CHICAGO—Playboy Enterprises hired Scott Flanders in June of last year to help the struggling company stay afloat in the middle of a recession in the economy and a depression in publishing. In the eight months since he assumed the CEO position, Flanders has begun to address the company’s ills by striking outsourcing deals and cutting in-house operations, and he has no plans to stop.
According to Greg Burns, writing Monday in the Chicago Tribune, by the time Flanders is done, the company could be reduced to half the size it is today.
“In a year, the Chicago-based media conglomerate could cut its headcount of 573 employees by half as partners take over its existing operations and expand into new ventures,” writes Burns. “Already, Flanders has outsourced production of the flagship magazine, and he's counting on big results from his recent deal with IMG Licensing Worldwide to take over the company's operations in Asia, he said. Playboy will be ‘open-minded’ about expanding the IMG relationship into Europe as well, he added.”
Closed deals include outsourcing the production of the iconic men’s mag and a recent deal with IMG Licensing Worldwide to assume the company’s operations in Asia, a relationship that Flanders said could extend to Europe.
Upcoming deals, according to Flanders, include “plans to open ‘four or five’ additional entertainment venues with partners by year-end, including a casino in Mexico and a nightclub in Miami.” The CEO also noted that outsourcing the company’s Spice Network and Playboy TV operations are also on the table, but would demand a much stronger partnership in order to succeed.
"There's no aspect of the business that I'm more focused on than TV," Flanders said. "Size matters."
Burns quotes Steve Marascia, a research analyst at Capitol Securities Management Inc., as expressing guarded support for the new plan. Without the necessary resources required to expand, he said, "The next best thing is to farm it out. This is probably the only viable option."
Another analyst, Robert Chapman Jr. of Chapman Capital LLC, which recently owned a 2 percent stake in Playboy Class B shares, said that the quality of Playboy’s new partners could very well determine which direction the company’s stocks trend.
"There's an awful lot of upside that comes from low expectations," he said. "It's like a million-dollar lottery ticket that somebody is willing to sell you for $3."
Playboy finished the day on Monday trading at $3.23 a share.
