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Sunday, November 8, 
4:15 pm

Sex doesn't sell in a down economy

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Penthouse_logo.jpgWhen have you ever heard that sex doesn't sell? But that seems to be the case for FriendFinder Networks Inc., the publisher of Penthouse magazine. The adult social networking company hopes to raise $460 million by going public, but no one appears to be in the mood to fool around with an IPO. 

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It seems that traditional underwriters are avoiding adult-themed businesses in fear of being associated with seedy activities. Go figure. So the transaction so far has only one underwriter, Moscow's Renaissance Capital. According to Thomson Reuters data, Renaissance Capital has never underwritten a U.S. deal.

Penthouse Media Group bought FriendFinder in December 2007 for $500 million and took the FriendFinder name in July 2008. FriendFinder generates most of its money from subscription-based sexual liaison Web sites. Its largest online property, AdultFriendFinder.com, has 131 million members and a growth rate that rivals mainstream social networking giants Facebook and MySpace. While that certainly appeals to investors, they could be turned off by the Web site's chat rooms, which carry names like "Hot Tub" and "Wild Room."

Another turn off could be the failed $132 million IPO of Classmates.com in December of 2007, probably one of the most inoffensive social networking Web sites around. What chances does FriendFinder have if Classmates.com couldn't fly? - Greg Johnson



Comments

From: NikkiJane,

It doesn't seem like any good IPOs will be happening for a while! But, this company makes money and sex and dating were the motivations for Facebook. Maybe investors will someday look beyong being PC.


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