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from www.businessinsider.com – Europeans are now so poor — or so scared — that they’re reducing their consumption of adult entertainment. That’s one reading of FriendFinder Networks’ Q3 2011 earnings. Sovereign debt, plus fears that its banks (and even the Euro itself) might not survive, are causing Europeans to cut their “discretionary” spending.

Revenues at the live video chat empire (which also owns Penthouse and “dating” site AdultFriendFinder) were down 5 percent to $87 million. All the company’s operating costs went up, and it lost $18 million in cash due in large part to crushing debt payments triggered by FriendFinder’s merger with Penthouse.

FFN CEO Marc Bell [pictured] blamed Europe:

“Revenue was impacted by a decrease in traffic and a decline in new subscribers and renewal orders primarily in European markets. …

“While we achieved certain business objectives, we are not satisfied with our overall performance in the third quarter. Europe remains a challenge where we have experienced lower user conversion rates and transaction acceptance rates.”

Bell has previously fingered the macroeconomic environment for hurting the porn biz. In Q1 and Q2 he cited the global downturn for hurting sales at his swingers networks and pay-per-view properties.

Worse, FFN appears to have become an almost negligible player in terms of advertising sales. It saw only $2,000 in ad income in Q3. It spent $8 million, mainly on search engine marketing, to promote itself.

There was one piece of good news: The company reported it is on the verge of settling a lawsuit brought against by Facebook for copyright infringements. FFN had allegedly been using the phrase “the Facebook of Sex” without social network founder Mark Zuckerberg’s permission.