Private Media Group has one of the biggest distribution footprints in porn today with its iconic flagship Private brand. But it was only several years ago that the Barcelona-based company was on the verge of collapse after a long and contentious shareholder and creditor rights battle, which was highlighted by the firing of CEO Berth Milton, the son of the company’s original founder.
Private, fresh from legal battles in Nevada over the future of the company, needed to find a new CEO to run the ship, so it turned to a familiar face: Charles Prast.
With even the most meager of ingredients a great attitude makes anything possible!
Prast, a rainmaker who previously ran the company as CEO in 2002-2003 as well as other well-known current and long-gone adult brands in other years, accepted the slot.
Under Prast’s stewardship, for the past 20 months has made great strides in the video-ondemand space, and is moving forward by “returning to its roots.” And just recently, Prast announced that the company launched 11 new sites, and is counting on affiliates to lure customers to those sites by offering them its sophisticated brand of porn content in five different languages.
XBIZ World wanted to find out more about Prast, as well as the future of Private, in this recent Q&A.
XBIZ: You’re a seasoned adult industry pro, have been around the block for a number of corporate ventures, including a previous stint as Private CEO. How did you get into the biz and how did you end up at Private ... again?
PRAST: I was part of the investment banking team at Commerzbank AG in London in 2000 where I helped build the media group and raised over $1 billion in financing for U.S. and European interactive entertainment companies including UbiSoft and Take-Two for their Rockstar Games subsidiary, the studio behind Grand Theft Auto. From my experience in interactive entertainment, I was convinced that the Internet would become a disruptive technology for adult content providers and create challenges that would require consolidation and capital. With this in mind I asked Commerzbank, which had completed a successful IPO of European erotic retailer Beate Uhse in 1999, to allow me to solicit adult media companies as corporate banking clients and they agreed.
Ultimately I was invited to join Private as president and CEO in 2002; I restructured $4 million in short-term debt and raised over $2 million in equity-linked financing, which prevented Private from defaulting on its obligations to lenders. I wanted to grow Private, and in late 2003, General Media Inc., the parent company of Penthouse filed for protection under Chapter 11. I was unable to convince Private’s chairman of the value inherent in Penthouse’s brand at the price it was available for. I like to grow companies, so I resigned to pursue the Penthouse acquisition independently with financing from Beate Uhse.
While we were ultimately unsuccessful in the bid, the substantial amount of Penthouse debt that we acquired in 2003 at a sharply discounted price was fully redeemed at 100 cents on the dollar by Marc Bell’s group.
From 2004 until 2005 I worked to maximize the value of that portion of Penthouse acquired by a third party and I structured an investment for them in ITVN Inc. an IPTV set-top box provider and obtained a NASDAQ listing. I joined ITVN as CEO in 2005 and broadened the company’s focus to include mainstream and niche media. Our content relationships grew to include Universal Studios, Major League Baseball, Liberty Starz and Setanta Sports, among others. Most of these deals were the first ever signed for Internet delivered content by these providers.
From 2008 until early 2012, I focused on adult media, interactive entertainment, intellectual properties and debt obligation advisory services. I also served as an senior vice president of New Frontier Media Inc. and as an advisor to the board of Beate Uhse and numerous public and private company boards, creditors and shareholders on a confidential basis.
As part of this work I was engaged to lead the widely reported shareholder and creditor rights battle involving Private that took over 18 months, ending in my election to the board of directors of Private in January 2012 and my being offered the role of president and CEO again in April 2012.
For a number of years the company was wound up in shareholder litigation, and the company was pared substantially. But Private seems to have weathered it through and has bounced back.
XBIZ: Is the company seeing brighter days?
PRAST: Private was on the verge of collapse 18 months ago. It’s only thanks to the long-term view of our shareholders and creditors that we survived and are now seeing record sales in the areas of the business, which will define our future and offer the best operating margins; paid internet delivered content and sales to MSOs and DTH operators worldwide. Private’s brand is well known outside of the U.S. In 2015 we will celebrate its 50th anniversary. I expect that to be a great year for us. The advantage that we have is that while we are rarely the No. 1 brand in any territory we are consistently the No. 2. We’re happy to be No. 2 in 20 or 30 markets rather than being a big fish in a small pond.
