Howard Rice Represents PlanetOut Inc. in Acquisition of LPI Media Inc.
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Howard Rice represented PlanetOut Inc. as the company completed a $31.1 million acquisition of LPI Media Inc., the country's largest publisher of gay and lesbian print publications (including The Advocate and OUT magazine), in a transaction that combines the largest online and traditional print media companies in the gay and lesbian market. PlanetOut acquired LPI for $24 million in cash and $7.1 million of debt.
PLANETOUT INC. ACQUIRES LPI MEDIA INC., PUBLISHER OF THE ADVOCATE AND OUT
LGBT - News) today announced that it has acquired substantially all of the assets of LPI Media Inc., and affiliated direct marketing and publishing entities for $24.0 million in cash and approximately $7.1 million in seller- financed debt. PlanetOut will also reimburse certain prepaid and other expenses totaling approximately $1.0 million. LPI, a privately-held company, is the nation's leading publisher targeting the gay and lesbian market, distributing more than eight million copies of its magazines each year. LPI publishes The Advocate and OUT, which are the two largest circulation LGBT magazines in the U.S., as well as the acclaimed Web sites Advocate.com, OUT.com and related e-commerce sites. PlanetOut intends to finance the cash portion of the purchase price with cash on hand.— PlanetOut Inc. (Nasdaq:
PlanetOut expects this acquisition to be accretive, with LPI 2005 annual revenues for its consolidated entities currently estimated to be approximately $29.0 million.
"This transaction will further advance our strategy of building a far-reaching media and entertainment company which aggregates the largest gay and lesbian media brands," said Lowell Selvin, chairman and chief executive officer, PlanetOut Inc. "This combination provides a larger, more diverse foundation for additional growth, particularly in our advertising business, as it becomes a larger percentage of our overall revenue, and it enables us to better reach the markets we serve, driving higher growth in a more cost- effective manner. Besides, this is one gay marriage the laws do allow!"
STRATEGIC AND FINANCIAL BENEFITS OF THE TRANSACTION
— Combines OUT and The Advocate, the two largest circulation LGBT magazines in the U.S., offering attractive cost per thousand impressions (CPMs), ad page growth and renewal rates, with the global online reach of PlanetOut.
— Provides PlanetOut with a more balanced revenue mix among advertising, subscription and transaction services. On a pro forma basis, for the first nine months of 2005, the combined entity would have had approximately 41 percent of its overall revenue from advertising, 45 percent from subscriptions and 14 percent from transaction services.
— Brings together a complementary advertiser base with mutual strength in the entertainment and travel categories. LPI's solid accounts list of fashion, retail and consumer packaged goods advertisers augment PlanetOut's growing base of pharmaceutical and automotive accounts.
— Nearly doubles PlanetOut's estimated 2005 pro forma revenue and is expected to be accretive.
— Expected to provide both revenue synergies and expense savings in numerous areas by engaging PlanetOut's model of high incremental growth and efficient customer acquisition.
"We believe that the marriage of PlanetOut and LPI will enable us to immediately extend our market reach and broaden our advertiser base," said PlanetOut Inc. President Mark Elderkin. "As a combined entity, we expect to use PlanetOut's proven ability to drive circulation growth as we deploy our complementary marketing and editorial assets to create cross-platform programs that engage our audience, while providing unique sponsorship opportunities for our advertising partners."
Conference Call and Webcast Information
As previously announced, PlanetOut Inc. plans to report its financial results for the third quarter ended September 30, 2005 after the close of market today, November 9, at 4:30 p.m. ET/1:30 p.m. PT. The company's management will discuss these results and the acquisition of LPI Media in a teleconference and live webcast for all investors at 5:30 p.m. ET/2:30 p.m. PT. Investors in the United States and Canada can dial 800-218-9073, access code 11042129, to listen to the teleconference. International callers can access the call at 303-262-2140. A telephonic replay will also be available for two weeks after the live call at 800-405-2236 (international callers dial 303-590-3000), access code 11042129.
About LPI Media Inc.
LPI is the nation's leading content producer targeting the gay and lesbian community, distributing more than 8.2 million copies of its magazines each year. Its titles and Web sites include The Advocate (www.advocate.com), the community's leading national news source since 1967; OUT (www.out.com), the popular lifestyle magazine that celebrates the spirit of gay culture, including fashion and style, trends, society, and the arts; and HIVPlus (www.hivplusmag.com), among other titles and online platforms. LPI Media is headquartered in Los Angeles, with additional offices in New York.
About PlanetOut Inc.
PlanetOut Inc. is a leading global media and entertainment company serving the lesbian, gay, bisexual and transgender (LGBT) community. PlanetOut's media properties include Gay.com, PlanetOut.com, Kleptomaniac.com, and OUT&ABOUT Travel, in addition to the newly-acquired national magazines and acclaimed Web sites of LPI and related entities. These properties include The Advocate (www.advocate.com); OUT (www.out.com); HIVPlus (www.hivplusmag.com), as well as other publishing, direct marketing and e-commerce properties, including Alyson Publications, SpecPub, Inc. and Triangle Marketing Services, Inc. PlanetOut, based in San Francisco, offers FORTUNE 1000 advertisers access to what it believes to be the most extensive network of gay and lesbian people in the world. For more information, please visit www.planetoutinc.com.
In addition to the historical information contained herein, this press release contains forward-looking statements, including statements regarding the potential synergies, accretive nature and financial impact of PlanetOut's recent acquisition of LPI and its related entities, as well as statements containing the words "believes," "anticipates," "expects," and similar words. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the company's limited operating history and variability of operating results; the company's ability to attract and retain subscribers and advertisers; the company's ability to integrate the acquired assets of LPI and its related entities; competition; timing of product launches; and the company's dependence on technology infrastructure and the Internet. Additional information concerning factors that could affect PlanetOut's future business and financial results is included in the company's Annual Report on Form 10-K for the year ended December 31, 2004 and other public filings filed from time to time with the Securities and Exchange Commission (SEC), which are available at the SEC's website at www.sec.gov.
All figures reported today are unaudited and may be subject to change.
|©2005 Howard Rice Nemerovski Canady Falk & Rabkin, A Professional Corporation. All rights reserved.