Playboy Narrows Loss

CHICAGO: Playboy Enterprises’ new CEO, Scott Flanders, offered up plans for building a "stronger and significantly more profitable company," as the outfit released its fourth-quarter results, with net loss down from last year’s $146.8 million to $27.8 million.

In the quarter, revenues were down by 13 percent to $60.6 million. This quarter’s results include an impairment charge of $28.6 million, as compared with a $157.2 million charge in the prior year quarter.

"We are a long way from effectively monetizing the power of the Playboy brand," said Flanders. "Today, we distribute content across five unique media platforms and oversee well over 100 licensing agreements globally. Although each of our businesses has promising opportunities, our operations are subscale in industries dominated by large players. In our business, size matters. Our mission is to create a stronger and significantly more profitable company. To do so, we are changing the way we do business. Earlier today we announced a deal with IMG to outsource our Asian licensing business. This follows our November announcement of an agreement with American Media, Inc. to handle most of the non-editorial operations of Playboy magazine. These partnerships illustrate our strategic direction and represent the first steps in our repositioning.

He continued: "Going forward, we will refine our focus around the management of the Playboy brand and lifestyle. Core creative competencies will remain in-house, but we will seek to identify partners who can effectively manage and build our businesses. In executing this strategy, our goal is to create a leaner organization and to remove cost centers and overhead, while building relationships that create value for the brand, our businesses and our shareholders. As the deals we’ve signed demonstrate, we are making progress in transforming the company. This work continues, and our direction is clear. Evaluations of each of our businesses are underway and ongoing, as are discussions with potential partners. We will be putting the pieces of our new structure together in 2010 and expect to begin to see significant financial benefits from this transition next year. The media businesses will remain challenged through this year, although the domestic magazine business will benefit from our recently announced partnership with AMI in the 2010 second half. With new licensees in place and consumer spending showing signs of improvement, the Licensing Group is expected to report solid improvement in 2010 revenue and profits. In total, we expect double-digit percentage growth in segment income for 2010, but, more importantly, our goal this year is to position the company for much greater future profitability in 2011 and beyond by focusing on our core strengths and better optimizing the use of the brand."

In the Entertainment Group, segment income was down to $2.6 million on revenues of $23.7 million, with a 29-percent reduction in U.S. TV revenues to $12 million. There were, however, increased revenues and profits from international TV, thanks to higher licensing fees from European partners and reduced overhead.