The online adult entertainment grotto just got a little more crowded. Penthouse Media Group, Inc. (PMGI), the parent company for Penthouse magazine and the owner of extensive online properties, announced Wednesday that it is spending $500 million to acquire Various, Inc., the owner of numerous social networking sites, including AdultFriendFinder.com, one of the Web's leading dating sites. The transaction is one of the largest ever for an adult business.

"Various is an attractive addition to our already strong print platform, and one that puts Penthouse in a very robust position in the ever-growing online social networking arena," said Penthouse Media Group CEO Marc Bell said in a statement. "We like where the business combination puts us and that this transaction will enhance PMGI's current and future licensing, print and interactive ventures."

In addition to AdultFriendFinder.com, Various owns and operates a network of more than 25 other popular sites, including JewishFriendFinder.com, OutPersonals.com, and Cams.com, which advertises itself as "The Wildest Live Webcams."

A Massive Customer Database

Clearly, a leading attractor for Penthouse Media Group is the staggeringly large member base that Various commands. An estimated 260 million people at one time or another have joined a Various Web site, including the 18 million alone that are members of AdultFriendFinder. The company's paid subscriber total is far smaller, just 1.2 million, but that still translates into a substantial revenue boost for Penthouse Media. In fact, the companies predict that PMGI's purchase will make it the largest adult entertainment company in the world, with projected revenues for 2007 of $340 million.

In our telephone interview, Bell acknowledged the importance of the customer base that Various brings to the table. "They've got tremendous market reach," he said. "Social networking is clearly the future of adult entertainment, particularly in the mobile space, and we're excited to be joining forces with Various."

The Various purchase is merely the latest step in an extensive expansion by Penthouse, which last year separately purchased the popular soft-core site Danni.com and the library of Jill Kelly Productions. "Together," Lars Mapstead, VP of Marketing for Various, said, "we will expand in many areas, both online and offline, to solidify our position as the world leader in adult entertainment."

FTC Watching Closely

As the companies do so, however, at least one governmental agency will be watching closely. Just last week, the Federal Trade Commission announced that it had reached a settlement with Various over charges that the company illegally delivered sexually-explicit pop-up ads to consumers.

"Some of the ads," the FTC said in its statement, "have included graphic depictions of sexual behavior, exposing consumers, including children, to sexually explicit images." The agency said that the ads were served to customers who had entered innocuous search terms like flowers, travel, and vacations. In addition, the FTC said Various had been using both spyware and adware to deliver its ads.

Under the terms of the settlement, Various (and now Penthouse) is forbidden from delivering sexually explicit ads to consumers "unless the consumers are actively seeking out sexually explicit content or unless the consumers have consented to viewing sexually explicit content." Various must also create an online system for consumers to register complaints and put procedures in place that will enable the FTC to monitor the company's compliance with the settlement.

"The FTC settlement had no effect on the timing of this deal," Bell said, "and it will not have any effect on the companies going forward."