Playboy in trouble: Profits decline in print and online

20.02.2009
An old-school publishing empire that has spent years trying to profitably transition to the Web is in trouble.

discussed its 2008 fourth quarter performance in a to analysts Wednesday. The news was bleak. According to , "Playboy reported a year-end net loss of [US]$156.1 million in 2008, compared to a net gain of $4.9 million during 2007. The majority of that loss came during the fourth quarter, which saw a profit loss of $145.7 million due, in part, to $157.2 million in impairment and restructuring charges."

Online losses weren't that bad, with a $7.4 million decline in fourth quarter revenues. According to Chief Financial Officer Linda Havard, $6 million of that "was due to our decision to outsource our e-commerce business. This led to a modest improvement in online margins, despite declines in advertising and pay site revenues."

This explanation sounds a lot like then-CEO Christie Hefner's explanation of a 2007 downturn in online profits, posted . "Our decline in online/mobile revenues in the second quarter compared with 2007 was due largely to our strategic decision to license our e-commerce and catalog operations, ShopTheBunny.com and PlayboyStore.com," Hefner said in the comment. She added, "the Playboy brand has never been more popular and relevant, and we see significant growth opportunities in our digital business, both domestically and internationally."

However, by the end of the year, it was clear that the company was having problems executing on its plans. Christie Hefner, the daughter of Playboy founder Hugh Hefner, resigned in December. In January, Playboy announced that it was combining its online and print editorial operations, and closing its New York office. It also closed its online poker room and canceled its Super Bowl party, "widely regarded as football's equivalent of the Vanity Fair Oscar party," according to Belinda Luscombe in .

Even bigger changes may be on the way. When Jonathan Boyer of Boyar Asset Management asked if, now that "there's not a Hefner in charge, is the company more open to an outright sale of the company or change in the strategic direction of the print magazine?" Interim Chairman and CEO Jerry Kern said, "Yes. We're willing to listen."