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Law Office of James J. Clancq, 9055 La Tuna Canyon Road La Tuna Canyon. 91352 818-352-2069 .Fax: +I (818) 352-6549 FAX COVER SHEET

FAX NUMBER TRANSMITTED TCE: (513) 579-2121

To: Mr. GF~H. Lindner American Financiai Group One East Fourth Street Cincinnati, Ohio 45202

From: James J. Clancv. Esq

ClientMatter~~ Financial Assistance 1~1Reestablislung - Time Motion Studv Analysis of Obscene Adult Motion Pictures for Prosecution.

Date: February 8.7001

DOCUMENTS: (2) TOTAL NUMBER OF PAGES: 8"

Correspondence of Robin Gallagher with the Library of Congess re their interest m C.D.L. correspondence over the years...... 5

Estimates received from Samy's Camera on the Integral parts of the Digital Time and ...... >lotion Study pr0ces.s. ~, , 3

COMMENTS: Dear Mr, Lindner:

I am transmimng the above documents. both of which are refemed to in my Express Mail letter to you. dated February 5. ZOO1

The idomation cmmlnrd in 'his fhcsimile rnessnqe D infofmatioii pratected h? attorney-client andlur the arrorne!lwork pruducr priyilere. It is imedcd only for the use offhe iodiyidual named above and the privilqes are not waived by virtue *,(tb hn,iPg heelsent b? ra&nik. If the person aamall? veceiviag this facsimile or any other reader of the facsimile k not the marned recipient or the etnp@ec or aeent rctporihlr to dclivtr it to the named recipient myuse. dissemination, distrihutitnn. til' cllpyine olthe ronmunicrriuo is micsb pnihihited. W?nu hare received this communicrtion in errnr. please hmedinte{y norif? t& relcphone and armnee ((I remm the erieinrl messare to us at uurcmt 10 the shove address ,iil U.S. Postal Service. Thank you [or ynur consideration.

* UOT COUNTIYG COVER SHEET. IF YOU DO NOT RECEIVE ALL THE PAGES. PLEASE TELEpHOXE ES I>IMEDI.ATELY ,AT (818) 352-2069, Thank you. THE LIBRARY OF CONGRWS 1111 INUEI'ENUENCE AVENUE. S.E. \YSHINGl'ON. U.C. ?054&-WJO

Dear Ms. Gallagher:

It was, a -ereat treat to talk with you about the Jatiies Claiicy papers. and to have your assessment ofthe six volumes left wiih us for examination and iepcirt. your description ofthe large body of inaterials in California. and some very I'Luitfui sugxstions about how we can best explore these matters in greater detail. It was also ge~~e~ousof!ou to offer US your copy of the film that Mr. Chcy used it1 his testinlorly before the Judiciary ( 'onimittee when it was considering the nominatioii of Abe I:oqas as Chief Justice. should the Clancy papers come to the Library OfColieress,- 1 ralked wit11 Jblm Haynes abciut ourconvimltion later in the morning, and he was very son). to have missed you.

I enclose a receipt (or the Clancy papers that w will be <.uarniningin the near future. We are very grateful to you for bringing,.I& fia!lggfiOn;to our attention.

L Best regards,

- I .. &M-d. L2 \-I.-. Da\ id 'Vigdor Assistant Chief

Enclosure

,MS.Robin Gallagher 90 1 Cedar Fork Trail Chapel Hill. NC 17514 \T <".\PEL HILL

February 4. 7001

.Mr. James CIancy 9055 La Tuna Canyon Road Sun Valley, California 91352

Dear ,Mr. Clancv:

This is a long overdue'note to thank you for your continued interest in mv research as a doctoral candidate at the University ofNorth Carolina at Chapel Hill School of Journalism and Mass Communication. Without your unfailing willingness to help me understand the point of view of Citizens for Decent Literature (CDL), my access to prim& resources would be very limited. A4 you know. I am trying to document how the .... Supreme Court has interpreted the meaning of the First Amendment right to discuss sex when a concern for children's moral welfare is presented. This study has entailed a comparison of the arguments presented by CDL, Morality in Media, and the .herican Civil Liberties Union. As long-ten counsel for the CDL, your knowledge, not to mention your generous contribution of time. is an invaluable asset.

As impressed as I am with the articulate. thorough, and precise records you have kept. I am concerned that the nature ofmv particular research project will not hlly explore vour copious records. Your side ofthis important free sp.eech debate merits presemation and serious study bv historians and others 'interested in documenting a fascinating aspecr of American life. .As you know. in the interest of protecting your documents and making your contribution available for study, I have contacted the archivists at the Library of Congress. As the enclosed letter shows. Dr. David Wigdor. .Assisrant Chiefrtrchivist. seems likewise interested in working with you to create a collection of your papers. This will no doubt be quite an undertaking, but 1 am positive that the etYon will mean a rich reward for those of us interested Fm examining all sides of this long-standing First Amendment dispute.

