Private Media Group Inc, a Spanish pornography distributor, said it's in talks with US cable and satellite television companies to start a channel to promote its brand in the US$10 billion US market.
The talks are with the main operators in the US, Chief Executive Officer Charles Prast said in an interview, without naming them. Private Media has two channels in Europe and Latin America and sells rights to broadcast its movies to Playboy Enterprises Inc.
Barcelona-based Private Media wants to focus on the US, the world's largest market for pornography, to boost growth. The company generates 13 percent of revenue in the US; the rest comes mainly from Europe.
"In two years time I would like to see 50 percent of our sales coming from the US," Prast said. "Americans appreciate European quality product in all aspects of life and adult content is no different."
The biggest pay-television operators in the US include Comcast Corp, Time Warner Cable, Charter Communications Inc., Hughes Electronics Corp.'s DirecTV and EchoStar Communications Corp's DISH Network.
By expanding in the US and by providing pornography over hand-held computers or wireless phones, the distributor aims to boost sales 15 percent per year and net income 30 percent for the next three to five years, Prast said.
Profit last year was eroded by writedowns after it pulled a US$50 million equity offering and listing on Frankfurt's Neuer market in February. The company also has costs from restructuring its Internet businesses. Third-quarter profit fell by almost a third to 1.5 million euros.
Private Media shares have followed the drop in profit. The company's shares, which trade on the NASDAQ Stock Market, have slumped almost 70 percent in the last 12 months, to US$2.40.
In the US, Private Media is betting its content top rivals such as Vivid Entertainment Group. Private spends about US$70,000 per movie, three times the industry's average, the company says.
Its Private Gladiator movie won 10 industry awards, including five in the US, he said.
The international expansion will help Private Media improve profit margins, Prast said. The company's DVDs, or digital video discs, are in multiple languages and allow the same product to be sold in different countries.
"Sex is a product that travels well between countries, and to have the economies of scale and a large organization allows us to make better products at a cheaper per unit price than anybody else," Prast said.
Private Media started as a magazine publisher in Sweden in 1965 by Berth Milton. In 1991 his son, also named Berth Milton, bought the company and expanded to new businesses such as films, broadcasting, and selling products over the Internet.
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