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IPO on Salon's next page

The parent of Salon.com, the Internet magazine, files for an initial public offering, becoming the latest Net publisher to jump on the IPO bandwagon.

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The parent of Internet magazine Salon.com today filed for an initial public offering, becoming the latest Net publisher to jump on the IPO bandwagon.

Salon's investors include television producer Norman Lear (of television's All in the Family fame), who was named a director this month and holds 283,505 shares, or a 2.6 percent stake, today's regulatory filing disclosed. The Well's Bruce Katz also will own stock in Salon Internet.

With its planned IPO, Salon--which remains unprofitable--joins Net publishers such as TheStreet.com, CBS Marketwatch, and ZDNet, which either have gone public or plan to soon. Wired tried but was unable to go public; Wired Digital is being sold to Lycos; and Wired magazine was sold to Conde Nast.

But Salon's offering is unique: Unlike these other content companies, which focus on a specific area of coverage, Salon publishes articles on general-interest topics. In addition, the site appears to be relying almost solely on advertising for revenue, while others have expanded their business models to include such services as e-commerce.

According to the filing, Salon intends to offer 2.5 million shares at a proposed maximum offering price of $38.8 million. Some 10.7 million shares will be outstanding after the offering. "We expect that the price will be between $10.50 and $13.50 per share," the filing with the Securities and Exchange Commission said today. Salon will use the money to expand its sales force and marketing and distribution and for general corporate purposes.

The underwriters include WR Hambrecht and Daiwa Securities America. If the offering is completed, Salon will trade as "SALN" on Nasdaq. Salon, launched in 1995 in San Francisco, has grown to 74 workers. As reported, it recently acquired the Well to expand its online community. In connection with the purchase, Salon recorded "intangibles and goodwill" of $1.9 million, the filing disclosed

"The offering involves a high degree of risk," the filing noted. "We lack significant revenues, we have a history of losses, and we anticipate increased losses." For the nine months ended December 31, 1998, Salon generated $2.1 million in revenue on losses of $4.3 million.

The filing also detailed the risks of traffic slowdowns. "For example, in March 1999, users were unable to access Table Talk for approximately two weeks as we upgraded our technology to compensate for unexpected growth in user activity," it said.

Salon's traffic is growing. "In March 1999, approximately 1.2 million unique users visited Salon's network of Web sites, generating about 13.2 million page views, compared to approximately 790,000 unique users and 7.7 million page views in March 1998," the filing said.

Salon chairman David Talbot holds 402,083 shares in the company for a 3.7 percent stake. Salon also issued stock to Bruce Katz in exchange for his membership interest in The Well, the filing added. Katz holds a 9.1 percent stake.

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