Salon Media Secures New Financing

Posted on August 10, 2001

Salon Media Group, Inc., a Internet media company, announced that it has secured $2.5 million in new financing. The round was led by Bill Hambrecht, Chairman & CEO of WR Hambrecht+Co., and followed by a combination of venture capital firms and individuals including WR Hambrecht+Co.; John Warnock, the Founder and Chairman of Adobe Systems; the McKay Investment Group; Alacrity Ventures and Constellation Ventures.

The company also announced cost reduction moves including layoffs of 14 employees and the conversion of Table Talk, Salon's free discussion board, to a paid service. SFGate.com reports that these latest staff reductions leave Salon.com with only 55 employees. Salon.com was desperate for the funding. Salon was running out of cash and its shares have been trading well under $1 a share. Salon is also planning a 10-to-1 reverse stock-split to keep its value about Nasdaq's $1 minimum requirement.

``This new financing helps ensure that Salon will survive this current Internet shakeout and achieve its goal of becoming profitable,'' said Michael O'Donnell, Salon's President and CEO. ``Given the difficult financing climate, this latest investment by an impressive group of investors is a major endorsement for the Salon brand and its long-term potential for shareholders.''

Salon claims to have about 12,000 subscribers to its fee-based Salon Premium. Salon's goal is to reach 50,000 subscribers in its first year of offering the premium service. By converting Table Talk to a paid service like Salon's existing subscription-driven community, The Well, Salon is placing increased emphasis on its subscription strategy.

John Warnock, the Founder and Chairman of Adobe Systems will join Salon's Board of Directors, along with Rob McKay, Managing Director of the McKay Investment Group, and Bob Ellis, a former executive at NBCi and Time, Inc.