Flynt Ponders Adult Channel

BY ANDREA FIGLER Porn king Larry Flynt is considering a Hustler-style adult channel for cable and direct broadcast satellite markets. “We are exploring the viability of launching a channel in the U.S.,” a Flynt spokesman told Cable World last week. But, he added, “there are no immediate plans to launch in the United States in the next few months.” Other than to say “timing” is the biggest hurdle, the spokesman would not elaborate further on Flynt’s plans. While his bold entrepreneurial spirit gives him an edge in negotiating deals (Remember The People vs. Larry Flynt?), Flynt faces intense competition and political opposition to distributing explicit adult TV programming nationwide. Competition in the U.S. is so fierce, in fact that profit, one of Flynt’s favorite obsessions, won’t come easily — if at all. Just ask Erotic Networks, the video network division of New Frontier Media. The adult content provider, launched five years ago, started to bleed money after Playboy Entertainment Group snagged a portion of its distribution last year. Even Playboy’s gain hasn’t done much to boost its own revenue. Why? Because cable operators switched adult content to digital cable from analog, which gives networks a much smaller subscriber base. Operators also demanded a heftier revenue cut, from 90% all the way up to 100% for certain launch periods. This financially strangled both programmers last year. “It’s an industry that’s already basically owned by cable,” says Bill Asher, the former president of more explicit adult content provider Califa Entertainment. Asher said Flynt executives have called him recently to talk about the viability of a new channel. Asher should know. Playboy had to pay him $70 million for his stake in Califa’s more explicit networks — the Hot Zone, the Hot Network and Vivid TV — to help stop New Frontier from stealing subscribers interested in spicier pornography two years ago. So, is another takeover on the horizon? The bidders are surely there. Aside from Flynt, Spain-based Private Media Group, which has been seeking U.S. distribution for years, may have an announcement in the next few weeks, a company spokesman said. And changes are emerging here at home. New Frontier’s chairman and CEO Mark Kreloff announced his resignation Friday along with the company’s third-quarter results, ending Dec. 31. Net revenue dropped 31%, to $8.6 million, compared with the same period last year. The company reported a net loss of $5.9 million, compared to net income of $1.3 million. So, perhaps, Flynt’s on the prowl. While anything could happen, it would be easier for Private or Flynt to buy New Frontier or for Playboy to break into the market, says Robert Routh, media analyst at Natexis Bleichroeder. “The easiest way to get into the business is to buy somebody who’s already in,” Routh says. “It’s a lot less risky and a lot more guaranteed.”