Dolan Media IPO documents revealing about biz journalism business

I had some time tonight to check out the amended SEC filings for Dolan Media Co., the owner of the Long Island Business News, Mississippi Business Journal, the Colorado Springs Business Journal, the Idaho Business Review and the Daily Journal of Commerce in Portland, Ore., among other papers. Dolan has filed to go public sometime later this year.

Here were some interesting disclosures about the business:

1. Its total subscribers fell in 2006. “A decrease in paid subscriptions to our print publications, which occurred between 2005 and 2006, primarily due to the termination of discounted subscription programs, could adversely affect our circulation revenues to the extent we are not able to continue increasing our subscription rates and our advertising and display revenues to the extent advertisers begin placing fewer advertisements with us due to decreased readership.”

Later, Dolan disclosed, “Circulation revenues increased $0.2 million, or 4.7%, to $3.6 million for the three months ended March 31, 2007 from $3.5 million for the three months ended March 31, 2006. This increase was due to an increase in the average price per subscription, which was significantly offset by a decline in the number of paid subscribers. As of March 31, 2007, our paid publications had approximately 75,500 subscribers, a decrease of approximately 2,700, or 3.5%, from total paid subscribers of approximately 78,200 as of March 31, 2006. This decrease was primarily due to our termination of discounted subscription programs for LawyersUSA and for publications in Colorado and Maryland, partially offset by an increase in paid subscribers related to our acquisition of the Mississippi publications of Venture Publications.”

For those interested, specific subscriber totals for each of its publications can be found on pp. 67-68 of the amended filing. See link below.

2. The company has reported a net loss for each of the past three years. In 2006, the loss was more than $20 million. It stated, “These net losses have been attributable to our non-cash interest expense related to redeemable preferred stock, which we will not incur after consummation of this offering because we will use a portion of our net proceeds from this offering to redeem our preferred stock. However, we expect our operating expenses to increase in the future as we expand our operations. If our operating expenses exceed our expectations, whether because we are unable to realize the anticipated operational efficiencies from centralization of acquired accounting, circulation, advertising, production and appellate and default processing systems in a timely manner following future expansions or for other reasons, or if our revenues do not grow to offset these increased expenses, we may continue to incur net losses in the future.”

3. The company is looking to buy more papers. It stated, “While we evaluate potential acquisitions on an ongoing basis, we may not be successful in assessing the value, strengths and weaknesses of acquisition opportunities or consummating acquisitions on acceptable terms. Furthermore, we may not be successful in identifying acquisition opportunities and suitable acquisition opportunities may not even be made available or known to us. In addition, we may compete for certain acquisition targets with companies that have greater financial resources than we do.”

4. The Mississippi paper and its subsidiaries were acquired for nearly $3 million earlier this year. The filing said, “On March 30, 2007, we acquired the business information assets of Venture Publications, Inc., consisting primarily of several publications serving Mississippi and an annual business trade show, for $2.8 million in cash. Up to $0.6 million in additional cash purchase price may be payable based on the amount of revenues we derive from the acquired business during the one-year period following the closing of the acquisition.”

5. The size of the weekly busines newspaper market is $1.4 billion. Dolan stated, “Our business journals generally rely on display and classified advertising as a significant source of revenue and provide content that is relevant to the business communities they target. Our court and commercial newspapers generally rely on public notices as their primary source of revenue and offer extensive and more focused information to the legal communities they target. All of our business journals and court and commercial newspapers also generate circulation revenue to supplement their advertising and public notice revenue base. We believe, based on data we have collected over several years, that there are more than 250 local business journals and more than 350 court and commercial newspapers nationwide, which generated approximately $1.4 billion in revenues in 2006.”

6. There are barriers to competition among weekly business papers. The company stated, “Our segment of the media industry is characterized by high barriers to entry, both economic and social. The local and regional communities we serve generally can sustain only one publication as specialized as ours. Moreover, the brand value associated with long-term reader and advertiser loyalty, and the high start-up costs associated with developing and distributing content and selling advertisements, help to limit competition. Subscription renewal rates for local business journals and court and commercial periodicals are generally high. Accordingly, it is often difficult for a new business information provider to enter a market and establish a significant subscriber base for its content.”

The filing can be found here.