Penthouse IPO: A Winner ... or Just a Tease?
The explicit adult magazine might soon offer a chance to buy into the action.
March 25, 2008— -- Former Penthouse editor Mark Healy recalls a heated conversation last spring with his then boss, Penthouse Media Group Chief Executive Marc Bell, who was angry about a magazine item that tweaked a celebrity. "What's this damned Howard Stern story doing in here?!" fumed Bell. Healy considered the piece innocuous. Bell thought it was inflammatory enough to anger Stern, who frequently hosts Penthouse Pets on his radio show. Healy later quit because of Bell's meddling.
Bell, 40, has given Penthouse, for decades one of the most explicit men's magazines, a "softer focus," as he puts it. The cover shot is more conservative than most images in Sports Illustrated's swimsuit issue. Bell has spent $8 million on the redo after buying Penthouse and related properties out of bankruptcy for $52 million four years ago. The gussying up is mainly for Wall Street. Bell hopes Penthouse Media Group will raise $250 million in stock in an initial offering, perhaps in the summer.
There's a lot of airbrushing under way. Penthouse is the tame front for a racy collection of 27 social-networking Web sites that Bell and Daniel Staton, company chairman, bought late last year for $500 million in cash and stock. The sites, previously owned by a Palo Alto, Calif. company that carried the plain-brown-wrapper name Various, turned Penthouse Media Group into the world's largest adult entertainment company.
Click here to learn more about media billionaires at our partner site, Forbes.com.
The biggest site by far is the very X-rated AdultFriendFinder. With 22 million active members, the site is a Match.com for people who want to find bedmates. There's nothing subtle here, especially in the photography members send in. Special-interest groups include folks who like orgies in central New York state and some people interested in Buffalo sex, apparently a reference to the city, not the animal. There are listings from around the world. Kazakhstan has 2,644 swingers.
Fees from 1.2 million paying members of this site, who shell out an average $25 a month for full access, brought in $285 million last year, or 85% of the total from all the social networking sites Penthouse Media Group acquired. Last month AdultFriendFinder got 8 million unique visitors, who lingered an average 16 minutes on the site, says Nielsen Online. Playboy.com attracted only 1.3 million unique visitors, who dropped by for just more than 5 minutes.
