Salon files to go public

Want to own a little piece of Camille Paglia's online rants? Or Christopher Hitchens' erudite dissections of the Clinton administration? Later this year, you'll be able to: Online magazine Salon.com is to file for an IPO. The news follows a number of shifts at the magazine, including an expansion of offerings, a redesign and this month's purchase of Internet community group the Well.

Want to own a little piece of Camille Paglia's online rants? Or Christopher Hitchens' erudite dissections of the Clinton administration?

Later this year, you'll be able to: Online magazine Salon.com confirmed long-held suspicions when it announced yesterday that it had filed for an initial public offering. The news follows a number of shifts at the magazine, including an expansion of offerings, a redesign and this month's purchase of Internet community group the Well.

The company expects to reap US$27 million from its offering of up to 2.5 million shares of stock -- a little more than 25% of the outstanding shares -- at a price "between $10.50 and $13.50 per share," according to the S1 registration.

Salon's IPO will be handled by online investment bank W. R. Hambrecht & Co., launched last year by Hambrecht & Quist founder William Hambrecht. In February, the firm introduced its OpenIPO service -- the first Internet-based, "Dutch auction" IPO pricing system. Unlike traditional investment banks, which determine IPO prices internally, W. R. Hambrecht & Co. lets its clients bid on IPO shares through an online auction and then prices the deal accordingly. The firm's first IPO was completed for Ravenswood Winery earlier this month.

A Salon IPO has been expected for some time, in part because Salon officials had hinted at it in a Wired magazine story in January. Still, the Salon IPO represents something of a rarity. Although Internet IPOs are abundant, public offerings of editorial-only Web sites are still uncommon. CBS MarketWatch and TheStreet.com are two exceptions -- although the latter has paid subscriptions, while the vast majority of editorial sites are available for free.

Salon began operating its Web sites in November 1995. Many observers consider Slate, Microsoft's online magazine, to be Salon's principal competitor. In February, Slate abandoned its strategy of charging readers for most content. At the time, Salon officials insisted that Slate's reversal confirmed their own business model. However, Slate has been able to integrate itself into the far-reaching Microsoft Network and to raise its traffic numbers to the point where they rival and even exceed Salon's.

According to Media Metrix, Salon had 459,000 unique visitors in February. It's a respectable number but represents only a fraction of the traffic generated by Web sites affiliated with nationally known newspapers or television channels. The magazine has long positioned itself rather like a journal of opinion, akin to the Nation or the National Review. And indeed, Salon's prospectus reveals financial data that would be comparable to a small to medium-sized magazine. For the nine months that ended Dec. 31, 1998, Salon reported a loss of $4.3 million on revenues of $2.058 million. The majority of Salon's advertising revenue in fiscal 1998 came from just two companies: Borders (37%) and IBM (16%). As of the end of 1998, Salon said it had an accumulated deficit of $10.5 million which, while sizable, is much smaller than many widely read and ostensibly successful Web networks, such as iVillage.

(Megan Barnett contributed to this report.)

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