.Again.- d am deeplv appreciative of your generous gift of time. not to mention the replication ofrrurnerws records. 'briefspwnal correspondence. and CDL newsletters you have provtded me >,fid. as rewardin? as it will be for me to finish my dissertation. it will be likewise sazisfying- to visit the Libra? of Congress someday and find your records archked for further study. Sincerely.

- dkLli*ci--

Robin Gallagher Doctoral Candidate University of North Carolina at Chapel Hill School- of Journalism and Mass Communication Rmeallaeaenml.unc edu 901 Cedar Fork Trail Chapel Hill. North Carolina 2751.1

Enc THE LIBRAIIL' OF CONGRESS

WASIIIN~~IUN.V.C. Xs.10

RECE1V:ED THIS DATE FSOH:

Robin Gallagher 901 Cedar Fork Trail Chapel Hill, NC 27514

919-929-9689

i

DESCRIPTION OF NATERIAL:

i

Six volumes of James Clancy papers

(5 volumes on a related legal issue; L bound letter to Charles Keating)

PURPOSE: x For esamination ma report

Otner

\..,ame

Yanuscrip ..t Division -..;tTe

26 Januarv '101 Date THE L'UI\'ERSITY OF NORTH C.IROL1S.A AT CitXPEL HILL

.Mr. Charles Keating 3734 E. Windsor Avenue Phoenix. Arizona 85008 Dear Mr. Keating: I Thank you so much for your permission to copy the film. I dropped it bv the Universitv's audio-visual ofice this morning. It will serve as essential background material for mv next chapter.

To keep vou up to date on mv progress, the second chapter of the dissenation was just turned in to my adviser. I tr). to suppress the fact that there are five more such chapters to go. Nevertheless, the second chapter deals largely with the advent of the CDL, the concern the CDL caused the Cincinnati CLU and the ACLU, your congressional testimonv. problems with J. Edgar Hoover. the stories of Roth, Sturman. .Aday, and so on. The next chapter chronicles the CDL's displeasure with the USSC. the . advent of Morditv in Media. and,how the CDL's approach to the obscenity problem differed from h&'s. J

On another . 1 have just returned from the Library ofcongress. where I met with an archivist interested in James Clancv's papers. .Apparentlv. the archivist and Mr. Clancv have spoken. The library was interested and wanted examples of his records. Samples in hand. I delivered them. along with a strong comment about the general thoroughness and historical significance of his collection. There is little else L can do now excepthope thal he will not become frustrated bv the glacial pace ofa bureaucracy like the LOC.

On that note I will close. rhsnking you again for all your assistance. Similarlv. please thank Carol for her continued kip. My best wishes Fnr hamork's rerove?. I- \\ INVOICE

INVOICE NUMBER. a8c;874 41S. Fanax Avs.. LDS Anpes. CA 90036 123-938-2420 FAX 323-931-2919 8M $10 MOUI~OIIAve.. io9 Anqe8er. CA pW31 :3-222-9530 FAX 323-222-0128 I'O E. islev Sk. $anla Barnam. iA93103 305-963-iZ69 FAX 8054634100 INVOICE DATE. o~/a7/1211 I 535 Vrnrce alvO.. Yenre. LA 90291 :10-9504551 FAX 310450-85m SALESPERSON: DRD

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249. Id0 EFICH 243. 80

20IN COLOR TV GRRY 1 349.35 ERCH 343.35 KV32FS12GRRY 1 033.1210 ERCH 099. oa

D-1 DIGITRL SLR CRMERR 1 4939.1210 ERCH 4,933.ma 2'52'8 1 RC RDRPTER F/D1 1 115. 121121 ERCH i 15. @a .E. LLL.-.54.3 NIKON CRPTURE SOFTWRRE/Dl 1 560. a121 ERCH 56121. aQ 25244 1 cdi3. -I 0121 ERCH 523. oa 1~~ GIG KIT W/ilDF'T 8 CMRTE MDiGADK ELECTRON 22 ELUE MONITOR 1 1333.35 ERCH 1,339. '35 ia4~~109 ERCH RF MICRD NIKKOR ClZlMM FZ.8 1 459. a121 453. OQ 1987 79. !a121 ERCH 73. @@

%-3d REMOTE CCRD 78.98 ERCH 7121.98 *GC@

w:801 IJ;t-:DRD 17:42 . JEl . Elm . am NET INVOICE. 12, 607. 88 FREIGHT .08 SALES TAX: 1, ma. 63

INVOICE TOTAL. 13.616. 51 (*s-> (*s-> 4 INVOICE

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NET INVOICE. $22 4 4 FREIGHT SALES TAX. i cc d JAMES J. CLANCY ATTORNEY AT UW -5 U TUNA CAWVOH ROAD SWN VAU-€V. CAW. 9l3Y - . - .. (818)35L.x)6.

