The move is yet another indicator of porn’s attempt to include itself as just another aspect of mainstream pop culture.

"We’re in the middle of a brand reinvention," said publisher Diane Silberstein, who was looking for new marketing ideas and outside resources at the convention of the Association of National Advertisers in Orlando, Fla., last weekend.

Mark Edmiston, managing director of AdMedia Partners, a New York-based magazine acquisition advisor, said he believed Penthouse had a chance of succeeding in its new guise. "It does have a good shot because Playboy seems to be doing the same thing it’s always been doing and it’s not been all that successful in attracting younger males." He said. "This could be the next step after Maxim."

Until 2004, Penthouse was the generally regarded as the poor man’s Playboy. Its pictorial content was generally more graphic and less "classy" than that of Hugh Hefner’s dominant brand.

With the rise of the Internet in the late 1990s, adult entertainment consumers drifted toward the free images that became available in the privacy of their own homes. All the major adult magazine brands—Playboy, Penthouse and Hustler—suffered massive circ and ad revenue drops. In the last few years, however, Playboy and its ilk have poured resources into online, DVD and pay-cable efforts; bricks-and-mortar club, hotel and casino venues; and various licensing plays.

The three dominant brands suffered different fates in the shakeout. Playboy fared the best, as Hefner reinvented himself as an ironic nostalgia icon and his empire saw growth on Direct TV's pay-per-view channels. Hustler, under the iconoclastic, wheelchair-bound Larry Flynt, opened a chain of adult stores and maintains a strong DVD line.

But Guccione’s Penthouse went into bankruptcy in 2004. He was forced to sell his enormous New York mansion, on posh E. 67th Street, which he once listed as worth $100 million. (It was back on the market this year for a more modest $45 million, according to Forbes.com)

The brand was bought by private equity group Marc Bell Capital Partners. The new Penthouse, which has continued publishing, has bulked up on pop-culture content, and features guides to music, movies, video games, and so on. The pictorials still feature complete nudity, but they are considerably more airbrushed and coy than they were under Guccione.

It’s also had a redesign, giving it the slick, modern look of an entertainment book rather than a skin rag. Silberstein’s vision of the brand is that it will offer the excitement and luxury of an actual stay in a Penthouse suite. Licensing deals for jewelry, lingerie, adult toys, and liquor and water brands are in the works, she said.

The goal, Silberstein said, is to become "coffee-table acceptable." She said brands that previously would never consider advertising in Penthouse are now giving the title a second look. New advertisers include Jose Cuervo, Maker’s Mark and Lifestyle Condoms, she said. The current circ is 366,000, she said.

In terms of marketing, Silberstein is sitting on a $500,000 ad budget. She is currently looking for an agency to spend it, she said.

More ...

New Publishers Bring Changes to Porn Magazine, Penthouse

Palm Beach Post, 9/4/05 - Two men in pinstriped shirts. One flat-screen TV tuned to MSNBC. And desks so crowded with family photos their offices resemble shrines. They look like stockbrokers, but Marc Bell and Don Staton have a more sizzling vocation: They're the newest publishers of Penthouse Magazine.

From a low-key office in the Arvida Park of Commerce in Boca Raton, the pair plots a remake of the pornography periodical. Since they took over nine months ago as co-editors and publishers, the magazine already is sharply different from its hard-core porn past. Articles are more mainstream and touch on young men's pastimes, such as computers, cars and sports. There are still plenty of pictures of naked ladies, but they're not engaging in sex acts anymore.

More changes are planned: This fall, Penthouse will start featuring a celebrity on every cover. First up: Basketball badboy Ron Artest. He's the Indiana Pacers player who threw punches at fans during a brawl last year. In one mock cover shot, a grinning Artest is surrounded by three partly-clad women.

How did Penthouse wind up in Boca, in the hands of two preppy millionaires? After all, this is a city more known for nipping-and-tucking skin than baring it.

Penthouse started out as an investment for 37-year-old Bell, a Boca Raton financier and whiz-kid Internet entrepreneur. Last year, Bell and Staton bought a big chunk of Penthouse's debt after the company, founded by Bob Guccione, filed for bankruptcy protection. The pair had hoped to flip the debt for a quick profit. But buyers didn't pan out and they ended up stuck with Penthouse's bonds.

It was either lose a $50 million investment — or try to bring back the business. They chose the latter, and so far Bell's pleased. Only a few months into a remake to tone down the skin mag's racy content, the magazine is turning a profit, Bell said. An audit by the Audit Bureau of Circulation shows circulation up 8,000 since January.

More changes are in the works. Bell will move the company headquarters into a 180,000-square-foot office building he plans to build next door in the office park. (The bulk of Penthouse's 100-plus employees will still work out of the company's Manhattan office.) Plans are in the works to push the magazine's brand, especially overseas. Bell said more company announcements are expected soon.

It's clear that Bell and Staton see themselves as businessmen, not pornographers. "It's a business, like any other business," Bell said. "I'm the same person, with the same friends for 20 years."

Indeed, both men are proud of their past business exploits. Bell, now managing director of Marc Bell Capital Partners, a private investment firm, is best known for founding Globix at the age of 21. Globix is a successful Internet services provider that's raised $1.4 billion in public offerings. And Staton, 52, is a real estate developer and venture capitalist. A Delray Beach resident, he was the former No. 2 executive of Duke Realty Corp., a leading builder of downtown office space in Cincinnati. Staton's also been a producer of various Broadway shows, including The Producers and Hair.

Staton's also a financial backer of certain politicians, most notably, the current sitting president. He proudly points to a photo of himself flanked by George W. Bush and wife, first lady Laura Bush.

Not every politician is happy to be linked to Bell and Staton, however. Earlier this year, Tom Gallagher and Charlie Crist, both Republican candidates for Florida governor, gave back contributions received from Penthouse. Bell said the move was "disappointing, but understandable."

But neither Bell and nor Staton is losing sleep over it. They're already on the hunt for new deals. One possibility: Buying the Cincinnati Reds Major League Baseball team as part of an investor group. "We've expressed an interest, and we may be considered a frontrunner," Staton said coyly.

Both men say they don't plan to own Penthouse forever. In the interest of family harmony, that might be wise. While both Staton and Bell say their wives have been good sports about their prurient pursuit, "they'll be happy the day we sell it," Bell said.

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