The clock’s ticking for Playboy, folks.
During an earnings call earlier today, Playboy Enterprises‘ interim CEO Jerome Kern (who replaced Hugh Hefner’s daughter Christie after she stepped down last December) didn’t really have any uplifting news to share. The publishing company reported a $13.7 million net loss during the first quarter of 2009, more than 3 times the loss it took during the same period in 2008 ($4.2 million). Athough, we should note Kern indicated that the loss includes $8.7 million of “impairment and restructuring charges”.
In October 2008, Playboy laid off over a quarter of its workforce, axed its DVD business and its New York office and consequently merged its print and online operations to reduce costs significantly.
“These initiatives allowed us to offset all but $1.4 million of the nearly $17 million revenue decline and led to improved margins in our TV and digital businesses, despite a lower revenue base,” said Kern.
Lower revenue base, indeed. Revenues went down a whopping 26 percent compared to the same period in 2008, with digital revenue dropping to a lousy $9.3 million, down from $15.2 million during the first quarter last year. This was in big part due to the fact that Playboy decided to outsource its e-commerce operations. Domestic print didn’t perform all that well either, with reported revenue falling back to $13.5 million (down from $16.5 million during the first quarter of 2008). Total revenues for the period were $61.8 million, down more than 20 percent from $78.5 million a year ago.
The decline in revenues for Playboy is significant, and like so many others companies it is really struggling in this economy on all fronts of its business, and its publishing segment in particular. Fortunately, Playboy’s interim CEO has a brilliant game plan to save the print business from fading away:
From Folio:
“During the call, Kern said Playboy is considering “radical changes” of the print business model, including price increases, a frequency reduction and lowering its rate base of 2.6 million. The company said it would combine Playboy’s July and August issues into a double issue.”
That’s right, people! Fewer and fewer subscribers are opening Playboy’s magazines, and companies buying ad pages barely make up for the mere cost of printing and distributing them, but they’ve finally found the perfect solution to all their problems: charging more for fewer issues. Looking ahead, the company said it expects to report a 39% decline in magazine ad revenues in the second quarter compared to last year.
Anyone ever seen Blackadder? I think this memorable quote from an episode of the fourth season of that great TV series captivates my thoughts on this: “If nothing else works, a total pig-headed unwillingness to look facts in the face will see us through.”
Ten bucks says Playboy magazine doesn’t last as a standalone business.
will be interesting to see if things like the Playboy Archive (http://playboyarchive.com) help them to explore new subscription and delivery options
TC known for its anti porn propoganda. And would very much like to see all porn people go bankrupt.
Seems to me that Playboy forgot what business they’re in. Using the old MBA story “railroads would have thrived if they realized that they’re in the transportation business, not the train business”:
They’re not in the “pictures of naked ladies” business. They’re not in the “porn” business. They’re in the “provide news, interviews, stories, and photos that men (and women) can’t easily get elsewhere” business.
Sometimes you need to kill your former golden goose to transition the business. That may mean no tree-killing. It may mean clothing the women. Think “outside the box”, Playboy, pun intended.
Time for Hugh to go from 7 girlfriends to 4.
Robin – you seem to talk a lot of shit in this article (and most of your articles), yet you don’t provide a solution.
One thing you have to consider here is that publishing companies are in dire straits – I think everyone agrees with that. In the meantime do you expect them to just stop printing altogether and forego cash flows that may be needed depending on their financial situation and how their business is leveraged? They are buying time while they try to figure it out…but apparently perhaps all they have to do is ask you for the solution to their problems.
How do you know that these decisions by the CEO are not better in the short term financially for them while they try to figure out what to do next?
Also, Robin – I would assume based on your hard stance on this – where you think there is a solution they haven’t thought of – that you have either 1) not worked at a public company and dealt with shareholders, or 2) your experience in that area is EXTREMELY limited.
It’s just an opinion, and I really do think Playboy mag will get bought, I’m not just saying that. Fact is they’ve publicly stated to be open for discussions on a possible sale.
And yes I call out the CEO’s quote about the ‘radical changes’, because I think they’re stupid. I don’t pretend to have all the answers either, and I’ll also happily admit I was wrong when PE turns its business around.
I tend to agree with a lot of what you write in the article – including the part about it not lasting as a standalone business.
The thing is you stated very black and white that “they’ve finally found the perfect solution to all their problems”. At what point did he say that?
What he said is that they were making radical changes which in many people’s eyes, including mine, aren’t so radical. There could be a few reasons for this:
1. The CEO went overboard in using that terminology trying to perfume the pig for now and keep shareholders at bay, or…
2. Since Playboy has been around for so long and had the same business model, internally as a company this could indeed be considered radical from that sense (but not in an industry sense).
I still don’t see where he stated that he thinks “they’ve finally found the perfect solution to all their problems” however.
Because these aren’t journalists. They are bloggers who post articles based on very little information, just to encourage debate in the comments and attract visitors.
