Playboy Enterprises Records Loss

CHICAGO, August 8: Playboy Enterprises has reported a second
quarter loss of $3.3 million, versus last year’s profit of $4.6 million, on
revenues that were down $2.3 million to $80.5 million.

At the entertainment segment, revenues were down 3 percent
to $47.5 million, and income halved from $9.8 million to $4.9 million, largely
as a result of its television business in the U.S., with the loss of
exclusivity on DIRECTV and increased competition on the cable platforms.

Revenues from international TV, wireless and online
increased during the quarter compared to the prior year, primarily due to
higher revenues from the company's U.K. networks and increased wireless royalties.
International networks saw revenues rise from $11.9 million to $13.2 million.

The company partly attributed its quarterly loss to a net
restructuring charge of $1.9 million due to its cost-reduction plan, as well as
weaker results in the American publishing and TV segments. Christie Hefner, the
company’s chairman and CEO, noted, "During the second quarter we took a
number of actions to better align our cost structure with our digital media
strategy. These moves, which we announced last month, included both expense
reductions in our mature businesses and the elimination of approximately 30
positions, roughly half of which were open. While we have improved our cost
structure, we will continue to prudently invest in our expanding international,
online, wireless and licensing businesses to ensure we are optimally positioned
to capitalize on growth opportunities.”

She continued, "The year-over-year negative variance in
our second quarter results stems from a significant revenue shortfall in our
domestic television business, where an increasingly competitive environment has
combined with a technology shift to VOD from linear networks to create a
difficult operating environment. We believe that our performance will begin to
improve in the fourth quarter as a result of the rollout of Playboy as a
subscription video-on-demand product, the opening of our venues at the Palms,
the leveraging of our recent CJI acquisition and reductions in spending.”

Hefner expects the company to deliver a loss in the third
quarter, but does anticipate moving into a profit for the full year.