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the mainstream corporations profiting from pornography

The big companies, making big money, that are featured in FRONTLINE's "American Porn" report, first broadcast in February 2002.

HOTEL CHAINS

Marriott, Westin, and Hilton

These major hotel chains all offer in-room X-rated movies delivered to the hotel by one of two major distribution companies, LodgeNet or On Command. Some analysts say these in-room sex movies generate more money for the hotel chains than revenue from the hotels' mini-bars.

"The 5 percent or 10 percent of revenue that the hotel chain gets, that's pure profit to them because they have no cost," says Dennis McAlpine, an entertainment industry analyst. "They didn't put in the wiring system, they didn't supply the programming." (Read more of McAlpine's analysis.)

A Hotel Chain That Said 'No'

In late 1999, Omni Hotels announced that it would no longer offer adult pay-per-view movies in its rooms. The company's statement noted that it made the decision "in response to what it perceives as a growing need for corporate America to support pro-family issues."

Based near Dallas,Texas, Omni has hotels and resorts throughout North America and ranks 45th in the list of the top 50 U.S. hotel chains.

In an October 2000 New York Times article, Omni's president, Jim Caldwell, said that his company's decision to remove the sex-videos would cost it an estimated $1.8 million per year. The company stated that "[t]he anticipated loss in revenue demonstrates the company's commitment to the issue. Omni Hotels has already removed adult magazines from the gift shops at its owned and managed properties."

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CABLE & SATELLITE COMPANIES

Cable and satellite companies channel pornography into millions of homes and take approximately 80 percent of the pay-per-view dollar that gets spent by the consumer, according to Bill Asher, president of Vivid Entertainment, which produces adult movies.

AT&T - Comcast

AT&T's cable division, AT&T Broadband, distributed to subscribers the explicit porn channel, The Hot Network. But At&T sold its cable company and its connection to pornography to Comcast.

For AT&T, porn distribution had been great business, but there was no mention of adult material in the company's annual report, nor how much it contributed to the company's bottom line.

In the spring of 2001, an interfaith coalition of religious leaders brought their concerns about AT&T's connection to porn directly to the top at AT&T. Cardinal William Keeler, co-chairman of the Religious Alliance Against Pornography, met with AT&T Chairman C. Michael Armstrong, and told him, "Ma Bell shouldn't be selling smut." Keeler says that "when a company like AT&T, which has won the hearts and allegiance of so many, gets into this business, it's a way of legitimating it, saying it's OK, it's alright. That's the Good Housekeeping Seal of Approval we don't want to see put on this kind of business."

While AT&T refused to grant FRONTLINE an interview about The Hot Network, the company had publicly stated its position. It said that competitive pressures with companies like General Motors, which owned rival service DirecTV, was keeping AT&T in the business. (Read AT&T's letter of explanation, which cited competitor companies that also offer The Hot Network.)

General Motors - News Corporation

General Motors at one time owned the national satellite distribution service DirecTV, which channels pornography into millions of American homes for a nice profit. But General Motors sold its stake in DirecTV to Rupert Murdoch's News Corporation which continues to offer pornography channels.

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THE INTERNET

Yahoo!

Yahoo! has made lots of money selling ads and links to porn websites.

"When Yahoo! first launched, getting a site listed, even a commercial business site, was free," says Sam Agboola in his 2001 interview with FRONTLINE. He is director of marketing for Danni's Hard Drive, one of the most popular softcore sites online. "Nowadays it costs $200 to get a website listed unless you're an adult website, in which case they charge $600."

But Yahoo! ran into trouble in early 2001 when it announced that it was opening a virtual sex shop where millions of users could buy hardcore videos and DVDs. The anti-pornographers' assault began.

"I think what Yahoo! did was go one step beyond and say, 'OK, my customers want to see sex, I'll make it easier for them, and I'll categorize it," says Dennis McAlpine, an entertainment industry analyst. "Here's bestiality, here's whips and chains, here's whatever."

Overnight Yahoo! was bombarded by hundreds of thousands of email complaints. "The very next day, Yahoo! made some statement that they were getting out of this business, that they would no longer sell hard-core videos and were going to clean up their site," says Patrick Trueman, former chief of the U.S. Dept. of Justice's Child Exploitation and Obscenity Section. Trueman protested Yahoo's actions in a letter to U.S. Attorney General John Ashcroft.

Since then, Yahoo! has been in full retreat. As of January 2002, the company had closed its sex shop and began to hinder access to other porn sites.


Editors' Note: FRONTLINE's report focused on Yahoo! and not AOL or other Internet service providers such as FRONTLINE's underwriter in the 2001-2202 season, EarthLink. That's because Yahoo! actively entered into business arrangements with adult companies and directly profited from porn on the Web. AOL and EarthLink are what are known as "Internet service providers" (ISPs). FRONTLINE found no evidence of direct business relationships between ISPs and the adult industry.

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Mainstream Businesses and Porn: Tracking the Money


"The Perils of Covering Porn"
There are some significant roadblocks in accurately reporting on the porn industry's size and revenues, as this July 2001 Online Journalism Review article outlines.

"Will the Religious Right Make the Tech Slump Even Worse?"
In this May 2001 report on WSJ.com, Lewis Purdue researched the Web-hosting industry's reliance on adult websites -- which he estimates generate, at the minimum, hundreds of millions of dollars a year. Two examples: MCI owns the Web-hosting firm UUNet, which hosts the giant adult site, Cyberotica; and a business unit of Digex hosts the No. 2 adult site, adultrevenueservice.com, and two other adult sites.

"Mutual Fundamentals: Fending Off Stealthy Growth of Porn"
This February 20001 article in The Christian Science Monitor advises those who want to invest in stocks that reflect their values to look carefully at their holdings. "Most socially responsible mutual funds don't screen out pornography explicitly," writes Laurent Belsie.

"Wall Street Meets Pornography"
"The General Motors Corporation, the world's largest company, now sells more graphic sex films every year than does Larry Flynt, owner of the Hustler empire," reports Timothy Egan in this October 2000 report in The New York Times. Egan dissects some of Wall Street's under-reported ties to the adult industry.
(New York Times, Oct. 23, 2000)

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