It is a blog you morons… I don’t Mike says to people I want you to write boring crap like newspapers do… you all need to read what the medium of a blog is…IT IS NOT A NEWSPAPER… do you understand that bobby… blogs are about opinion… deal with it.. and the reason why pboy is doing crap is because porn is free online.. the days are gone when you need pboy to power your one man love shows. all you need is the internet.. why pay for a picture when you can get a whole movie? duhh
“…yet you don’t provide a solution. ”
ahhh, I did not believe that Robin is/was on the board or an exec????
A true reporter only (surprise) reports.
Playboy already offers “virtual” subscriptions through Zinio (http://www.zinio.com/) to complement their regular print subscriptions. Unfortunately, they may have to start relying solely on virtual platforms, like Zinio, from here on out.
They had a good run, but the jig is up.
zinio isn’t the solution… the web is what is killing them in the first place… and why would the normal person install zinio?
Yeah, I imagine selling naked pics of women is a tough business with that whole interweb thing out there
Funny, it really is all about the articles now.
The only thing to save them will be great articles because it’s so unbelievably easy to find airbrushed pics of attractive women. (Or so I’m told.)
I did my best not to include any reference to the fact that there are articles in Playboy mag and you go ahead and spoil it.
Use 3d paper. Done.
Print is over and porn is free on the Internets. Shocker.
All old world media companies are facing the same dilemma. The revenue decline in traditional channels is not being offset by any of their digital channels. Interestingly no media company has found a solution to this problem. The only conclusion one can make is that the old model was incredibly inefficient. Going forward the total dollars spent on advertising will decline significantly (probably by half). As it appears there was that much waste in the traditional advertising model.
I thought I heard the most profitable part of the business is the merchandising…I guess women still like to have a bunny stensiled onto their underwear.
How about the cable TV channel ?
Licensing income was down $1.1 million to $5.6 million in Q1-09 compared to last year on a $1.2 million decline in revenues to $9.3 million. First quarter 2009 domestic TV revenues declined to $13.3 million from $16.5 million.
From music to soft-porn, nowadays nobody wants to pay for content. You pay only for Premium content. Anything else you can download it for free on the Internet.
And print media is pretty much doomed as well, so Playboy needs to come up with a new business model if they want to survive.
They need to redefine the Playboy’s audience experience, using social media, MySpace, and other digital channels to drive revenue.
I mean, when was the last time that you bought a printed Playboy’s issue?
…exactly, and this goes for all types of media. I have stopped reading ESPN.com because it seems that most of their reports/stories are premium and I refuse to pay to read the same crap when I can get it on Sportingnews, CNN, or the local paper’s web site for free.
this doesn’t surprise me. this has been long coming. it says in the first paragraph they were reporting loses in the first quarter of last year. porn is everywhere. plus, no one wants to see softcore porn anymore.
@Robin
The plan of the CEO is probably not “charging more for fewer issues” as you noted, but to charge more per issue but due to the reduction in number of issues (probably halved), the overall yearly cost to a subscriber would come down. That’s what I’d expect.
Playboy needs a complete overhaul! They need to make it more hip and young. They need to get bake to having great articles as well as pictorials.
The photos have become lame! It has become too soft, bring back classy nude photos that people want to see. A ’60s era photos spread showed more T&A than todays.
Playboy isn’t for real men. Fuck the plush, coy toys far from normal.
In case anyone did not read the first post, I will repeat the good news: over 50 COMPLETE issues are available online here (including the stories!): http://www.playboyarchive.com/
bah, who cares.. you need to install Micr0soft’s silverlight app to see the “free” issues..
nobody is interested in reading 50 year old magazines
Zinio is an interesting format and if I was Playboy I wouldn’t bet their business on it. I was a digital subscriber for almost three years but after I lost access to all my back issues by simply upgrading my computer several times over the years, I cancelled my subscription. I contacted Zinio tech support several times and was unable to get access again. They just kept sending the same formula email over and over again. I don’t think their tech support is in the US and they seem to work from a script that points back to the top if they work through it without coming to a solution. I even tried going directly to Playboy to help me get access to my digital editions again but they just refer you to Zinio.
Interesting article. I think the one thing that it leaves out is a mention of the recent redesign of the magazine.
Sadly, the redesign only reinforces the last quote in this article. They moved nearly all of the articles to the back of the magazine (which actually were pretty good). In addition they revamped much of their content to have a more ‘Maxim’ feel to it (cartoon-ish and colorful).
I think it was a bad move. They are trying to capture readership (young males) at the expense of content and brand equity (moved away from a more elegant and crisp presentation that evoked the sense of a ‘gentleman’s magazine’).
You know a company is in trouble when they start to compromise brand. Playboy has always danced the line between class and sexy. If you lose the class, you only have the sexy, and the internet has plenty of that.
The redesign really disappointed me as well. They really are going for a more maxim-like presentation, which is terrible. Not only have they moved the articles to the back, but they have decreased the amount of articles and the length of those that are left (including review sections). Again, very disappointing.
maxim is garbage devoid of any content interesting to anyone with an IQ of over 100..
by trying to emulate Maxim, playboy is digging its down grave.
no wonder it is losing millions every quarter
Obama will bail them out if the playmates unionize.
no one buys playboy mags anymore. Since the naked pictures of hot chicks and celebs(which sets them a part from other smut mags) can easily be found online.
