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Cybersmut and Debt ^ Undermine Penthouse

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Cybersmut and Debt ^ Undermine Penthouse jSctu JlorkStmeis MONDAY, APRIL 8, 2002 .leeS' Cybersmut and Debt ^ Undermine Penthouse 1 By DAVID CARR \ Bob Guccione, the publisher of Penthouse, fought for decades to introduce pornography to mainstream audiences, succeeding, he may have built a gallows for his once ^rM B? A hugely successful magazine. Pornographic images of every iSSyi bent are now just aclick away on the Web, often atno charge, and Penthouse, which once sold almost five million copies a month, now has a circulation of 650,000. The auditors of Mr. Guccione's debt-ridden company. General Media, the parent of Penthouse and affiliated enterprises, stated in its annual report that the company would not be able to meet interest and amortization payments of almost $13 million this year on loans that carry a punishing 15 percent interest charge. General Media's liabilities exceed its assets by $22.3 million, and if it fails to meet its payments on $52 million in debt, its trustee, the Bank of New York, "could assume control of the company," the annual report said. Calls to the Bank of New York were not returned. Mr. Guccione, 71, acknowledges that the run of Penthouse magazine is at an end. There is "no future for adult business in mass market magazines," he said. "The future has definitely migrated to electronic media," he said, adding that he expects to be part of it. That is a breathtaking acknowledgment for the man who vied with Hugh Hefner and Playboy in the race to cash in on the American male libido. According to Mr. Guccione, Penthouse Bob Guccione, publisher of Penthouse, says he believes that grossed $3.5 billion to $4 billion over the 30-year life of the company, his brand of pornography may be on the way out. A heavy debt load and failed ventures have not helped matters. Continued on Page 9 V Lybersmut and CrushingDebt Undermine Penthouse Magazine's Decades ofSuccess parcels, with the proceeds being used Continued From First Business Page Paula Jones (twice). to pay down a $28 million loan from Mr. Guccione's publishing practice Kennedy Funding of Hackensack, of objectifying every body part of a with net income of almost haJf a N.J, Calls to Kennedy Funding were woman save her tonsils, along with billion dollars. not returned. his penchant for massive gold Jew Unable to speak publicly because The enormous misstep mny have elry, positioned him as the more of the effccts of throat cancer, he been just one more ill-advised effort transgresslve half of the duo of Hef- answered faxed questions from his to diversify, but the explosion of por ner/Guccione. But he was conserva 45-room, 17,000-square-foot town nography on the Internet In ever tive In his personal habits, choosing house In the East 60's of Manhattan, more customized ways may accom not to drink, smoke or use drugs, and one of the largest private residences plish what the Meese commission on he was a devoted husband, according In the city. On Thursday, the house pornography, the Rev. Jerry Falwell to friends and associates.. was put on sale for $40 million, ac and Andrea Dworkin, the antlporno- In the mid-90's. Mr. Gucclone re cording to a real estate broker. Some graphy activist, failed to do: the sponded to the growing threat from of the $200 million in art work Mr. shuttering of Penthouse. digital pornography by making his Gucclone has collected — Including magazine even more explicit, depict works by Degas, Renoir and Picasso "I'm delighted that Mr. Gucclone may be going out of business," Ms. ing various sexual acts. The change — have been pledged as collateral did not please newsstand vendors, against business and personal loans. Dworkin said. "The problem is that he is being replaced, quite possibly, and what had been a mainstream For three decades, (he effusively publication became a magazine by something that is much worse." decorated house served as a head whose distribution was often re quarters for Mr. Guccione's far- Mr. Gucclone stumbled into the stricted to pornographic bookstores. Hung interests. Neither satisfied by The loss of newsstand revenue was nor ashamed of his status as a por- critical, and circulation decreased 33 nographer, Mr. Gucclone sought to percent from 1997 to 2001, according wriggle out of the pigeonhole and A once-prosperous to the company. The publication was overreached In the process. His ef never advertising driven, and the forts at more general Interest maga publisher circulation decline led to a net loss of Jack M>nnlng/T)w New YorV TImn zines — Omnl and Longevity — $10 million last year, compared with failed. He spent millions an an unsuc overreaches. a net income of $5.5 