- ~~ ..

February 9, 1990 I

Mr. James Evans District Attorney Q€ Montgolnery County p.a, BOX 1667 Montgomery, Alabama 36102-1667

Dear Mr. Evans:

f am sending via Federal Express the following: 1. Letter dated July 31, 1988, to Senator Joseph Biden re appearance at confirmation of Richard Thornburgh with the following 7 exhibits, and letter of United States Senate General Counsel Jeffrey J. Peck, dated October 3, 1988, returning Exhibits 1-7: Exhibit 1. Bound volume (5/8" thick). Letter dated July 21, 1988 to United States Attorney General Edwin Meese 111. Exhibits 2A, 2B, ZC, and 2D. Copy of videotapes of Exxxtasy Broadcast (S-1, channel 18) of "Suzy Superstar" and "Glitter" on March 12-13, 1988.

Exhibits 3A and 3B. Xerox copy (11" x 17") of time and motion study of "Suzy Superstar'! and "Glitter" 'Exqtasy Broadcast (S-1, channel 18) on March 12-13, 19-88. Exhibit 4. A portion of the book entitled, Fortas: The Rise and Ruin of a Supreme Court Justice. Exhibit 5. Videotape copy of the "Fortas Film," of July 1, 1968, submitted to Senate Judiciary Committee in opgmsition to the appointment of Fortas as Chief Justice. Efi5bit 6. A copy of the hearings on the Fortas wmination as mief justice.

I\ 3. Bound volume (1/4" thick) containing file on - Archdiocese Resolution, dated September 6, 1988, re People v. - :). Freeman, 46 Ca1.3d.419, 256) cal.Rptr. 598 (1988), (involving the film "Caught From Behind Il"), aqesting that a Petition for Rehearing be filed in the California Supreme Court. 4. Bound volume (3/8" thick) containing file on Los Angeles Archdiocese Resolution, dated h'ovember 1, 1988, requesting . Petition for Certiorari be filed in the United States Supreme Court in People v. Freeman, 46 Cal.3d. 419, 250 Gal-Rptr. 598 (August 25, 1988), involving the film "Caught From Behind 11").

I 10. Copy of Copyright application and Copyright issued to "Suzie Superstar, "Glitter," "Private School Girls,'I "Summer Camp Girls," and "Virginia." I I 11. My letter, dated October 27, 1989, to P.C.C. General Counsel Robert Pettit, and other papers (9 pages). - The nine (9) programs which kmerican Exxxtasy sent to its subscribers for the pPriod September 1987 through February 1990 (see enclosed Xerox copies) establish that the following five colleen Applegate films ("Private School Girls," "Glitter," tlSuzie Superstar," "Smner Camp Girls, " and "Virginia") were broadcast during that period: OS/OS/87 "Private School Girls" 09/17/87 "Private School Girls" 10/14/87 "Private School Girls" 11/14 / 87 "G1 i t tern 11/23/87 "Glitter" 12/--/87 None 01/09/48 "Glitter" 01/12/88 "Private School Girls" 01/25/88 "Glitter." 01/27/88 "Private School Girls" 02/--/88 None 03/02/88 "Glitter 'I 03/12/88 "Suzie Superstar" (2)- 03/13/a8 "Glitter" (2) 03/25/88 "Suzie Superstar" 03/29/88 "Glitter" 04/04/8a "Glitter" a4/20/88 "Suzie Superstar" 04/30/88 "Suzie Superstar" 05/15/8a "Suzie Superstar" 05/20/88 "Private School Girls" 06/01/88 "Glitter" 06/04/88 "Private School.birlsl1 06/06/88 "Suzie superstar" 06/18/88 ."suzie Superstar" 06/21/88 "Glitter" 06/29/88 "Suzie Superstar" 07/16/88 "suzie superstar" 08/12/88 "Suzie Superstar" 09i--/88 None 10/27/%8 "suzie Superstar" 10/2918a "suzie Superstar" 11/--/88 None 12/1s/sa "suzie Superstar"

0 l/08/8s "suzie Superstar" 0 11 mi89 "Suzie Superstar " OtJZB/%9 "Suzie Superstar" 03/01/83 "Suzie Superstar" 03/12/89 "suzie Superstar" 03/20/89 "Suzie Superstar" 04/--/89 . ::one 05/--/89 . :;one .. ;I . -

