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PENTHOUSE TO EXPAND INTO TV, WIRELESS PLATFORMS

Raises $48 Million to to Challenge Playboy in Softcore Porn Business

By Published on . 0

NEW YORK (AdAge.com) -- The Penthouse Media Group has locked down $48 million in private financing to pay for an expansion into TV and wireless delivery, potentially reviving the formerly rough-and-tumble competition for soft-core porn profits.

On-demand and subscription TV
Penthouse said it will use the new money to build multiple high-definition on-demand and subscription TV properties in a direct challenge to Playboy Enterprises, which operates Playboy TV and the Spice channels in the U.S. and abroad.

With new ownership, management and funding, Penthouse will bring a much-needed shot in the arm to cable and satellite and will set the stage in new arenas such as wireless, said James English, vice president for entertainment at Penthouse and former president of the Playboy Entertainment Group.

A Playboy representative declined to comment.

Playboy's successful division
Like many magazine publishers, Penthouse and Playboy are now both betting that their brands and content will perform at least as well on TV and in other media as they fare on the printed page. Playboy has paved the way, posting net income of $21.8 million at its entertainment division during the first half of the year. (Its publishing unit lost $2.7 million during the same period.)

Penthouse, which was founded by Bob Guccione in 1965, filed for bankruptcy protection two years ago and emerged as a private company led by Marc H. Bell.

We have changed the magazine dramatically, said Mr. Bell, now the CEO. Its no longer a hard-core magazine. Its back to being a mens magazine. A number of advertisers have joined or returned to the book, he said, citing Caswell-Massey mens grooming products, Windjammer Barefoot Cruises and the Iceberg and 3 vodka brands.

'Penthouse': Advertiser friendly
Penthouse now hopes to use the revamped, more advertiser-friendly magazine to drive consumers to TV properties, as it already does for its Web sites. Were building a lifestyle brand, Mr. Bell said.

Penthouse had an average paid circulation of 355,698 during the first half of this year, down from 400,229 during the first half of 2004, according to its filings with the Audit Bureau of Circulations.

Playboy claimed 3.1 million in paid circulation during the first half of this year, about 35,000 copies shy of its rate base -- the paid circulation it guarantees to advertisers -- and down from 3.2 million in paid circulation during the first half of 2004.

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