May 1 1992 by Peter Lacey
It’s mind-boggling. You’re in another world!” Kathy Keeton is raving about one of her favorite subjects, virtual reality, but her guests are reacting in similar fashion to the setting in which she speaks: a seven-floor, 28,000 square-foot townhouse, the largest private house in Manhattan, which Keeton shares with her husband, publisher Bob Guccione.
“Can you imagine Penthouse in virtual reality?” Equally mind-boggling, perhaps, and a segue from a favorite subject to Keeton’s raison d’etre: the publishing activities of General Media International. Already vice chairman of GMI-100 percent owned by Guccione-Keeton, 51, was recently appointed to the additional posts of president and COO of the company’s publishing group. Her energetic support of GMI’s eight major magazines-including flagship Penthouse, with a circulation of 1.4 million-along with her development of Omni and such new titles as Longevity and Compute, has garnered substantial success for GMI in a stricken industry.
Indeed, the privately held company has recently outpaced much of the pack. Last year, GMI’s revenues were estimated at $200 million, 60 percent of which were generated by Penthouse. The magazine-one of the “ten hottest” of 1991, according to Adweek nipped archrival Playboy in advertising pages. Observes Scott Donapon of Advertising Age: “GMI has weathered the recession a lot better than other publishers. It has been aggressive in raising its profile, largely due to Kathy Keeton.”
No one denies Keeton’s extraordinary salesmanship. She’s been known to extend personal service even to smaller advertising accounts, and she’s had remarkable success launching publications in a treacherous market. But critics maintain a sales bias sometimes clouds Keeton’s judgement: In October 1990, for example, some GMI editors questioned her decision to place a hologram of Motorola’s logo on the cover of Omni. Some also wonder whether the vice chairman’s lack of an equity stake stems from a corporate vote of “no confidence.”
Moreover, like its peers, GMI has been squeezed by recession. Last October, the company severed 120 employees in a move to reduce its debt. Liabilities have inched higher in recent years because of costly media investments and funds poured into a valuable yet decaying chunk of property in
Even so, the near-term outlook for GMI remains solid, partly because of its prized stable of fast-growing, special-interest magazines, including Stock Car Racing. Another plus may be Keeton’s taste for electronic media: She dreams of eventually putting her magazines on disks. “Niche magazines are the future,” Keeton says. On the high-tech side, she adds: “Knowledge is a key commodity now. Publishers are sitting on a gold mine of software.”