Penthouse finds a friend

By Josh Quittner

Why did Penthouse Media Group plop down $500 million for a bunch of social networks owned by Various — including the X-rated AdultFriendFinder?Because it’s so “sticky,” Penthouse CEO Marc Bell told Fortune Wednesday. He wasn’t being gross.

We’ve been working on this transaction for about one year, he said, pointing out that AdultFriendFinder had been on Penthouse’s radar forever, but more prominently in recent years as it became the largest adult site in the world.”If you’re going to buy something, why not start with the largest?” he said.

A social networking site is a perfect complement to Penthouse’s content, he added, because, “you create a sense of online community. It’s much more sticky than just serving up content to people. With social networking you now have a user interaction that you can’t get otherwise.

Indeed, 1.2 million of AdultFriendFinder’s members pay on the order of $25 a month for “premium” services on the social network. The privately held company claimed $200 million in annual revenue and reportedly averaged 40 percent growth for the past decade. In all, Various will add $340 million in revenue to Penthouse, making it the largest porn company in the world.

The porn business has aways been at the forefront of the technology industry. So it’s not surprising then that AdultFriendFinder was launched 10 years ago by a Stanford-educated PhD in engineering named Andrew Conru — around the time that Facebook’s Mark Zuckerberg was in middle school. It was one of many social networks — including a religious dating site called bigchurch.com — that Conru built out, and collectively called Various.

Bell said that Penthouse plans to keep all of Various’s social networks intact. “We picked up a slew of traditional dating sites that have nothing to do with adults,” he said. “We’re not selling anything at this point.”That said, the acquisition of AdultFriendFinder will help Penthouse conquer what Bell calls the next great porn frontier: adult-oriented social networking on your cellphone. “We have some very interesting applications,” he chuckled, declining to elaborate.