Bell was candid about his history as an entrepreneur and his unplanned entrance in the adult entertainment business.
Moderated by XBIZ Publisher Tom Hymes, the pair’s discussion played to an attentive audience of hundreds of conference attendees.
Prior to founding investment firm Marc Bell Capital Partners in 2003, Bell served as CEO of Globix, a communications company that was heavily invested in fiber optics technology, which grew to provide many additional services. The group of businesses completed an IPO on NASDAQ in 1996.
Bell acquired Penthouse through Marc Bell Capital Partners, after loaning Penthouse founder Bob Guccione $54 million after the magazine filed for bankruptcy in 2004. Guccione didn’t pay back the money and Bell found himself the owner of one of the most recognizable brands in adult entertainment.
Calling this purchase a “necessary evil” because of the dwindling revenues of print media, Bell touted Penthouse as a lifestyle brand. He said the company completed extensive market research before deciding to make the purchase.
“Penthouse really is a global brand – the magazine is in 45 countries,” he said. “The magazine space is not a money maker, you’re lucky to break even. But we felt it was necessary to keep the magazine in order to build out other properties associated with this flagship product. The brand is much stronger in Europe than it is here.”
It appears Bell made a wise choice to invest in the company as evidenced by the IPO Penthouse Media Group plans to offer in the second quarter this year. He says the company earned just less than $100 million in net income this past year and its stock would be four times the size of Playboy’s upon launch.
Since acquiring Penthouse, Bell ambitiously cut a wide swath across the landscape of adult entertainment. In a bid to expand his company’s video content offerings, Bell purchased the library of Jill Kelly Productions and the popular Danni.com website.
PMGI’s latest acquisition, however, made the biggest splash – and cost the most. The company recently purchased Various Inc., parent company of adult dating site AdultFriendFinder and live cam network Cams.com.
The cost of that transaction? Half a billion dollars.
Bell still plans to purchase other companies in the adult space and believes the industry is ripe for “rollup.” PMGI is looking to acquire content producers, websites and transaction services in efforts to grow its empire.
Bell’s keynote address also touched upon piracy, which he called a major problem facing content producers of all stripes. He cited PMGI’s lobbying efforts on Capitol Hill and implored content producers to police their own content.
Also discussed were the mobile space (profits targeted at three to five years away), DVD production (described as a break-even proposition) and satellite distribution (a new player in this field – Penthouse just launched a channel to compete with New Frontier Media and Playboy).
Of course, no conversation would be complete without discussing the world-famous Penthouse Pets. Bell revealed that he hoped to turn Penthouse Pets into porn stars (ideally for Penthouse Video), a totally different tact than Playboy, its most direct competitor.
Additionally Bell said PMGI plans to purchase a “well known” casino on the Strip in Las Vegas.
Apart from his adult ventures, Bell’s entrepreneurial efforts are diverse. He is an investor in iFilm, Vault.com, NetSat Express, Edgar Online, Earnings.com and SpamEx. Bell also has produced numerous Broadway musicals including the hits “Jersey Boys,” “The Producers” and “Little Shop of Horrors.” Bell’s efforts on the Great White Way have earned him a Tony Award.
Not even in the adult business for four years, its clear Bell sees the adult entertainment industry as a profitable sector. His ambitious plans for growth, and deep pockets, could make him and PMGI a force to be reckoned with for a long time to come.