...... %/--/a9 None ...... -. . 07/14/89 "surmer camp Girls" ...... --: . ~...... - 07/29/89 ",Smpr Camp Girl's" !2). :.: :.-. .. -. . -...~...... OS/--/a9 None' . ~ -~ .- OS/Ol/89 IISUmmer camp dirasm 09/21/89 "Summer Camp Girls" 10/04/89 "Summer Camp Girls" ( 2) 10/07/89 "Virginia" ( 2) 10/13/89 Virginia" 10/28/89 'Virginia" ( 2) 11 / 0 8 / 8 9 Ivirginia" 11/23/89 Virginia" 12/06/89 'lVirginia" ( 2) 12/17/89 "Virginia" - 01~11/90 "Summer Camp Girls" 01 / 2 3 / 9 0 Virg ini aft 02/19/90 Virginia"

12. Time and Motion Studies (17" x 22**) of: (a) t'suzie Superstar" (b) "Glitter" (c) "Private School Girls" (d) !*Virginia" (e) "Summer Camp Girls" me above Time and Motion Studies are being sent under separate cover, and will be delivered by James J. Clancy in person. 13. photo-reduced Xerox copies (8 1/2" x 11") of the and motion studies of: (a) "Suzie Superstarut ( b ) "GlitterI' (c) "Private School Girls" (d) Wirginia" (e) '%mmer Camp Girls"

14. Photo-reduced Xerox csapries (8 1/2" x TI*) af fow [4) time and motion studies of si.~~taneousSUrVei~lSELCeS in Hiagztra County, New York and Los AngeLes, California of "Suzie Superstar" and "Glitter" during March Qf 1988, l 15. comparison study of versions of "Suzie Superstar" as shown on Exxxtasy Channel and the Wedo Channel.

"Virginia" is to be broadcast again on February 19, 1950 - 10 days hence.

Included in the above transmissions are copies Of t52 surveillance recordings which I made in Sun Valley, California, of two Colleen Applegate films broadcast by Exxxtasy Channel (s-1, ch. 18) (within your statute of limitations Period of a year) : "Suzie Superstar,' March 20-21, 1989, and "Virginia," n-C-I--,- 17 1989. .

I request that your grand jUrY consider these transmissions to Montgomery, Alabama, and that the copyright holders of these films also be named as aiders and abetters in the obscenity crime and co-conspirators in the conspiracy crime. See copies of copyrights enclosed. Certified copies of the copyrights can be obtained from the copyright office. The signature of the applicants is admissible evidence (admission) and is all that is re-jred authorize extradition form California. ~elatf.veto your proposed letter to U.S. Attorney General Tho,mbt.rgh requesting that the S-I, ch. 18 broadcast of "Vf-xginia" on February 19, 1995 be enjoined from broadcast to %amtqmery Cou~ey' Afabma, 1 particularly invite your attention to my letter dated July 21, 1988 to U.S. Attorney General Meese [see page 1, paragraph 1) and my more recent request to the new F.C.C. Chairman [appointed by President Bush), on October 27, 1989. On that date, I and Los Angeles Archdiocese Commission Chairman Dennis Jarrard met With F.C.C. General Counsel Robert Pettit in Washington, D.C. and personally delivered a letter and a time and motion study of the film "Virginia* and videotape surveillance copies of the Tuxedo Network Satellite broadcasts in LOS hgeles County and requested that the future showinss of that film on the Exxxtasv Channel and the Tuxedo Channel be enjoined.

See copy of my letter of October 27, 1989 to Robert Pettit i [enclosed) at page 2, paragraph 2. l

Sincerely,

lancy W v JJC/cac end. February 10, 1990

I&- James Evans Districk attorney of mntgomery County P.0, Box 1667 Montgomery, Alabama 26102-1667

Dear Mr. Evans: As a complement to the criminal process which you are presently consideqing against the satellite broadcasts of the Exxxtasy Channel (S-1, ch. 181, I would like to recommend that you consider applying in tandem the civil remedy of injunctive and declaratory relief. See, in this regard, the enclosed complaint which I drafted in 1988 for Niagara County District Attorney Peter Broderick's Office. A bound volume (3/8" thick) of that file is enclosed €or your study. In view of the fact that Karen Applegate will be giving testimony-to the Grand Jury on Tuesday, February 13, 1590, should examine immediately Exhibit J of the enclosed proposed comDlaint which contains the transcript of the 58 minute dockentary. film: "Death of a Porn Queen.'' That documentary provides a narrative account of Colleen I. Applegate's introduction to and parAicipetion, in the production , I of pornographic films from age 18,to her death at age 20. A videotape copy of the documentary film is also enclosed for - viewing by the grand jury. There are several distinct advantages in your employing the civil process and the long am statute in tandem against these foreign corporations. For example: (1) a good result in a criminal case can be short-circuited by a bad trial judge or a bad appellate court decision. Generally, such errors are not appealable in a criminal case. ahe civil determination, however, authorizes aa appeal and is certain to have a good final result;

