In-House at Penthouse

A lot of people thought Bob Guccione was crazy to try to take on Playboy, which had a virtual stranglehold over the men's magazine market. But Guccione believed there was plenty of room for a competitor. He was right.

In October 1965 Guccione published the first issue of Penthouse. The magazine offered a much more revealing look at the female body and took a more sensational, tabloid-style approach to its editorial coverage than Playboy. It was a monumental success, generating more than $3.5 billion in revenue over the life of the publication and turning Guccione into one of the richest men in America.

Guccione then lost it all and is now reportedly broke. His downfall began in the 1980s when he made series of bad investments in everything from a small-scale nuclear fusion reactor to an Atlantic City casino. At the same time, men's magazines came under attack from the Reagan administration, which put pressure on convenience store chains to stop selling pornographic material. Guccione shot back by featuring increasingly explicit pictorials, which alienated many of his loyal readers. The Internet and pay-per-view cable further eroded his circulation. By 2003 Penthouse was bankrupt, and Guccione was out of a job. A group of investors led by Marc Bell acquired the debt and control of the company in 2004 and began the process of rebuilding the brand and expanding its portfolio of offerings.

Q:How so?
A:The Penthouse brand is known throughout the world. It is one of the premier brands in its space. As a trademark lawyer, that presents challenges and opportunities that very few brands can offer. We also are a content company. As a copyright lawyer--and as a person skilled in rights, clearances and rights negotiation--that's an ideal match. The company also was in the process of rebuilding, so there was a lot of transactional work going on. And that was of great interest to me.

Q:What kind of transaction issues were you involved with?
A:Well, we do a lot of licensing agreements, which are the bread and butter of our practice. We also have had opportunities to acquire assets that fit well with our business strategy. For example in April 2006 we acquired almost all the assets of Jill Kelly Productions Inc. [a producer of adult films founded by adult movie star Jill Kelly] out of bankruptcy. So, we were able to supplement our extensive library of content with the content that Jill Kelly has generated.

Q:Do you review the magazine before it goes to press for such things as libel?
A:Yeah. We are quite careful. Our senior counsel handles the publication review--which is something he has done for years. We are proud of that record as well. We are aware that we can be a lightning rod for criticism, and we take every step to make sure everything in the magazine is accurate and compliant.

Q:Some people believe magazines such as Penthouse exploit women. How do you respond?
A:I take pride in how this company handles its relationships with talent and with the models. There are two schools of thought: One is the one you just expressed, and the other is that this is an avenue for women to express themselves and to make their own choices.

staff Writer

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