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Penthouse CEO

Except for Playboy, no brand is more synonymous with adult entertainment than Penthouse. Since February, the company has been owned by Kelly Holland, an employee who had tired of seeing the storied brand disrespected – her description – by its previous owners. Founded in 1965 by the late Bob Guccione with a $5,000 loan, Penthouse began publishing its magazine four years later. By 2003, the company and Guccione were both in bankruptcy and it was acquired by private investors. They later acquired FriendFinder Networks Inc., a social network provider, and put the Penthouse brand under that umbrella. When FriendFinder declared bankruptcy in 2013, Holland stepped in with her offer to buy Penthouse for an undisclosed price. The Indiana native attended college briefly in Texas before going to work for Pat Robertson and “The 700 Club.” She had a political awakening in the 1980s in which she became a Leftist, which led her to make documentaries about turmoil in Central America. The next decade found her directing adult films under the moniker Toni English. She started working for Penthouse in 2006 as an executive producer and later became president of the broadcast division. Now, as the new owner, she plans to bring Penthouse back to its provocative and cutting-edge roots with hard-hitting political journalism alongside photos of beautiful, naked women. Holland spoke with the Business Journal at her Chatsworth office about what she looks for in a Penthouse model, the effects of the mandatory condom law Measure B on the adult industry and her animal rescue nonprofit. Question: What motivates you? Answer: A love of the brand – and I feel protective of the brand. It’s my child and it’s been abused and mistreated for 12 years. “Disrespected” is the best expression of what’ s happened. What does Penthouse mean these days? Originally it meant provocative, renegade, cutting edge, contrarian. It had a tabloid sensibility. Bob (Guccione) believed that the only bad press was no press. Did you ever work for Bob Guccione? He passed in 2010. Unfortunately, I never met him. I couldn’t meet him because he was still in litigation with the people who had bought (the company) out of bankruptcy. I’ve talked with his family. I’m on good terms with the kids who he disinherited. They had a mild reconciliation shortly before his death. Our senior vice president of digital actually worked for him, lived in the (New York) mansion for a while but Bob didn’t know that because the mansion was so big you could live there for months and not run into anybody. So how did you start the process of buying the company? I did what a lot of people do these days, I Googled it. I put in “president buys company” and it took me to a wiki page that said “management buyout.” I went “Oh, there’s a name for what I want to do.” It was the hardest thing I’ve ever done. Why? It was three years of meeting every lunatic, fake Saudi sheik, fake Russian oligarch, nut, nut and nut on the planet. They all came to me. I never met more grownups that were lying and scheming and cheating. Does the adult industry bring out those type of characters? Oh, yes. It captured everybody’s imagination. Everybody wanted to come in and hear the story. At the end of the day they did not have means or those who did have the means had such harebrained ideas it would have been out of the frying pan and into the fire. So how did you put together the financing? I spent every penny and every bit of treasure that I had. I mortgaged my ranch. I’m supporting lawyers and accounting teams and due diligence people through this process. So how did you close the deal? I decided to buy it on debt. I don’t like debt. I saw what it did to the parent company (FriendFinder Network) which was over-leveraged and went into bankruptcy. I did a deal with some institutional lenders. It was a hard deal but it was manageable. What changes did you have to make once you were the owner? In the first two months, the New York operations closed down and we outsourced the production, layout and design and 70 percent of the editorial (of the magazine) to a small circulation “Penthouse” magazine in Australia. Have you done anything different with your photos as a response to what Playboy did with no longer showing nudity? We have in fact softened the images just a little bit. That was not motivated by Playboy throwing itself over a cliff. I just felt that, as I like to say, I have no fear whatsoever about vagina, I just don’t need to be your gynecologist. It is a fine line between having the girl with a foot behind her head or can she just be a natural, beautiful, naked woman? What has been the response to the magazine since you took over? Positive. We got one big complaint that was a mind blower to me. The first month we went out, we had four days to get the magazine to the printer to make our on-sale date. We went out with the first edition and did not put in the Forum letters. Sixty percent of the criticisms and complaints we got opened like this, “My wife and I just opened the magazine, where are the letters?” We have a magazine called “Penthouse Letters” and we know its readership is 45 percent women. What I didn’t know was that it pulled into the main magazine in the form of couples. How do you feel about the company now? It only occurred to me about six weeks ago that I own a magazine, I can do anything I want. It is so delightful. To know the limitless possibilities of actually having a magazine is extraordinary. What do you look for in models? Natural. I don’t go so much for girls with tattoos. I don’t go so much for girls who bleach their hair so much it looks like it’s about to fall out. How did you get into the adult industry? I came into this business as a leftist political activist, a leftist documentary filmmaker opposed to senseless wars in Central America. I ended growing a company called Art Attack into a robust post-production house to support my documentary habit. I rented out edit bays. One day some people came in and rented an edit bay; they were there for a week. It was a line for Vivid Video called “Vivid Man,” a gay porn. There are 10 monitors in the bay and they all have the same image on it and I go like, “Oh.” That started a dialogue which ended up at Vivid and the owner’s sister saying if you know so much about movies why not try directing a porn. I said, “Okay.” I directed a movie. I’m still friends with one of the girls who starred in it. Julia Ann and Janine Lindemulder in a movie called “Blondage.” What was the response to the film? It was a huge success. Which had mothing to do with me. These girls were like Jenna Jameson; they were hottest thing ever. Of course it sold. The owner of Vivid (Steve Hirsch) thought I was some kind of auteur, so he gave me a contract that ended up going for seven years. Do you foresee the adult industry staying here in the Valley? It is very difficult. I know of two, three businesses that have already moved to Las Vegas. I know businesses that have relocated to Florida. And it’s not just Measure B. It is also the pressure of a changing business. DVDs don’t carry this business anymore. Now you are either broadcast or you have a strong Internet presence. We parallel mainstream. So the same mergers and acquisitions that happen in mainstream, the consolidation between Charter and Time Warner (Cable), that happens here. You have big companies merging, big companies gobbling up small companies. What are your interests outside of work? I have a ranch about five minutes from here, a 4-acre horse property that borders the old Manson property, the old Spahn Ranch. I have horses, goats and donkeys. I have a (nonprofit) called the Animal Rescue Alliance. How did you get involved with that? I ended up with some orphan kittens at the stables that I ended up taking care of and then had to figure a way to get them adopted. The housing crisis struck and the mortgage meltdown happened and a bunch of people lost their ranches and they were asking me if I could take their goats, donkeys and horses. I do a huge fundraiser to raise money not only for my rescue but for several good rescues in the Valley area. We do adoptions at Petco Unleashed in Granada Hills, at Kahoots (Animals & Supplies) down on Mason (Avenue). Anything that you would do differently in your career? No. Not a single thing. Why not? All the mistakes and the missteps and wastes of time, those things bring you to where you are. Every failure brings you to your next success. We talked earlier about the fake Russian oligarchs and Saudi sheiks and the long line of charlatan and thieves that came to my door. Every one of them taught me something about them and about business. You take something from everything that happens in your life.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.
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