(2) Niagara County District Attorney Peter Broderick, other law enforcement officials and citizens who are interested in law enforcement in this area could join you as 'plaintiffs in your state civil action. The Los Angeles Xrchdiccese codmission on Obscenity and and the ~~ - ~------.. - .. . - .-~. .- - .. - -_.. - --.- ~ -~ __ __ ~i -~ " . - .. -. -. . .- .-- ,*.e . . . ~.< ~-

~. ~ - * .- -. -. ~ e .. ~ -- , ~ ~ ~ -.. i- .. - - - - - ~ ~ - -. -_-_ -~ - -- ~~ ;i

-Catholic Knights of Columbus could entertain joining YOU in .-. your-lawsuit, as could Karen Applegate; ~. (3) In addition, a campaiF for ffnancial contributions to support your civil litigation would Lake additional funds available and would provide the means of defraying the County's cost of enjoining what, clearly, is a federal public nuisance.

. .. .. " -..., ..- ~t~.. . . JJC/cac. .. encl. companies t :S;IOXK*3MERr, Ala.

Minn., said ~someof the movies /-'e /-'e Connor. vice president_._-.. madeby-~rdaughter.Colleen.~e -$ZlVenising'and, promoll il+€ho+fR. orAe7&x%-&sym. _. __ &me Dish Satellite Network. de- -- rged the charges. '. "The only redSon i'm here b to ' I "The movies that we broadcast. get ridol(mydaughter's) filmsand '------I,--hwp r.xer been , stop the men who use her." she.. ../ : R?&z naitzkahing his 'cUenG hdao"k.iWul intention or abili- ty Io violate any-local. state, ar Fedeial statute" on Mr. Screws said the F-O~DW

broke the. contract b.ecau&~~~ ~~ df ,&e indictments. :.:. . .. "US. Satellite assures citi (that) we regard our rep

khether (Home Msh's) mate"& !are indeed -ilIeeal." said !& $ckws who was-reading repared statement "US. Satel. 3te. aner a careful.review. hE elected to act promptly to hmi- hate its contract" - *. Montgomery County Ditrict Attorney Jimmy Evans;who an- pounced the indictments, said to- day that he was not Informed di-' iectly.. by U.S. .Satellite 'or their. move and that it was not'* of a'plea-bargin agreement 1 ':'We have insisted that we are: gbing to enforce the law. and2! .are sWI on the mode.'' Mr:Eu 5 c

their own discretion." , Along with the two comphes. CTE Spacenet Corp.. the owner fthe $atelUte used for the trans- &ions.. and its parent cqrpora- &,aJeneralL. Telephone. and @,ec mcs Corp , have been, in- @@$.e@?wabcalgandjury. 4 i

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hut@6texs wt ~ pW" . 1.. ' :.: . ~2 be rrli ask a ~ontgomrrg :(lYmq grand jwj for mare indict.. :men& against, RQQK Dish and any upliok and satellite eompanier.. which -carryitsprogamming. , ..

\sent off Lhe air Feb. 26 after a Utab 'company, U.S. Satellite Corp.,

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. out ofbuin&.,.-(.i ., ..< .'-:: ..'.;-I;, ![ It is fa?ing criminal charges in what lawyen say is the first case h which local obscenity 1,aws are being applied to programs car- ried nationwide by satellite tech-

cers. who have never set Iwt h To: James J. Clancy ACmney at Lw From: Cam1 Sant 9:11/01 Om 24 Pzge 2 of c Sent by the Award Win0ir.g Cheyenne Bitware to Acquire 3 Hard-core PmChmnels Page.1 of3

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...... I ...... Home I Xegister i Home Delimv Sits h3ao Archives ; Print Edition I .4dvertise ! _F ! ~ ..

. ... .- --- msrket dmtomare eqlicit upstarts. SALLIE HOFSEEISER and K4LPH -,A -. FIW\ihf@LfiO. TINES ST.IFF WRITERS, Thes Ileadhes 111 - ...... Expandin%into the h-dcore pornography 2.l business. ?layboy Entcrprijzs Inc. has slnick an agreement with \.-anSuysbased Vi\

Ph$o> spckesman Scott Barton would not commertt Friday. Vivid executives did not refurn ..... - .- .- ... , -_- phone c~!ls.The ded. which is expected to be ,.. __. - announced !,Ionday, \vould bolster Playboy's - '111 lead in the adult telsision business. Playby -- curniitly OWIS three so&-corecharnels: Playboy ,. I! W and mo Spice networks. In the last thee .A ~ .- years. the company has been losing market share I id ...... I1 to nex bad-core channels inchdins the three it a has agreed tw buy from Vivid. 1 Sections

.A#tmp&g b hescnion of i& channels by the upstart?.. Pla>boy lust year is ta enter he hard-core television arena. But it has 6oursd Wesuppi t;or &e ttmc proposed Spice Platirmm ch;mnels. No ubk m sateilite Opaators have agreed to distribute Playb$s new channels, in large part becnuse they already have deals With competitors To: dames J. Siancy Attorney ar Law From: Carol Sann i Sent hwara Viinning Cheyenne fiihvara I by tne Plavbov.. to ;Icquire 3 Hard-Cor? Porn Cliatuuiels

"\....."" . .. I... Wall Street analysts have speculatzd that die chilly raceptioa by distributors would fcrrcc Playboy to buy one of its new competitors.

