Lazio Makes Industry Waves

Salonhas lots to boast about—its unique users tripled last year, and as of March 30, it had more than 360 advertisers and advertising sponsors. And the spinoffs: This fall, Viking/Penguin and Random House/Villard will publish new Salonbooks, and this winter, Bravo Networks will debut Salon TV, a weekly series.

Therein lies a subplot. As part of the December 1999 TV deal, Salonissued more than 1 million shares of stock to Bravo parent company Rainbow Media, which, in turn, promised to put $11.8 million worth of Salonadvertising on TV.

But having sold a 10 percent equity stake, Salonnow finds itself in a quandary. The 10-K cites a litany of risk factors, chief among them the following catch-22: They may have to sell more equity to survive, but doing so might dilute shareholders' control and/or kill off future financing altogether.

The bitter end is signaled on page 32. After a passing reference to "the uncertain nature of the financial markets," the 10-K says, "If we raise additional capital by issuing equity or convertible debt securities, the percentage ownership of our then-current stockholders will be reduced. . . . Additionally, we may not be able to obtain additional financing on favorable terms, or at all."

All that great content for nothing? Christopher Byron recently predicted in The New York Observerthat Salonwill be "stone broke" in 15 months. "This is the New Paradigm?" he asked rhetorically. "If so, you can have it."