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The End of the Line for Penthouse?
« on: Jul 22nd, 2003, 2:52am » |
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The End of the Line for Penthouse?
The once high-flying skin magazine may soon cease publication. Even the mansion is at risk
By Seth Mnookin
NEWSWEEK WEB EXCLUSIVE
July 18 — Penthouse Magazine, long a staple of adolescent fantasies and a favorite topic of discussion for Howard Stern, could soon be disappearing from the publishing world. What’s more, by next week Penthouse founder Bob Guccione could lose his fabled Penthouse Mansion, a century-old residence that is one of the largest private homes in Manhattan.
PENTHOUSE EMPLOYEES ON Friday received only 25 percent of their usual salaries, according to several employees at the company. And Kennedy Funding, a commercial real-estate lender, is planning on foreclosing on the mansion on Tuesday, according to Joseph Wolfer, Kennedy’s founder and principal. Meanwhile, employees and the magazine advertising community are questioning whether the once high-flying skin magazine will ever publish again.
Lainie Speiser, a spokeswoman for Penthouse, insisted the magazine had no cash-flow problems. When asked whether employees would receive their full paychecks, she declined to comment. She also refused to comment on whether the magazine, or any of its print spinoffs like Penthouse Forum and Penthouse Black Label, would publish again.
Last Tuesday, the magazine’s employees were called to a meeting and told Penthouse had missed its printing schedule—no new issues of the monthly magazine appeared from late April until early July—because the company had been unable to pay printing costs, according to several people who were present at the session and asked to remain anonymous. The break in publication resulted in significant lost revenue and could make it hard for Penthouse to sell future ads.
Only one editorial employee, associate editor Deidre Goldbeck, was reachable in Penthouse’s offices on Thursday. When asked about Tuesday’s meeting and this week’s paychecks, she said, “I’m not allowed to talk about that.” In response to queries, editor Peter Bloch left a message that said, “I can’t talk about the situation at the magazine.” Stephen Gross, Penthouse’s president, did not return several messages asking whether Penthouse was ceasing publication. Late on Thursday, a Penthouse employee reached at home said the magazine’s staff was given the option of working from home until further notice.
Meanwhile, Guccione is apparently fighting to hold on to the Penthouse mansion. “They owe us around $15 million,” Kennedy’s Wolfer said. “And they’ll need to find a way to come up with it by Tuesday.” Wolfer said Guccione is “very resourceful,” and that another unnamed lender was trying to secure financing to pay off the debt. But, he said, “We’re at the end of the line.” Guccione could not be reached for comment.
Around Manhattan, newsstand vendors said they had been told after Penthouse missed its publication schedule that it was likely the magazine would not be reappearing. As a result, several newsstands were not displaying the new issue, which was shipped earlier this month, illustrating how difficult it can be to regain newsstand positioning.
The Penthouse mansion
“The advertising community has been watching a series of disintegrations with Penthouse,” said Steve Greenberger, a senior vice president and director of print media at Zenithmedia, a media-buying firm. “The circulation’s been declining, and the editorial content is a lot raunchier than most clients will accept. Even alcoholic beverages and tobacco companies are saying, ‘This is starting to be too much’.” Greenberger said the fact that the magazine missed its publishing schedule is a problem. “No one wants to take risks in this economy. It’s going to be hard to re-establish itself as a viable alternative in a media plan.”
In April 2002, The New York Times’ David Carr wrote a piece describing the tenuous financial position of the magazine. Carr quoted Guccione, who is sick with throat cancer, as saying there is “no future for adult business in mass market magazines.”
The first American issue
When Penthouse was launched in America in 1969, Guccione was gunning for Hugh Hefner’s Playboy. During its peak in the 1970s, Penthouse had a circulation of more than 5 million. By comparison, GQ’s current circulation is around 800,000, and Esquire’s is just below that. Playboy, while also down from its peak, still has a circulation of more than 3 million.
For years, Penthouse has been squeezed from both directions by the Scylla and Charybdis of men’s entertainment. On the one side, the monster growth of hard-core pornography on the Internet has meant that consumers no longer need to suffer the embarrassment of receiving their mail in plain brown wrappers. On the other side, the rise of laddie publications like Maxim and FHM has meant there are publications that show a lot of skin without the stigma of being pornographers.
In response to these pressures, Playboy has remained relatively staid-the nudity of its models sometimes seems almost incidental. But Penthouse has gone ultra hard-core. These days, the extreme close-ups of Penthouse’s pictorials seem more appropriate for a medical manual, and the live-action sex scenes are as graphic as anything available. Penthouse’s circulation is hovering around 500,000.
Last month, Bloomberg reported that Penthouse had defaulted on $41.8 million of bonds in April and was facing eviction from its Manhattan corporate headquarters. Wendi Kopsick, a spokeswoman for Penthouse’s landlord, confirmed there were legal proceedings involving Penthouse’s office space but would not comment further.
“There are some of us who still believe in this magazine,” one Penthouse employee said Thursday night. She asked not to be named because, she said, magazine staffers had been told that speaking publicly could jeopardize their future positions at the magazine. “Plus, it’s not like there’s a lot of other jobs out there. So we’re just hoping we’ll struggle on.”
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