The terms ofthe deal :ouid not be learned. but industry sources and analysts es+te the &re channels could bi. worth more thm SJ3 million. Yivid does m &ihunckd fi3u~sbecause it is privately held.

Playboy pasd upa to acquire what is now hnown as .he Hot N&w& far a ofbe price when it bought onz-time rival Spice EnteTtaimnent Cos. forSP37aadIimin March 1999.

hstead. Playboy took control of only Spice's S-rated television operations. , , The company sold off another potentially controversial chamel, Spie Hot. to a new company called Calif3 Enrmtainmsnt. Califa is owwd by Vivid p3hRS.

Unlike the S-rated channels, Spice Hot \vas a pionezr in.TiY-rated movics for TV depicting actual sexual intercourse. The cbelwss from the start more than twice as popular as traditional soft-core porn among cable and satellit2 customers.

Playboy loaned Califa,all bur 6500.600 5fthe $10.5-1nillionsale price, bur .. __ - -_ retnined an option to buy the chmnel back in March 2002, accoding to public filings. It negotiated to exercise its option early. In addition Playby S.ibscripti@n agreed not to launch a competing x?; channel and licensed the hard-core Senices versions of its movies to the new channel, nhich Califa renamed the Hot Network.

Since die& Hot has grown significantly, psrtly because of distribution agreements with DirecTV and AT&T Broadband, the leading satzllitz and cable providers, respzctively. The three networks in the ddreachabout 30 million cithe nation's 85 million &!e and satzllite homes.

- For infoimation about reprinrtng this article. go to

.. , .... : .;-:. ... . ~.!:... ..~ .~ ~ From: Carol Sann 9,11/01 041.58 Page4ota T" inrne~.I Clancv Anornev ai Law Page 3 of 3

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Taesday, July 3,2001

Playboy She&%'Gentleman's' Cloak, Bup 'SS' TY Ch;innels Media: Its plah to add explicit pro-mning mphasize dtz gowhg tobnce of racier Tt'.

Playboy Enterprises Inc. on Monday moved to presmx its role as America's dominant purveyor of sex on television by bringing more explicit movies into the lkkg room. The Chiqo-baszd company agced to acquire lhr.2 -%-rated sex cllanne!s km the owners of Va,n Nuys-based Gvid Video, one ofthe largest producers of porn movies: for $70 million. Thtransaction, 3s Die Times reported S3turday. V;iU put Playboy far out in front of Sew Frontiipr Media Inc.. which will become the only other significant adult tdelevision Fr0g-C. The move is B departure from Playbo)" carefully cultivated iruage 2s a "gmtlmads" brand. The &e channels it is acquiring--Vivid TV. Hot Iietwork and Hot Zone-carry nore extreme progamming than an-g on Playboy's three X-rated networks-Playboy TT', Spicz acd Spice 2. Playboy's btegic about-face underscores the grossing acceptance of racier sex on tzkvision. Hard-cor2 pornography has become increasingly poplar and hugely, profitable for satellik and cable opfraton: forcing Playboy to give up its singular devotion to soft-core programming. Mondays deal "drmtically expands.. the number of US. television households that T> - ~-4... tt..y"~.-.~_. . a,lr.ylt: n,wfhonc IIF .!c the !dy>l,ndkr srf I: rlno? 9f dnh ... - - m " aajlj Chnstio i&k,Phyboy's 48-year-old &ef executisk in 9 amb~mcea piillbe ab& b sxw [ow] constitukies bettsr, by p;roC&g a r;qoi'non\kd do&&at demand." E3 fbix3g Eo. tht Fbglay of ?he sed ~~f~~~~~~~~~ 50 Yeus ago with the uarifyn M~EDZmqpk cmW. Thc eommalso is to protect irs sta~bwines.tr hewicnPhyf&s thgship magaim and ikfledgbm- In~operatimml*~. ,- Many indusm expw said Playboy ~vaalosing ground to upstarts that are fwt, To: James J. C:ancy Anorney at Lzw 9/11/01 0:50.10 Fage3of5 Sent by the Award Winning Cheyenne Bihvare LA Tima Page 2 of 5