The same goes for our distribution paths. We still sell print in kiosks profitably. We sell DVDs. We have two branded 24/7 linear TV channels. We have exceptional relationships with VOD providers and were often the first studio they ever worked with. We receive licensing fees from the use of our brand for toys, soft mobile content and other products. Of course we also have Private.com. If, like many studios, we were dependent on any one or two distribution channels we would have problems.
XBIZ: What are the upsides and downsides for an adult entertainment company to be a publicly owned?
PRAST: Really the same as for any company. It provides for a degree of transparency that is most appreciated by our mainstream commercial partners. It gives us a certain discipline in that we need to look at our business on a quarterly basis. We also have some plans to use our equity as a currency for some deals.
XBIZ: How many brands does Private operate, and how many eyeballs worldwide view your sites, read your magazines and buy your DVDs?
PRAST: We focus our attention on our iconic flagship Private brand, which drives sales of both high production cinematic releases and niche content such as our castings series. It is hard to measure how many people actually see our content considering the size of our distribution footprint that is 24/7 and covers a variety of platforms. Aside from our growing online presence we are on more than 90 mobile operators in more than 33 countries. On IPTV operators and digital cable providers we are available on about 90 operators across some 20 countries. Of course we are also present through SVOD services, two 24/7 linear Private-branded broadcast channels and on pay-per-view and Pay TV platforms. We even continue to publish a magazine and sell DVDs. You could say our goal is to be seen by everybody of legal age in territories where our products are permissible.
XBIZ: Private has made a big B2C push by launching 11 new sites in five languages. What is the hope with this rollout?
PRAST: We have indeed increased our online presence by a factor of 60. We have gone from one site, Private.com, in one language, English, to 11 sites in five languages and the addition of four languages to Private.com.
Doing this requited months of hard work and more than 4 million keystrokes by our local language community managers.
With the relaunch of PrivateCash.com, we now have an affiliate program which aside from a great payout also provides banners in four languages promoting each of the 12 sites in a way which allows webmasters to better target traffic.
More than 90 million adult men live in European countries where German, Spanish, French or Dutch are the principal languages. In addition there are more that 20 million adult male native Spanish speakers in the U.S. Together this audience equals the 110 million adult native English-speaking males living in the U.S., the U.K. and Canada. These potential clients have demonstrated a marked preference for consuming and transacting in their own language.
XBIZ: What’s new with Private for mobile platforms?
PRAST: We continue to provide our content and brand to “on deck” services, which are those billed by operators. For “off deck” services, where the billing is either done through a third party using the operators billing service or by the consumer entering their payment details, we have two products in development. One, a simplified interface with mobile-friendly content provided on a short-term or scene-by-scene basis with a micropayment, and two, a small-screen version of our Private.com network.
Our 24/7 Private channel in South America has been a great venture for more than a decade. In Europe we have tended to use third parties to manage our linear channel relationships. In October we announced that we would launch our own European channel, PrivateTV, available on Eutelsat Hot Bird 13B and a French-language version, PrivateTV France, with substantial original short form French language programming.
PrivateTV and PrivateTV France have a refreshing scene driven format and thematic scheduling. Essentially we deliver the promise of the online experience to the TV, the only platform that can adequately convey the quality of our HD content to the “lean back” audience. This venture involves close cooperation with and financing from tmc Content Group AG, the leading German-language adult broadcaster and telemedia service provider.
XBIZ: What sector of the adult business is driving the market these days?
PRAST: The easy answer is Internet-delivered video content to tablets and handheld devices. What is not so easy is to understand the need for this content to be fresh and relevant to the users and billed in a way that they feel confortable. The magic is understanding the needs of the users and meet them in a financially sensible way.
XBIZ: What’s a typical workday like?
PRAST: If I’m in town, which I try to be as much as possible despite our very wide distribution and sales channels, I try to get in by 7:30 a.m. and put in 12 hours. Ultimately, as CEO, all the successes and failures of the enterprise end up back with you. Also there is a responsibility to the investors in the business who expect a reasonable risk-adjusted return on their investment. When our competition is free the challenge is even greater. You need to understand all elements of the business from the mundane to the complex. I’m fortunate to have a fantastic team with the best chief operating officer, head of sales and marketing director I could wish for. So a typical day is long and involves shepherding many projects and making a lot of decisions as a team.
XBIZ: When not thinking about the biz, what do you like to do?
PRAST: Spending time with my family and managing the kitchen. Cooking for me is a way to relax and a reflection of an important work principal; that with even the most meager of ingredients a great attitude makes anything possible.
