John Warnock, the co-creator of the Postscript language that lets us print beautiful documents and the co-founder of Adobe Systems, is surely the best friend online journalism ever had. He is single-handedely keeping Salon afloat.
Back in February I and lots of other journalists wrote that it seemed Salon was about to be shuttered. It was unable to pay the rent on its pricey San Francisco office space and it seemed to have no prospects for some long-term stable financing.
But, as some Salon execs crowed shortly after we wrote those words, word of its demise seem greatly exaggerated.
That's because Warnock, who is now retired from Adobe but sits on its board, has written one cheque after another to keep Salon afloat. The latest cheque, according to an SEC filing this week, was for another $100,000 (U.S.) of his own money. He gets — as he has several times already — warrants to buy up to 300,000 common shares of Salon Media Group Inc. for .0805 cents a share. The stock (SALN.OB), which trades in the Nasdaq over-the-counter market, is trading at about 6 cents a share right now.
(The Hambrecht family, tool, has been a big supporter of Salon. Bill Hambrecht is the venture capitalist behind Hambrecht and Quist and his daughter, Elizabeth, is Salon's president. Hambrecht was also an early investor in Adobe and Warnock.)
But Warnock isn't doing it for the money. He thinks Salon is a good idea and he wants to it succeed.
I've met and inteviewed Warnock twice. He's a charming patient man. And a good friend to journalism.
As for Salon, well . . .
“The Company will use the capital raised for working capital and other general corporate purposes,” it says in the SEC filing, which means, as it has every time Warnock has written a cheque, that this money is urgently needed to pay the writers, pay the rent, and pay for the Internet services it needs to keep publishing. Despite Warnock's largesse, this is not yet close to being a sustainable business.
According to its most recent financial statements, Salon Media Group had just $83,000 on hand at the end of June, down from $162,000 at the end of March. It ran an operating loss for the quarter of $1.32-million on a revenue of $1.045-million. That, though, was an improvement, believe it or not, over the same quarter in 2002, when it had an operating loss of $1.66-million on revenue of less than a $1-million ($972,000).
It was able to sign up about 18,000 paying subscribers in the quarter, bringing the total number of netizens paying for what may be the Web's premier online-only journal to about 66,000. There are, by the way, about 600 million people on the Internet.
As the company itself says in that financial statement:
“Salon has incurred losses and negative cash flows from operations since inception and has an accumulated deficit at June 30, 2003 of $83.6-million. These factors raise substantial doubt about Salon's ability to continue as a going concern.”
Let that sink in for a moment: This is a company with revenues of barely $4-million a year and it's more than $80-million in the hole!