IN THE BUNKER: Perhaps the only surprising thing about Diane Potter’s resignation from Gruner + Jahr last Friday is that she was forced to do it so publicly — the other G+J executives who know too much have quietly disappeared from view.

This story first appeared in the November 25, 2003 issue of WWD. Subscribe Today.

Of course, Potter had to take the fall. G+J’s director of consumer marketing, she was the one who’d confessed in her deposition for the Rosie O’Donnell trial that Rosie’s newsstand sales had been purposefully inflated to fool advertisers. She resigned Friday, “but for [G+J] to fire Diane Potter and think that cleans up the mess is absurd,” said a source close to the company.

There’s certainly enough blame to go around, and so far, G+J chief executive Dan Brewster hasn’t been directly linked to any of it. (Not that it’s stopped rampant industry speculation that his bosses in Germany are merely waiting a socially acceptable length of time before letting him go.) G+J executives could not be reached for official comment.

But over the past year, sources said, Brewster has steadily insulated himself from G+J’s day-to-day operations and delegated responsibility to a troika of executives just beneath him. Potter was one, while executive vice president Dan Rubin and chief marketing officer Cindy Spengler are the others. Brewster has taken pains to maintain plausible denial, but Spengler and Rubin have not.

Spengler was present on many occasions when Potter discussed circulation, sources said, and Rubin was behind the hiring of circulation executive Ron Sklon, now a consultant to the company.

Curiously, Brewster has kept most of the major figures from the Rosie debacle close — editor Susan Toepfer continues to labor on prototypes; publisher Joan Sheridan Labarge was handed YM when Laura McEwen bolted for Reader’s Digest in June, and Sklon, who arrived in 2002 just in time for Rosie’s meltdown and was horrified by what he saw, sources said, has nebulous duties.

Not that he hasn’t been tainted, too — Brewster had to hire another circulation expert, former Time Inc. executive Greg Zorthian, to vet the circulation of G+J’s other titles in hopes of appeasing advertisers. In an open letter sent to them on Friday, Brewster vowed, “The review of our methodology…and any associated errors will be fully disclosed to any and all interested parties.” Want to bet the advertisers can’t wait? — Greg Lindsay

LOCATION, LOCATION, LOCATION: Is the name Penthouse meant to be taken literally? While the skin magazine founded by Bob Guccione Sr. continues its trip down the tubes — it’s in Chapter 11, still losing money on rapidly shrinking revenues and Guccione has resigned as ceo — its parent just bought 712 acres of Mexican beachfront property for an eye-popping $115.5 million in stock to build a resort. Considering that Penthouse’s creditors believe the magazine is all but worthless, what was the seller thinking?

That he could win control of the magazine before Hustler founder Larry Flynt has a chance to buy it, said sources close to Penthouse.

The magazine is on the block and interested parties are circling, but the man who’s said to have the upper hand is one Fernando Molina, the land owner who’s formed a joint venture with Penthouse named “Penthouse in Ixtapa.” According to documents filed with the SEC, Molina’s land will be used as collateral for a $25 million loan to finance the new company, which would make it more valuable and more solvent than the current Penthouse itself. Penthouse declined comment.

With Guccione gone, bidders have the feeling Molina’s making his own play to take control of the franchise. “With Molina controlling the parent, the theory is that he can take control of the magazine,” said a source close to the magazine’s auction.

Potential buyers haven’t given up hope yet. However, Flynt confirmed through a spokeswoman that he’s still interested, and several sources said former Penthouse president and current Hollywood Movie Life publisher John Evans was mulling a bid. Not true, he said. “People keep calling me and asking about it because they knew I was there forever, but it’s hopeless.” — G.L.

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