FriendFinder Networks Inc, an owner of niche dating websites and publisher of the adult men’s magazine Penthouse, filed for a $460 million IPO. FriendFinder has plans to use the proceeds of its IPO primarily to pay off debt, according to a filing with the U.S. Securities and Exchange Commission.
Penthouse Media Group, a Florida-based company bought FriendFinder, Inc in December of 2007 for $500 million in an effort to gain a leading position in the online adult market with FriendFinder’s AdultFriendFinder.com property. According to the regulatory filing, FriendFinder’s net income between Jan. 1 to Dec. 6, 2007, was $48.6 million, but down 20.5% from the full year in 2006. FriendFinder had seen a lot of new competition in the adult dating space with competitors like SexSearch.com and Fling.com coming on the scene and growing quickly. In July this year, Penthouse Media Group changed its name to FriendFinder Networks Inc. in getting ready for the initial public offering. This is an amazing story considering how many people over the years have said that Friendfinder.com would never be able to sell or be acquired because of its association with the adult industry. To top that off they are even going public. I will be quick to pick up some “FFN” stock as I know that sex sells and we have been an affiliate of AFF for years.
FriendFinder has close to 1 million paying subscribers to the adult sites, paying an average of $19 per month, and 78,000 paying members to its general sites, paying an average of $16 per month. Most of the revenue comes from the paid subscribers as dating sites typically don’t have outside advertising on them because of conversion dilution concerns. 44% of the FF revenue comes from their affiliate program which is where the risk factor comes in as the competitive programs have been really aggressive with payouts to try to take some of this market of adult webmasters.
Andrew Conru, former CEO of FriendFinder, Inc., Medley.com, Inc. and Various, Inc. will finally get his well deserved payday in the industry. He started in the dating industry in the mid 90’s with one if not the first dating site, Webpersonals.com. He sold the property in 1995 and started over again with Friendfinder.com. His dating empire grew to about 27 different niche dating and social networking properties under the company Various. Conru was always reinventing the industry and testing new verticals and had niche sites like BigChurch.com, SeniorFriendFinder.com and MillionaireMate.com. According to the SEC documents that FriendFinder filed, Andrew Conru might still be on the payroll as an Independent Contractor. It must be strange being a contractor for a business that you built and owned but very rewarding to watch it go public on the NYSE.
-Brian R.
2 responses so far ↓
1 Theory // Dec 29, 2008 at 3:25 AM
I just read that Various neglected to collect taxes in the EU on their prospectus. The company says:
“After our acquisition of Various, we became aware that Various and its subsidiaries had not collected VAT from subscribers in the European Union nor had Various remitted VAT to the tax jurisdictions requiring it. We have since registered with the tax authorities of the applicable jurisdictions and have begun collecting VAT from our subscribers in the European Union and remitting it as required.”
I would hold off on putting any cash down on this stock until they clear their debt and any misc. things from the Various acquisition. The IPO is also underwritten by Renaissance Capital, which is based in Moscow. Not exactly your typical Morgan Stanley or Goldman Sachs type companies but I can see that the adult nature of this transaction would keep the conservative companies out of the game for sure.
2 Online Dating // Mar 9, 2009 at 6:48 PM
Wow, this story is truly inspiring! Thanks for sharing.
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