Playboy for Sale?

CHICAGO - Playboy Enterprises is "open to discussions" regarding the sale of the company after suffering a massive fourth-quarter loss, interim chairman Jerome Kern said Wednesday.

Playboy reported a loss of $145.7 million for the final quarter of 2008, compared to a $1.1 million loss in the same period last year. Revenues fell 19 percent to $69.8 million.

During a conference call to Wall Street analysts, Kern was asked if the company would consider an outright sale or a change in the editorial direction of its flagship magazine. "We're willing to listen," he said.

But a buyout would require the approval of Playboy founder Hugh Hefner, who still owns a controlling share of the empire he created in 1953. Some observers say the company is more likely to attempt a turnaround than to sell.

Playboy attributes a large part of its recent losses to a reported $157.2 million in restructuring costs. The company trimmed 14 percent of its staff in 2008, and plans more layoffs as it consolidates its online and print divisions in the coming year.

"The results of our [restructuring] efforts to date should be meaningful, but in the face of current economic conditions, it is clear that our streamlining initiatives need to continue," Kern said.

Broadcast and VOD helped make the company's Playboy Entertainment division profitable at the tail-end of 2008, contributing to a rise in segment income, but the unit still suffered an overall loss. The fourth-quarter slump even extended to licensing of the Playboy brand, which the company has touted as its strongest asset.

In its year-end results, Playboy reported a loss of $156.1 million for 2008, compared with a profit of $4.9 million in 2007; annual revenue declined 14 percent to $292.1 million.

Despite the doom and gloom of the numbers, Kern seemed hopeful about the future.

"Our financial performance is not reflective of potential," he said. "Over the past several months, the company has accelerated the pace of expense reduction designed to bring our cost structure in line with current market realities and the positioning of our businesses going forward."

Playboy's fiscal plans for 2009 include a non-cash impairment charge of about $5 million in the first quarter. The company expects to record a $9 million charge in the first half of the year related to the closing of its New York offices. 

The company projects a 27 percent decline in publishing and ad revenue for the first quarter of 2009.

"The biggest challenge is restructuring our monthly magazine, and we're not alone in that," said Playboy exec Bob Meyers. "Print and digital have always been collaborative at Playboy. But rather than developing content for two different sides, we'll be adapting content for print and online and mobile. While long-form articles tend to work best for the print magazine, much of what we offer works best in a combination between print and online, such as humor and photos. Plus, that will present advertisers much more opportunity." 

Meanwhile, longtime CEO Christie Hefner received a $2 million severance package from the company after stepping down in December. After 33 years with the company, 20 of them as its chief exec, Hugh Hefner's daughter was reportedly entitled to $1.6 million - leading some to question the final figure.

"The board decided that providing the $2 million in severance wasn't a violation of our fiduciary responsibilities," Kern told the Washington Post.

Hugh Hefner, 82, is still the head honcho of Playboy magazine, and still in the public eye with his "Girl Next Door" series on the E! Channel. The company has hired an outside firm to find a replacement for Christie Hefner.

"I'm starting to get used to 'interim' in front of my name," Kern quipped. "I hope my wife doesn't start getting too used to the title, though."