redefig adult televisiol: wid1 emmely hard-core channels. "Playboy had the ad1,ulbge of a brand name and 3 lot of real estate on cable," said I& B&-Paltner. a Denver-based programming consultant and cahle industty veteran. "FM U~eymissed be rndet. Thev Rere becoming marginalized." CInistie Hrfnu dalinsd to be iutzn;iewed for this report. But her father, Playboy huader fiu@ Hekcr. said kbss 00 regrets about the companys late eug. to the hard- o(Ec-. ave:" Heher said last month at the i5th Id at his mansion in Holmby Hills. satellite and company executives. of Plavboy--k ptective of the about pushing &a gnptrif fire. One forrner en@q%s said Christie Helker describes Ihe company as a "Disney for pwn- ups." "It stems Eom somiq 0111 of the Midwest." explained Jim English, president of the Bmerly Hills-based Playboy Television Nehvorks. "You wouldn't want to go to a cocktail party and hzve wmeone come up and say, 'I hear you're making porn movies now'!' ICs OK fov?mz. but not for Christie." Once a pioneer in breaking se.wal taboos, Playboy became so comfortable with its own brand of 1950s "stylized eroticism"-symbolized by the ubiquitous bunny logo-tbat the Helker zmpire failed to keep pace with ilmerica's growing appetitz for more graphic porn on television. --:.wA~,2L:..*Tbeline between mainstream and pmgral;hy,hisblurred. Porn stars date rock ~;FL=:xu~;~Lsu~.~-,.., stars. chat ou radio programs 2nd appear on album covers. R-rated films veer into X- rated territory. Television tilts toward the risque, &om bare buttocks on "WPDBlue " to the bed-hopping antics of HBO's "Sex in dis City." "Playboy has a!\vaya bezn the class aci. more crzative nnd thoughfil," said Lq Gzrbrandt, chizfcuntent officer at Lagan World Media. a market research fml in Cannel. "But that's not nzcersarily what people wantd. The company has suffered for not plunging into dirtier waters." Satellit? pro\Fiders such as DrsTV and EchoStar Communications COT. have been dingXY-rated pay-per-view movies for at lessr two years. Some major cable companies have smrred cqing=-rated channels in the last year. .b.d one ofthe last and largest I?oldoats. AOL Tile M7arner Inc., tie nation's secmd-largest cable operator. is expected to change its policy against carr).ing =-rated material within the next.. ywr. accwding to sources close to the company. -Cable and satellite sales of adult pay-per-\ies programming are expected to nedy double by 2005 from S465 million in 2000, according to Kagm World Media Satellite operators have qpessively devoted pay-per-bierv channels to .XX-la'red movies, leading inany cable operators to follow suit These movies show htercourse. oral sex and close-up shok. Triple3 shows are more graphic still. The x-rated ''soft porn featured by Playboy is characterized by nudity, wide- and medium-cmera shots. ' .,, ., &lrlrl,wp -Y*lU a=. Yd.i err, -:

Hot adHot heat S28.3 tniUion--ntarly thtlrc thzs \that Playbay sold kin for in 1998. nE trlsvisjon busurzss ir the l&&loc.d of Playbo).. Tiiz three C.S.chmels account fw k hulk cf thc revenus in its mtwaimnent p~p.wvhich was thz only profitable dkiskn in ths firs

rdksnia tk yew-eadicr paird. Thc Spice acquisiFi00 allowed Playbay to increase ,, w-mm: eveit as rmvtilors such as Hc4 @ed market slim. The continued expansion on cable adSadekpz afPlsybo~3he chaantlls abheipzd sustain revme IeveIs. .Uthough %s magzine still ranks among ths ostica's top 10, its circulation has droppzd from o peak of 5 !nillion in tk early 19SOs to 4.3 million thy. Lately, h magwine has suffzred from an industpwidr advr?rtisin?snd subscription downturn, losing $1 million in the first quarter. compared \vith a S1.G-million profit3 year earlier. But publishing isn't losing nearly as much money as the compaq's foray into c!berspsce. Though 'Ahll Stre$t considers the Internet il key to Pla.bo?;'s f.mre, the company's push large!? \\'as responsible for a companywide opcrahg loss last yest of $16.9 millioti.~ ' Playboy shares dropped to a low of S8.38 iri latz December from a high of S29.81 in 1999 in large part because of increasing losses. The stock bounczd back Playboy cut Intmet spndinp in the fust quarter. 5;) ~ as rllarply 17 :;*. :. : Mer a 26OA rise this year?Bares inched up $1.33 on. Lionday, to close at 17.50 a &share. Initially, the prcsp:cts oIPlayboy going hardcarc troubled some najor cable optors.Telz-Coimunications Inc.. the nation's most powerfui cable cornpimy bzhre its sale two years ag> rc AT&T Corp., pressured Pla>boy to tone dowi the SS-rated Cpis channel hopizg to diminate my regulatory rhreat or migntisn to harder-core movies TI!* cable iiidi:s@ $511 has a love-hate relationship with adult progratming, which one insider calls the "ssmet hiddm asset." Arhoirgli porn is e touchy subject, no r;h-ision executive disputes its high profit margins. Few cable or satellite T\' cltzcutives acv;illing io nlk pblicly abaut adult Frogamrning for fear ofinsiting criticism &om mveston. subscribers and pliticians xho might revoke their licenses. AT&T came under fie frcm som: shareholders this year for rehsing to disclose the profit it earns from pmi pogamming on its cable systems. The sharsho!dns peritioned be Sscurities and Exchange Commission to ordar ths pinoue giant ta disclose the profit. but the SEC ddxxd. Adelphia Communications Corp.,Southern Cnlifomia's largest cabls provider, refuses to cany any adult cblsbscause its founder and chief executiw, John Rigas, kiicves it is immoral. 1. . . \...... ' J. I ., . .... '*, .. . . .*i-WU.iio.wr.. p.-*: -.i*11,*-11 ,..I >-,v,,-*- *L.."Y.b+."'.Y.uL - .,.... "1.4- iate '%Os, wlmpa?;-pw-view tduxhgy made it more secure. , .: *. Rm&n.y will r& chri~kHeku ssja in &e Xo&y dLTm of& Vivid channels will be raamed Spice 50%m3 Spice &me. Tine: lsorr @c \%id T\' will k renamed Spicz ?k&nim Live. ?h$&rais PIa>tmy will absmkm a yead- e&* to launch two hard-core movie dmnels of its ow of a lack of inzrest among distributorr which saw them 3s - redundant. .:, TJ: James J. =:3ncv AUorneyar Law From: Car4 Sann 9/!?iO1 3.51:14page 3 of 5 Ssnr by :le A,var+ 'hiinling Cheyenne BiWare 1.X Times Payc 4 of3

