A Porn IPO in the unclear winter?

Friendfinder Networks, owner of Penthouse and web properties such as Adult FriendFinder and various other social media type sites, is filing for a $500m IPO.

Why now? This can't be the best of times to tap the equity markets!

It would appear - reading the prospectus for the IPO - that they have a rather large lump of debt that needs paying off.

As one of the TechCrunch commentators observes, when Penthouse bought FriendFinder etc, they funded it mainly with Notes. Now the company is looking to go public to raise money to pay off the previous owners. In addition there is a $60M+ hole because the previous owners did not bill or pay VAT in Europe.

As best I can work out from a quick once over of the numbers, they are slowly bleeding money to service the debt, and there is not a lot of cash to provide a runway. Not good medium term.

But hey, why go for an IPO while the US Govt. is giving bailouts to industries in real trouble (and boy is the porn industry in real trouble - user degenerate content is really stripping its revenues!)

More interesting though is the raft of data about the operations of what is an early day social networking system - and interestingly for our times, an early day online Freemium play. Roughly 77% of the money comes from various paying members grades, which - reading the prospectus - seem to comprise of about comprise of about 950,000 users of a total of 270m (of which a high proportion are probably defunct say 27m, gives about 2-3% of members generating the bulk of the revenues).

Payment gives you a higher level of visibility (as it were) of other members' (as it were) details and access to more site functionality. The probable model for today's SocNet crop to follow in fact.