In the process of exploring OpenSalon over the past few weeks, I have come across bits and pieces of information on the larger enterprise, Salon.com.
I was looking over the most recent 10-Q for Salon from November 2008 and was distressed to find the debt load that the company is carrying, especially in light of newspaper closings, etc. Premium subscriptions have fallen since the program was initiated several years and there is now more reliance on advertising.
I have been a Premium member since the program was started and I wasn't aware of any requests to give friends and families lots of Premium memberships such as I saw several years ago. Nevertheless, just looking at the debt of Salon makes me think they could use a lot of new memberships to increase sagging revenues.
I am just one month away from the 10th anniversary from when I first started reading Salon.com and the last thing I would want to see is for Salon to fold up its tent and close. Perhaps some staff members could tell me if I am misinterpreting the numbers of the 10-Q.
Some excerpts from the 10-Q:
"Salon also derives a significant portion of its revenues from its Salon Premium subscription program. Salon Premium revenue is recognized ratably over the period that services are provided. This source of revenue has been decreasing since Salon's quarter ended December 31, 2004 when paid subscriptions peaked at approximately 89,100 and decreased to approximately 28,500 as of September 30, 2008. Salon expects this downward trend to continue, as it is placing greater emphasis on its advertising sales to generate revenue.
Salon has incurred significant net losses and negative cash flows from operations since its inception. As of September 30, 2008, Salon had an accumulated deficit of $98.2 million. These losses have been funded primarily through the issuance of common stock from Salon's initial public offering in June 1999, issuances of preferred stock and convertible notes, and bank debt.
Burr, Pilger & Mayer LLP, Salon's independent accountants for the years ended March 31, 2008, March 31, 2007 and March 31, 2006 have included a paragraph in their report indicating that substantial doubt exists as to Salon's ability to continue as a going concern because of Salon's recurring operating losses, negative cash flow and accumulated deficit."
The full 10-Q is here:
http://biz.yahoo.com/e/081114/slnm.ob10-q.html
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Comments
I reviewed similar figures concerning Salon's financial status during the past years and came away with the same concerns that you have expressed. As I remember, I wrote a note to Kerry about my concerns, but never received a response.
This issue needs to brought to the attention of all of the regular readers of Salon and OS because it is a very real threat to the continued viability of these entities. If nothing else, this attention might glean more Premium subscribers and suggestions of ways to ensure that OS and Salon are able to continue into the future.
I know the loss of these web sites would be a great loss to me and many other readers. Thank you for trying to create a greater awareness of this issue.
I believe the Premium subscription gives you Salon ad free (I don't see any ads after I log in) and a number of premiums, such as books, magazines, and DVDs. I know the the most important thing for me is that subscribing gives me a sense of supporting a source of news and writing that I enjoy and and that I feel makes an important contribution to our society. It's like subscribing to PBS and NPR. Don't you feel guilty about not subscribing?
Where do we go for news if the papers fold and online news can't make a profit? Is anyone anywhere making money in the news media now?
As I had noted previously elsewhere, the credit line is tapped out, viability is day by day only because of continued funding by Messrs. Warnock and Hambrecht to the tune of $500K per quarter, and there is no possibility of near term profitability or positive cash flow. So right now, this is not a business venture, perhaps it is a hobby for Warnock and Hambrecht. And who knows when their continuing generosity will end given what the market has done to people's asset bases? March 31 is the end of the fiscal year and a pretty important date, I suspect.
Best bet is to back up all the posts you're proud of off-site. And pray for rain. Sorry to sound so pessimistic, don't even feel like woofing.
It's like the people who download music or movies illegally and don't get that if everyone did that, the art would not exist. It exists because those artists got paid for producing what that person wants for free, and that person can only get it for free because other people paid for it, thus enabling the artist to work and get public attention.
It's one of those snake eating its own tale kind of situations.
Before long, there will only be amateur content. Much of which is wonderful (ahem, says this OSer) but it's not professional journalism, and other forms like movies are going to be impossible to keep going "for free".
Mikek, I was surprised to see the debt and to not have heard any concerns about it on Salon just made me wonder why. You have been looking at the numbers far longer so this is no surprise, plus you contacted Kerry and it's unfortunate that you heard nothing back. For me the day is not complete without reading the main site, Salon.com and I would be distressed to see it go away and I feel especially bad if there was something that I could have done to help out. I figured at the very least I'd post it here as without a healthy Salon.com there will be no OS.
Dorinda, it seems like if too many professional news outlets closed we'd be entering some kind of Neanderthal period of rumor and hearsay. Some papers have tarnished their reputation over some questionable reporting, but on the whole it's the best way to go rather than have some rumor mill as the news source for a lot of the population in the future. It's a battle right now to keep up with the fact checking needed with the major league bloviators like Limbaugh, O'Reilly, and Hannity, etc. just to name a few.
C.C.C., you have some fascinating information about the funding from the board members and we can only hope that their largesse towards Salon continues based upon what you have said here. Your comment suddenly reminded me of an analysis by OS member Haggismold and I just tracked down his post that appeared on August 7th entitled "speculating on the economics of Open Salon."
http://open.salon.com/blog/haggismold/2008/08/06/speculating_on_the_economics_of_open_salon
He looked at earlier SEC filings, but it seems like little has changed since mid 2008 since Haggismold wrote his post. Definitely check his piece out.
Silkstone, I agree there is reason to worry about the professional news outlets and it's bad enough that we have had such major media consolidation even when times were better. We certainly need a vibrant and large number of professional news outlets as a part of our democracy.
if you give OS the skinny on this, I bet we'd come up with a plan to save Salon.
Maybe in a week or two...
If I'm feeling that way, and I'm employed, there are likely many others who are less motivated to subscribe and also feeling the pinch.
I still remember all of those stories in the M$M years ago, predicting the demise of Salon, and how gladdening it was that they were wrong. Every single. time.
They decided it wasn't worth the bother? As a long-time reader of publications that frequently teeter on the edge of insolvency, I have contributed to several calls by those publications for funds to keep the enterprise rolling. Many years ago, for example, The Nation had a financial crisis and they were able to get their readers to pitch in and help make them whole again.
There seems such a wealth of loyal readers that putting out a public plea for more Premium subscriptions should be immensely helpful, particularly now that OS has garnered so many members. But I've also observed a tendency to be secretive, so perhaps they don't want to open up to us about their problems.