nc colnpmy will tiiovz forward with a new live forniat that will drzw content from the Ititsmet and be host4 h\- Jmna Jmzson a leading porn star who is under contract nith Vivid. P1aX:bov officials arc acc~rdya~ace of thz success of new hard-core rkals. "&\vi bowthose uwbas?Ye." Fa&& said. "hsit indicate that the public's taste & acceptabiiity of- 4 tmS changed? Yes. So 'yedad 'y~s'equal 'got ro do Jnmreg.8'* Fmdistributarkae- pni Ins tht: hi$& profit margins in the payer-

by p1pyh-& amapetitors -active terms pdywere the result of fierce wmpctition among Vivid; P!ayby d New Frontier. as well as the low cost of piadusing porn. Lntimatelv. Pla\.ho);'s acquisition "is about generating revenue adprofitability and maximizing shareholder \slue," said Uark &doff. president ofColorado-based Yeti, Frontier. which onns the only LV-rated channels. "This programming dis. It ~iil always sell." : *** Ties staff writer P.J. Huffstutter contributed to this report *+* c*

Playboy's Problem Playboy Enterprise3 hc.,whose founder, Htqh Hcfner, helped launch the sex~ialrevolution ofthe 19GOs, finds its television buuiness--its most profitable division--undw siege. .aer deciding not to enter the hard-core segment nearly trvo vasago, heconipanv did an about-face hionday and purchased tluee hard-core ~hannelsfrom the or&ers of Vivid \:ideo, which quickly &came one of its largest competitors. Playboy Chief Executiv? said the deal positions the canpm? as "the leading supplier of a range of dult entertainment."

Porn continues to gain popularity ... Satellite and cnbk operators espect pay-per-view revenues from adult TV charmels to nearly double over the ne?b five years.

2006 (estimate): S945 flon ... but Playboy's cornpnnpvide revenue has stalled and profits have ercdzd.

Net&, in lnifbm

2W:W.7 m&kn Net~hm?a!m

. .. .. TO:James J. Clancg .%iarney at Law From: Carol Sann 9111/c1 J.53:C2 Pege6ofS Sent b!, tie Award iVin?ipg Cheyenne aitmra LA Times Page 5 of5 ..

.\fler a spike in 1999. the company's stock price has fallen back to 1998 levels.

1f0ntMy &m and lntest for PLi

Monday: S17.50 sanres: Thus Bieambeq News firg.n World Xfedla * **

The Caw Porn 3imket Em's P look at thd biggest playm in the cable porn indusv. Pbyboy announced SEailday that it is buying Hot Network, Hot*** Zone and Vivid R. !dillions of households rcached in 2000 through cable and satellib and the year each belbegan: *** Playboy 29.6: Playboy TI' (1982) 16.5: Spice (1999) 46.1 total - . *** Vivid 16.0 Hot Netwurk (1997) 10.0: Vivid TY(l999) 10.0:Hot Zone (1999) 36.0 total *** New Frontier 17.5: Pleasure (1999) 6.8: TeN (1998) 2.4: ETC (ZCOO) 26.7 total Source: Times research

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