million in 2000. In 1973, Bob Guccione chose photographs to be used in an issue of cessful attempt to develop small nu The company has cash on hand of Penthouse. At the time, the magazine was a serious rival to Playboy. clear fusion reactors, financing a $2.4 million, down from $6.4 milUon team led by Robert W. Dussard, a in 2000. business to begin with. He was bom father well. A longtime business associate said nuclear scientist. "In the end, the decision to go In Brooklyn and wandered Europe as Ms. Keeton died in 1997 after a that he was still waiting for Mr. j "Those kind of mistakes can be hard-core is part of what brought an artist In the 19S0's and 60's and long fight with breast cancer, a loss Guccione to pull, if not a bunny, devastating," said Larry Flynt, pub Penthouse down," said Dian Hanson, worked as a journalist in London, that associates say had a profound something else out of his hat. lisher of Hustler. "The secret to my a former editor of Leg Show, an adult effect on Mr. Guccione's business success Is that I stayed away from before noticing in 1965 that Mr. Hef "People have counted him out magazine, who is now working on a and personal life. She is still listed on what I didn't know." ner's Playboy was storming the two-volume history of the men's again and again, and Bob always newsstand there. After a shoestring the masthead of Penthouse as presi Mr. Guccione's gamble on Atlantic magazine industry. "Penthouse had finds a way." the associate said. Introduction in England met with dent and chief operating officer. City was probably his costliest. In a name and a reputation, but when By fax, Mr. Guccione manages'to spectacular results, Penthouse ar Penthouse, which had been on a 1978, he announced plans for a $200 people looked inside, they were sound realistic while still posturing rived in the United States in 1969 and long, slow slide in much of the 90's, million casino at a site on the Board shocked at what It had become. Once as the unrepentant sophisticate of was a hit. seemed to go off n cliff after Ms. walk. He never received a gambling they went hard-core, they lost a lot of old. Working with his wife and lifelong Keeton died. With a declining fran license, and the four-story steel their placement at newsstands. "As far as our liquidity issues and structure sat rusting for 10 years business partner, Kathy Keeton — a Men's magazines are an Impulse chise in adult publishing and crip the auditor's 'going concern' opinion, while an elderly homeowner. Vera classically trained ballet dancer buy. It takes a lot more determina pling losses from his attempt to build we are not sticking our heads in the Coking, held out and stymied him. from South Africa who was a star on tion to drive to a windowless cinder a in Atlantic City. Mr. Guccione sold sand." Mr. Guccione said. "Although Mr. Gucclone switched his efforts to the European exotic dancer circuit block building out on the highway off a group of automotive magazines a joint venture with Ramada Inn to — Mr. Gucclone offered a darker and than picking up a magazine while in 1999 to Emap Petersen and used I can't discuss specifics, suffice lo develop a $140 million luxury club more overtly political appeal to male you are out buying some milk for the $.10 million in proceeds to reduce say that we are addressing these near the entrance to the city. That readers. In addition to depicting your family." his debt. Under the leadership of Ms. concerns and expect to be in business fizzled, as well, and he sold both nude women In more explicit poses. Over at Playboy, the next genera Keeton, Penthouse had moved ag for years to come." Penthouse, "the magazine of sex, tion of adult entertainment is being gressively Into digital technologies in But given the scarcity of profits, politics and protest," as it describes handled by Mr. Hefner's daughter, the mld-90's, but the explosion In the ubiquity of a formerly precious itself, was among the first maga Christie, but even though Mr. Guc sources of pornography has gradual commodity and the preponderance ON She web zines to recognize the plight of Viet cione's daughters and a son work for ly reduced revenue from electronic of his debts, one of pornography's nam veterans. His blithe willingness General Media, he had a very public businesses. Revenue In the online emperors is a little short on clothes. The Times on the Web offers to use exploitative Images of nude portion of General Media's business falling out with his namesake, Bob "1 think it would be shocking for a free daily newsletter, Deal- women Infuriated feminists and con was down 30 percent last year, lo less Gucclone Jr., after financing and something as large and well known Book, with news about merg servatives alike.
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