Penthouse magazine publisher Bob Guccione leaves federal court in New York in May 2002. Guccione, who erected an erotic corporate empire only to see it crumble into bankruptcy, died Wednesday at 79. ((Robert Mecea/Assocaited Press))

Bob Guccione, who founded Penthouse magazine and created an erotic corporate empire around it, only to see it crumble as his investments soured and the world of pornography turned toward video and the internet, died Wednesday. He was 79.

His family said he died at Plano Specialty Hospital in Plano, an affluent Dallas suburb. His wife, April Dawn Warren Guccione, had said he had battled lung cancer for several years.

Penthouse reached the pinnacle of its popularity in September 1984, when it published nude pictures of Vanessa Williams, the first black Miss America. Williams, now a singer and actress, was forced to relinquish her crown after the release of the issue, which sold nearly six million copies.

A frustrated artist who once attended a Catholic seminary, Guccione started Penthouse in 1965 in England to subsidize his art career and was the magazine's first photographer. He introduced the magazine to the American public in 1969 at the height of the feminist movement and the sexual revolution.

Penthouse quickly posed a challenge to Hugh Hefner's Playboy by offering a mix of tabloid journalism with provocative photos of nude women, dubbed Penthouse Pets.

"We followed the philosophy of voyeurism," Guccione told The Independent newspaper in London in 2004. He added that he attained a stylized eroticism in his photography by posing his models looking away from the camera.

"To see her as if she doesn't know she's being seen," he said. "That was the sexy part. That was the part that none of our competition understood."

'We followed the philosophy of voyeurism.' —Bob Guccione

Guccione estimated that Penthouse earned $4 billion during his reign as publisher. He was listed in the Forbes 400 ranking of wealthiest people with a net worth of about $400 million in 1982.

Guccione built a corporate empire under the General Media Inc. umbrella that included book publishing and merchandising divisions and Viva, a magazine featuring male nudes aimed at a female audience.

He also created Penthouse Forum, a pocket-size magazine that played off the success of the racy letters to the editor that began, "Dear Penthouse, I never thought I'd be writing you …"

Guccione and longtime business collaborator Kathy Keeton, who became his third wife, also published more mainstream fare, such as Omni magazine, which focused on science and science fiction, and Longevity, a health advice magazine. Keeton died of cancer in 1997 following surgery, but Guccione continued to list her on the Penthouse masthead as president.

Fortune wilted

Guccione lost much of his personal fortune on bad investments and risky ventures.

Probably his best-known business failure was a $17.5-million investment in the 1979 production of the X-rated film Caligula. Malcolm McDowell was cast as the decadent emperor of the title, and the cast included Helen Mirren, John Gielgud and Peter O'Toole.

Distributors shunned the film, with its graphic scenes of lesbianism and incest. However, it later became General Media's most popular DVD.

Guccione also lost millions on a proposed Atlantic City casino. He never received a gambling licence and construction of the casino stalled.

Legal fees further eroded his fortune. Among those who sued were televangelist Jerry Falwell, a California resort, a former Miss Wyoming and a Penthouse Pet who accused Guccione of forcing her to perform sexual favours for business colleagues.

In 1985, Guccione had to pay $45 million in delinquent taxes.

The next year, U.S. Attorney General Edwin Meese's Commission on Pornography issued a report attacking the adult entertainment industry. Guccione called the report "disgraceful" and doubted it would have any impact, but newsstands and convenience stores responded by pulling Penthouse from their magazine racks.

Print faded

Circulation dropped after the Meese commission report and years later took another hit with the proliferation of X-rated videos and websites. "The future has definitely migrated to electronic media," Guccione acknowledged in a 2002 interview.

In 2003, General Media filed for bankruptcy. A private equity investor from Florida acquired Penthouse the following year in a bankruptcy sale.

Penthouse and related properties are now owned by FriendFinder Networks Inc., a Boca Raton, Fla.-based company that offers social networking and online adult entertainment, including some with the Penthouse brand.

Guccione was born in Brooklyn and attended prep school in New Jersey. He spent several months in a Catholic seminary before dropping out to pursue his dream of becoming an artist. He wandered Europe as a painter for several years.

April Guccione said her husband was working as a cartoonist and a manager of self-service laundries in London when he got the idea of starting a magazine more explicit and aimed more squarely at "regular guys" than Playboy, which cultivated an upscale image.

Married four times, Guccione had a daughter, Toni, from his first marriage, and two sons, Bob Jr. and Nick, and a daughter, Nina, from his second marriage.