Playboy Increasing Online Budget

CHICAGO -- Playboy is upping its budget for online content, according to a 10-K filing reported Monday by the Washington Post.

The newspaper said the filing included information that didn't appear in the company's recent fourth-quarter earning report or call with investors. In 2008, Playboy raised production costs for online and mobile programming to $7 million, an increase of 25 percent.

According to the filing, those costs account for 14 percent of total production expenses, a 9 percent increase from 2007. A good part of that money went to the creation of webisode vignettes, the Post reported, including a series, sponsored by Audio, about three college interns working at Playboy's New York City offices.

The filing is anchored by the company staying true to the legacy of Playboy's image and its world-famous bunny trademark.

"We believe that our trademarks, particularly the Playboy name and Rabbit Head Design, and other proprietary rights are critical to our success, growth potential and competitive position," the company stated. "Accordingly, we devote substantial resources to the establishment and protection of our trademarks and other proprietary rights."

To that effect, it appears the company may well take a more aggressive stance globally against copyright infringement, though it could well deter business operations.

"Our actions to establish and protect our trademarks and other proprietary rights, however, may not prevent imitation of our products by others or prevent others from claiming violations of their trademarks and proprietary rights by us," the filing said.

"Any infringement or related claims, even if not meritorious, may be costly and time-consuming to litigate, may distract management from other tasks of operating the business and may result in the loss of significant financial and managerial resources, which could harm our business, financial condition or operating results.

These concerns are particularly relevant with regard to those international markets, such as China, in which it is especially difficult to enforce intellectual property rights."

The company also addressed its status on the New York Stock Exchange, suggesting it could be delisted should the price per share of common stock fall below NYSE requirements.

This could happen if Playboy's average global market capitalization for 30 consecutive trading days is less than $75 million and, at the same time, total stockholders' equity is less than $75 million. The company would have 18 months to take corrective action.

While the NYSE has temporarily suspended its $1.00 minimum stock price requirement until June 30, 2009, Playboy said, "There can be no assurance that we will meet the NYSE's continued listing standards or that the NYSE will not act to suspend trading in our common stock and initiate delisting procedures."

Playboy 's online revenue dropped 24 percent in 2008 to $15.6 million. For more on the company's Q4 earnings, see AVN Online's February report, as well as industry experts addressing the future of Playboy.