Sex Doesn't Sell: Sex.com Domain Auction Postponed [UPDATE 2]

UPDATE 2: XBiz.com (link not safe for work) reports that Sex.com will finally go on sale.

The managers of Escom, which owns Sex.com, have agreed to enter into an agreement with Sedo to sell the domain name.

Sedo is a global domain marketplace provider. The agreement to retain Sedo to sell the domain name comes after a settlement between a number of the creditors to Escom.

As part of the settlement, the parties agreed that "a sale of the debtor's assets, including its Internet domain name Sex.com, as expeditiously as possible is in the best interests of the debtor, the estate and its creditors."

The owners cited the short auction notice -- one month -- as one of the problems with the original sale attempt. For the many other problems, see below!

UPDATE: According to Reuters, Sex.com owner ESCOM LLC just filed for bankrupcy and creditors have put the auction on freeze.

Three creditors of Escom LLC, which reportedly paid $14 million for the website's domain name in 2006, filed the bankruptcy petition in U.S. bankruptcy court in California on Wednesday, claiming they are owed more than $10 million.

The creditors said they were seeking to push the company into bankruptcy rather than allow the lender, DOM Partners LLC, to conduct an auction in New York on Thursday after the company had been in default for a year.

The creditors, Washington Technology Associates, iEntertainment Inc, and AccountingMatters.com, said they believed the auction "would have diminished the value of Escom's assets," in a statement released by their attorney on Thursday.

The curse continues.

Interested in owning the biggest gateway for all erotic content on the web? This would have been your chance, as the notorious Sex.com URL was set to go on auction in Manhattan. However, the brokers just announced that the Sex.com auction has been postponed (though eager individuals can put in an early bid online). At a starting price of $1,000,000, it's easy to see why -- it's hard to think of an adult company comfortable enough with its recession-hit pocketbooks to go for it.

As the initial auction broke by Elliot's Blog:

In order to bid on the auction, you must come prepared with a certified bank check in the amount of $1,000,000, made payable to "Windels Marx Lane & Mittendorf, LLP, as escrow agent." The auction may be open to the public.

The auction description is as follows:

All of Borrower's interest in and to all right, title and interest in an undivided 100% interest in the internet domain name and related INERNIC registration of the URL www.sex.com, and 100% of all cash proceeds, accounts receivable, licensing rights and intellectual property rights directly associated with or derived from the ownership of such URL.

The tale of Sex.com is actually very interesting, and a book was written about it a few years ago. The Cliff's Notes version is that Match.com founder Gary Kremen originally registered the domain name, but it was then stolen by Stephen Cohen, and a 10 year legal battle ensued. A company called ESCOM, LLC acquired Sex.com in January of 2006, although terms of the deal were not disclosed. There was an article that pegged the sale at $14 million, but there was no confirmation that this number is accurate.

In other words, the domain is cursed. Seriously, what company would purchase Sex.com for an amount significantly above the $1 million auction floor, never mind the rumored $14 million amount from pre-recession 2006?

Let's look at a couple major players:

Playboy Enterprises, Inc.: An excellent candidate a decade or two ago, when the magazine was near peak circulation at 7.5 million and the brand was strong enough to push international clubs, television specials and other multimedia. Today, however, Playboy is itself on the auction block -- and its last potential buyer, the Iconix Group, dropped everything in December.

From Paid Content:

London-based Iconix Group, which was interested in buying/licensing Playboy brand from the parent company, is reportedly now breaking off talks after realizing the deal would have been too complicated, reports Bloomberg, citing sources. Separating the brand from the mag, TV and online assets, and possibly most importantly, from Hugh Hefner, may have proved too much to undo. Playboy already announced outsourcing its print ops to American Media last month, and has been looking for a buyer or partner on the TV and digital side. Among the names in the fray looking to take over the TV/digital side, as I reported before, including Cisneros Group, the South American media giant with which PLA already has international TV deals, and Penthouse owner Friendfinder Group.

It's rough: Playboy reported a Q4 2008 loss of $145.7 million -- and for Q4 2009, 27.8 million, the positive result of relocating back to Chicago from Manhattan, doing massive layoffs, implementing aggressive branding and outsourcing its publishing. So no, it's not in the space to take advantage of the Sex.com sale.

Adult FriendFinder: Initially going for an IPO, the large porn conglomerate had its public offering cancelled indefinitely last month. Controversial material aside, Adult FriendFinder was planning on using the $220 million IPO to pay down debt. Ouch.

Says the trade pub XBiz (link Not Safe For Work):

BOCA RATON, Fla. - FriendFinder Networks has shelved its planned initial public offering indefinitely.

Marc Bell, FriendFinder's CEO, did not return a message for comment to XBIZ; however the company in a statement said that it would not proceed with an IPO "until market conditions improve."

FriendFinder, operator of Penthouse, Cams.com and numerous FriendFinder social-networking sites, intended to sell 20 million shares for $10 to $20 each and use the proceeds largely to pay down debt. The offering had been set to price this week.

FriendFinder first filed for the IPO in December 2008, and initially sought to raise as much as $460 million.

The IPO was delayed last week when the Securities and Exchange Commission said that it had questions regarding the offering.

Renaissance Securities (Cyprus) Ltd. and Ledgemont Capital Markets were the lead underwriters for FriendFinder.

Up and comers like Brazzers are rumored to be facing major tax issues, not unlike Girls Gone Wild impresario Joe Francis. There are many adult companies, but the reality is this: The auction will eventually happen and Sex.com will get purchased -- it's way too valuable to sit there in legal purgatory -- but it won't be from a major player we see at the outset. If anything, the company purchasing Sex.com will become a major player in the adult industry because of the URL.

Related:

More from CBS News