29th November 2010: Salon Media’s Exit Strategy

In September I revisited Salon.com’s 10-Q filings after a five year absence. I had kept an eye on Salon.com and other media properties during the ‘deathwatch’ period after the dotcom crash on 14th April 2001. Salon Media is now looking for an ‘old media’ buyer, reports Wall Street Journal‘s Russell Adams.

The trigger for this however isn’t in Salon’s advertising model or operating costs, as Adams suggests. Rather, the trigger is in the repayment schedule of convertible promissory notes and other short-term debt securities which Salon Media needs to pay its investors. As I noted, these notes ‘mature’ in March and October 2012 when investors expect repayment. Interest payments and short-term financing costs could affect Salon Media’s operations. Salon Media’s chief executive Richard Gingras has cut operational costs from its earlier diversification forays, and has trimmed editorial. He is now also looking for Salon Media to be acquired as an exit strategy. Adams observes that Salon Media doesn’t have the network cost structure of Gawker nor the hybrid model of Politco.

It will be interesting to see which suitors emerge, and on what terms, if Salon Media is ‘in play’.