Also, does anyone really read playboy for the articles.
Playboy needs to reduce print and increase online.
But they have to focus more on licensing the brand and start diversifying into other forms of entertainment using the playboy brand.
The author doesn’t understand how print works.
Lowering the rate base, increasing newsstand price, and reducing frequency- are all going to help.
losing money on circulation and trying to make it up on advertising is the old game. Making money on every print reader is more a more hard-nosed approach- it is not a solution, but it stops the bleeding, or at least the rate of bleeding.
I have noticed that many other high scale men’s magazines are getting a good amount of attention by getting celebrity writers. Find a celeb with half a brain (there are a few) and have them write for a few months each. Not a cure all solution, but it has helped many others in the same sinking ship.
Who wants to see scantily clad or topless woman ? they need to step the game and go more hardcore………
For all the techcrunch prudes out there,don’t forget we are here through sex yes sex,……..so remember that your mother was not the virgin Mary.
Hardcore, as in sex, is basically boring (IMHO) and the really beautiful women don’t need to appear in hardcore features. Why should they lower themselves when the can make a great deal of money just showing off what they have without having to deal with multiple partners and that whole scene? I mean, how many really attractive men are there in porn? Lots of overweight middle aged guys in foreign hotel rooms. Give me a break! I can look in the mirror myself.
Basically that leaves porn purveyors with the women who have no financial choice or are just not overly attractive. Too much of the sex industry is shot overseas and is violent and exploitive. It leaves a bad feeling to even browse around.
Playboy has that going for it. In general, it skirts the violent/exploitive/sleazy aspect of porn but I also agree that it’s not edgy anymore. The airbrushed high tech enhanced women definitely make one long for a bit of reality. And Playboy is a rich man’s magazine. You read Playboy and check out the auto/tech toys/vacation/liquor advertisements and it takes big money to live the Playboy life. Doesn’t ring true for me.
I think Playboy had a relatively good formula but there really have no way to compete with online services though they still have their brand and I could see them coming back. Art sites like digitaldesire.com have beautiful women or sites like suicidegirls.com etc. have young modern beautiful women, and in general, they don’t have the sleazy feeling of porn sites.
Another aspect of Playboy is that I think to some extent it has always been so “tame” that it didn’t offend wives to the same extent that some of the more edgy sites probably would.
This is one of those brands that will be eventually bought out of bankruptcy and resurrected 25+ years in the future.
Best news I’ve read today. Degrading to society and needs to disappear once and for all.
You are degrading to society, DM. Go lose some weight, hopefully enough that you disappear.
Don’t hold your breath DM. Pornography will never disappear until global warming kills us all off and the paper it’s printed on gets absorbed back into the earth along with everything else man has created.
I have enjoyed Playboy magazine for 40 years, since I was 5 years old. Strangely, last time I subscribed to the magazine was around 1989 (two years ago). I ended my subscription because of the recession. For some strange reason, I have continued to get magazines mailed to my home month after month for 20 years without every renewing. I’ve moved no less than a dozen times all across the country, even out of this country, but the magazine keeps finding me, almost like a stalker.
Nowadays, as soon as I get the magazine, which is getting thinner and thinner and thinner, I go to the two sections where there are nude spreads and rip them out. I throw away the rest of the magazine without looking at it.
Not long ago, I looked through the spreads, and they are the same basic poses and looks over and over.
So, I think that Playboy will go out of business and/or file for bankruptcy. Certainly, Playboy is an institution, it’s name is a world brand, but if Pontiac can become extinct, I guess so can Playboy. Playboy may likely follow Hugh Hefner to the grave. And, based on actuary tables, that is probably in the next 5-7 years. By then, most of the baby boomers who have grown up with Playboy will be dead too.
I do think PB needs a makeover. The girls are all 18-24 blonde co-eds with fake ta tas!!! I’m 49, look 29 (no lie) and have been blessed with a beautiful body and brains (okay, maybe it doesn’t matter!!!). It’s ALL REAL!!! So, I’m going to audition for PB (why not???) and my sales pitch will be to feature a woman with class, confidence AND a beautiful body. I think if PB diversifies its content they can save themselves. And I do believe there are men and women who appreciate the “art” of a woman’s body without resorting to tacky porn shots!!! IMHO
The internet cannot capture the “art” . . .
It’s not just PB but even the dirtier rags like hustler chic high society. Much like Walmarts did to mom and pop stores, the internet will put all forms of magazines out of business. None of these porn sites have any character, they’re all the same generic impersonal sites. Magazines had personality and reflected the individual publishers, Playboy and Hef, Hustler, had Flynt, etc. Time, Newsweek, Life, all had a different look and feel. With the internet, looking up news or porn, is just boring, cause it feels so antiseptic devoid of individuality in it’s presentation.