BEVERLY HILLS—In response to a request for comment, Larry Flynt, the legendary founder of Hustler magazine and the head of Larry Flynt Publications, weighed in Monday afternoon on the announcement by Hugh Hefner that he wants to buy back all outstanding Playboy shares and take the company private. The bottom line, Flynt told AVN, is that such a deal is highly unlikely given the current state of Playboy.
In a call to the AVN offices, Flynt first dispelled any notion that Hustler itself would be in the running for Playboy, were he interested in purchasing it.
“I don’t think Hef would want to sell to me,” he said, adding, “I think that would only be a desperation move.”
But Hefner’s plan is equally dubious, said Flynt, who recounted that the last publisher of a men’s magazine who tried to do something similar to what Hef wants to do was Penthouse founder Bob Guccione, “when he floated that $80 million bond issue in New York, and ended up losing the magazine completely.”
The current state of Hefner’s business, he said, only lessens his options. “He has had this constant erosion of profits that have affected his margins in an unbelievable way,” said Flynt, adding, “When you’re making a lot of money, you can have any kind of lifestyle that you want to have, but when the profits dry up, all that changes.”
It isn’t just Playboy that’s hurting, of course. All of publishing is experiencing a dramatic downturn, said the longtime magazine publisher.
“Publishing has had some trying times in the last two years, and it’s only getting worse,” Flynt said. “They’re closing Newsweek and a lot of major dailies have closed, and the same thing applies to a magazine like Playboy, and even the publications that we publish. We’ve had to go into somewhat of an austerity program to cut costs anywhere we can. So the fact that [Hefner] brings in [CEO Scott Flanders] who’s taking similar measures doesn’t surprise me, because it’s the right thing to do.”
Flynt was referring to Flanders’ moves outsourcing many of Playboy’s core functions, including the publishing division. Given the reality of both the marketplace and the company, he said, it makes a certain kind of sense that Hefner would want to take the company private, saying it costs about a million dollars a year to keep a company public.
Flynt speculated that Hefner had gotten some advice that going private would save a bundle, but he said he simply does not see it being a solution to the predicament Playboy finds itself mired in.
“Hefner already has control of the brand; he has a controlling interest in the company,” he said. “If all of a sudden the magazine started becoming more profitable, or some of his other entities became more profitable, well, the value of the stock would go up and the company would be worth more money. In fact, the best way to establish the net worth of your company is to go public, because the stock value does that. So, if he wants to build something, taking it private is not necessarily the best way to do that, and it’s not going to give him more control because he’s already got control.”
Hefner’s destiny is in his own hands, he said, whether the company is public or private, and added that he will be hard-pressed to find anyone who will lend him the funds he requires.
“I can’t see anybody loaning it to him that does not feel their investment is secure,” said Flynt. “The hedge funds and major money lenders don’t lend money to companies where there may be a question about whether they can recoup their investment. So I doubt that Hefner will be able to even put together the money, and if he does there are going to be a lot of strings attached to it.
“If Hefner doesn’t make the changes necessary to become competitive, then he will eventually go out of business,” he added. “His only hope is that the magazine will outlive him.”
Basically, concluded Flynt, the whole story sounds like a lot of nothing. “I don’t really see anything significant happening. I don’t think anything is going to save the company.”
There is a possible solution, he said, but it isn’t one that Hugh Hefner is likely to ever embrace.
“Pure and simple, when you introduce someone to porn, they like it raw and hard,” said Flynt. “They don’t want nude girls running down the beach. Until Hefner realizes that he’s got to compete on that kind of level, it’s a doomsday scenario for him.”
This dilemma is not a new one for Playboy, he offered. “They had access to the material, but Hefner never wanted it to go on the Playboy channel,” he said.
Considering his point of view on the whole scenario, Flynt had to believe that six months from now the situation would basically be the status quo for Playboy.
“That is my belief," he said, "and I’ll tell you what I base it on. Hefner is looking for a lot of money to buy back the stock so he can go private. I can’t think of a single lender in America or anywhere else that would loan him the money without it being secured. And if he gets the money, there will be a lot of strings attached, including maybe a lien on the stock and a lien on other properties, and I just don’t see that happening. Hefner could really put himself into a bind by signing whatever he has to in order to take up the other shares, and I just don’t see it happening.”
Regarding the news that FriendFinder Networks (the parent company of Penthouse magazine) may make a competing offer in the days to come, Flynt expressed scepticism regarding that scenario, as well, saying that he had his doubts the deal could be put together.
AVN has reached out for comment to Playboy but had received no reply by the end of day.
