Just What Exactly Is Going On With Regent Media

Published on October 26, 2009 by QueenGossip   ·   2 Comments

The Dallas Morning News ran an interesting piece in this Sunday’s Business section on Stephen Jarchow, a straight Dallas resident who’s chairman of Here Media Inc., which owns Here TV, Out, The Advocate and Gay.com. As Follows:

Dallas movie executive Stephen Jarchow has made thousands of deals in his 17-year entertainment career, but none with more potential punch than his recent acquisition of a URL.

The 58-year-old chairman of Here Media Inc. bought gay.com, the preeminent Web site for gays and lesbians.

Through this Internet portal, Jarchow will offer online full-length movies, TV programming, magazines and fashion, travel and music information.

Gay.com will culturally and technically mesh with its new sister companies: HereTV, an online, cable and satellite service that reaches 54 million households, and Out and The Advocate, two alternative lifestyle magazines.

“As the result of this deal, we have become a unique company that straddles traditional distribution and digital distribution,” Jarchow says in his Preston Center office. “We own pretty much the entire media for the gay marketing space.”

Here Media is a publicly held – but delisted and unprofitable – company owned primarily by Jarchow and his longtime business partner, Paul Colichman, 49, who lives in Los Angeles.

They are building a gay-targeted multimedia mini-empire because they understand this largely affluent, well-educated minority group, believe advertisers want to tap into it and think other media companies don’t want to touch it.

“We intend to be the No. 1 place that advertisers go to reach a national gay audience,” Jarchow says. “Gay people buy a lot of everything. They tend to be fashion-forward, trendsetters and early technology adapters.”

Out, which has 75,000 paid subscribers and 75,000 who get it free, is filled with full-page ads for Calvin Klein, Louis Vuitton, DKNYMen, Continental Airlines and Subaru.

According to advertising industry figures, about 7 percent of Americans identify themselves as gay, lesbian or bisexual, and they represent $690 billion in buying power.

“The numbers bear up that this is a strong target market,” says Owen Hannay, principal of Dallas-based Slingshot LLC, which specializes in online marketing.

 

Movie mogul

Here Media executives Jarchow and Colichman are better known for their other company, Dallas-based Regent Entertainment, which has two Academy Award-winning films to its credit. Gods and Monsters, produced in 1998, won best adapted screenplay. Departures was this year’s best foreign-language film.

For nearly nine years, the company leased and operated the Regent Theater in Highland Park Village. It lost its lease earlier this year when new owners closed the theater for renovations.

Since 1995, Regent has produced or released 150 movies, a third of which were aimed at an alternative lifestyle audience.

Regent’s typical production budget is between $2 million and $5 million vs. $100 million for an average major studio flick, Jarchow says.

Gods and Monsters cost $4 million to produce – including $1 million from Jarchow’s pocket – and grossed about $8 million at the box office, he says. DVD and international sales have brought in an additional $7 million.

Jarchow, who moved here from Wisconsin in 1979, was a senior executive with Lincoln Property Cos. and Bear Stearns before starting a real estate company in 1990.

He got into moviemaking accidentally. He and a business partner bought the Studios at Las Colinas, so people mistakenly thought he was a producer and started sending him scripts. Jarchow, an attorney and CPA, started buying and selling film rights.

In 1995, he joined forces with Colichman, an established L.A. movie distributor.

“On paper, you couldn’t find two more different fellows if you tried,” Jarchow says. “Paul: gay, involved in the entertainment business since he was very young. Charismatic, outspoken, quick, articulate and funny. And I am a lawyer from the Midwest who’s straight and has two children.”

James Cassel, an investment banker in Miami who’s worked with them, agrees. “When you meet them, you think, ‘They’re what?’ But it’s a great business partnership,” he says. “Paul is artsy and really into film. Steve is a meticulous numbers person. But he has a creative side, too.”

 

Industry evolving

These days, the moviemaking business is in turmoil. Buyers are buying fewer films and paying much less for them. Some buyers are reneging on deals or are failing to pay up.

In the next 18 months, Jarchow says, he’ll decide whether to reinvent the business or get out of it.

In the meantime, he’s focusing on Here Media.

Last year, Here Media paid $6 million for Out, The Advocate and other publications to an owner who’d paid $36 million for them two years before that.

Jarchow thinks he can tighten costs (he’s laid off staff), fine-tune its pitch to advertisers and draw in a larger paying audience.

“This is basically a news and commentary magazine,” he says, holding up a recent Advocate with a portrait of President Barack Obama. “And this is a fashion, entertainment, what’s-hip-and-happening magazine,” holding up Out with a provocative photo of pop singer Lady Gaga.

Advertisers like hip much more than news, he says, so the staffs are being consolidated and The Advocate is moving to more of an online presence.

“We had to learn the magazine business and make these publications profitable in the teeth of the worst magazine market in 50 years,” Jarchow says. “We’re getting there, but we’ve still got a lot to do.”

 

Work in progress With the purchase, Here Media also bought a group of raunchy (Jarchow prefers to call them “risqué”) gay magazines that would meet many people’s definition of porn. Those publications were spun out from the publicly held Here Media and into a private company owned by Jarchow and Colichman. They’ve been melded into one “Playboy-type” magazine, Jarchow says.

Exactly how Out and The Advocate will play into the gay.com schematic is a work in progress.

Cassel, vice chairman of Ladenburg Thalmann & Co. in Miami, worked on a deal with Jarchow and Colichman that fell through but became familiar with their strategy.

“Although the whole media business is tough right now, their convergence of magazines, films, TV and online is quite interesting,” Cassel says. “They’ve taken over a platform that’s broken. The fact that they already understand this niche gives them a great opportunity to fix it.”

Gay.com draws nearly 3 million visitors a month and about $12 million in annual revenue. Jarchow thinks he can get that to 6 million visitors and $15 million in annual revenue over the next 18 months.

Targeting people battling a specific disease such as AIDS or diabetes is another possibility. Here owns a third magazine called HIV Plus that is distributed free to doctors’ offices.

“Small is the new big,” Jarchow says. “The key to building a big company is to do a series of small niches and be very good and completely dominant within those niches.

“For us, generating $50 million in revenue from a particular niche is a big success. For a major studio, that’s one day’s overhead.”

Tags: Dallas, Gay.com, HERE, magazine, out, Regent Media