Bob Guccione, the publisher of Penthouse, fought for decades to introduce pornography to mainstream audiences. In succeeding, he may have built a gallows for his once hugely successful magazine. Pornographic images of every bent are now just a click away on the Web, often at no charge, and Penthouse, which once sold almost 5 million copies a month, now has a circulation of 650,000.
The auditors of Guccione's debt-ridden company, General Media, the parent of Penthouse and affiliated enterprises, stated in its annual report that the company would not be able to meet interest and amortization payments of almost US$13 million this year on loans that carry a punishing 15 percent interest charge.
General Media's liabilities exceed its assets by US$22.3 million, and if it fails to meet its payments on US$52 million in debt, its trustee, the Bank of New York, "could assume control of the company," the annual report said. Calls to the Bank of New York were not returned.
Guccione, 71, acknowledges that the run of Penthouse magazine is at an end. There is "no future for adult business in mass market magazines," he said. "The future has definitely migrated to electronic media," he said, adding that he expects to be part of it.
That is a breathtaking acknowledgment for the man who vied with Hugh Hefner and Playboy in the race to cash in on the American male libido. According to Guccione, Penthouse grossed US$3.5 billion to $4 billion over the 30-year life of the company, with net income of almost half a billion dollars.
Unable to speak publicly because of the effects of throat cancer, he answered faxed questions from his 45-room, 17,000-square-foot town house in the East 60s of Manhattan, one of the largest private residences in the city. On April 4, the house was put on sale for US$40 million, according to a real estate broker. Some of the US$200 million in art work Guccione has collected -- including works by Degas, Renoir and Picasso -- have been pledged as collateral against business and personal loans.
For three decades, the effusively decorated house served as a headquarters for Guccione's far-flung interests. Neither satisfied by nor ashamed of his status as a pornographer, Guccione sought to wriggle out of the pigeonhole and overreached in the process. His efforts at more general interest magazines -- Omni and Longevity -- failed. He spent millions on an unsuccessful attempt to develop small nuclear fusion reactors, financing a team led by Robert W. Bussard, a nuclear scientist.
"Those kind of mistakes can be devastating," said Larry Flynt, publisher of Hustler. "The secret to my success is that I stayed away from what I didn't know."
Guccione's gamble on Atlantic City was probably his costliest. In 1978, he announced plans for a US$200 million casino at a site on the Boardwalk. He never received a gambling license, and the four-story steel structure sat rusting for 10 years while an elderly homeowner, Vera Coking, held out and stymied him.
Guccione switched his efforts to a joint venture with Ramada Inn to develop a US$140 million luxury club near the entrance to the city. That fizzled, as well, and he sold both parcels, with the proceeds being used to pay down a US$28 million loan from Kennedy Funding of Hackensack, New Jersey. Calls to Kennedy Funding were not returned.
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