Faking ROIs, Warping Markets


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Published: December 02, 2010

This week, after 15 years of being either one thing or another, Salon.com announced that it was up for sale.

According to its SEC filing, the firm showed $1.4 million in revenues this year, up from $1 million a year ago. And its operating loss shrank to $454,000 from $1 million the previous year. The company, however, had only $246,000 in cash and short-term securities and faced a $7.9 million deficit. Oops.

This comes a week or two after the announcement of the “50/50 merger” (i.e., sale) of the Daily Beast to Barry Diller’s latest acquisition, Newsweek, itself just sold months earlier to a non-news entrepreneur looking for a quick turnaround.

It turns out that the Beast, Tina Brown’s latest vehicle, was also running at a deficit, with one account indicating the firm was burning up around $1MM in cash last year. This, it turns out, was a chip in her favor, since Newsweek, according to Beast DC bureau chief Howard Kurtz, lost $40MM in the same time period.

In the Salon announcement, chief executive Richard Gingras suggested it is not possible for a company to do serious reporting and remain in business today.

Are these just repeats of the fantastic flameout of John Battelle’s Industry Standard days, or is it something more generic? Is it just the common generic mantra about transitional times, as advertisers move from print to online, or is there a deeper, more strategic problem involved?

Clearly, I believe the latter is the case, which is why I’m writing on it for this issue.

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Search Code: 37750
Published: December 6, 2010
Last Revised: December 6, 2010

Mark Anderson

Research Fellow

Mark Anderson, Info-Tech Research Fellow and CEO of Strategic News Service™, writes the most accurate predictive reports covering the computing and communications industries. This weekly newsletter covers must-have information for strategy development and business technology planning.

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