Dow Jones Newswire: Salon Media Repeats 'Going Concern' Doubt
To be fair to Salon this is a misleading article. In 10Q filings companies are obligated to outline possible risks/threats to the health of their business. Whilst it is true that Salon will go bust before they reach breakeven if they don't raise additional finance, their investors have a track record of throwing good money after bad. When you've lost so much why not punt and hope?
Yesterday was Salon's 7th birthday. David Talbot decided to use the opportunity to have a rant, listing those that have so far wrongly predicted Salon's demise (Although disappointingly he missed me, and Ken Layne off his scroll of shame). He also highlighted the difficulties that Salon has faced, blaming the economy etc. for their present struggle. What he fails to do is accept any responsibility. The reality is that Salon is only still in business because they had over $79 million in backing. To give this some context - at their present level of expenditure $79 miillion would have lasted them for 8 years without them achieving 1 cent in revenue.
Whilst it is true that David Talbot should be congratulated to some extent for his editorial leadership, both he and CEO Michael O'Donnell deserve serious criticism for their wasteful and unimaginative approach to business.
Salon's advertising revenue is still very low, standing at only $0.5 million for the last quarter. That said, they have managed to get their net loss for that period down to $1.5 million (an all-time record), mainly due to some serious cost cutting.
The reality is that there is still a serious question mark over their long term viability. There present strategy is also arguably flawed. The introduction of subscription, closing off the majority of their content, has done real damage to their credibility as an advertising medium. Over their 7 year history they've had more that 500 companies advertise with them - presently their ad directory houses 11 companies. The challenge that they face should not be underestimated, nor should their strategy go unquestioned. They are in a hole and O'Donnell is still holding a shovel.
