Playboy and Profits at Work

SEX - Playboy Magazine, a hallmark of men's magazines since 1953 isn't just about busty young women with typical dimensions of 36-24-36, Patrick Nagel artwork or cartoons... its also about politically and socially motivated articles, thought provoking ones. When Hugh Hefner started the magazine in the 1950s he wanted to change the world, but he needed to lure men in so they would (hopefully) read the articles in addition to gazing wistfully at the photos within.

In 1971 Playboy went public, becoming a publicly trading company on the stock market. At the height of the magazine's popularity in 1972 they sold 7.2 million copies of one issue.

As Hugh Hefner got older (he is now 84) his control over the company dwindled and the editorial articles started to change their direction. In recent years this has begun to bother him and he now wants control of his company back.

Announced this week is a $123 million USD offer to buy back all A and B class shares at $5.50 each, a premium of 30% more than they're actually worth right now and values Playboy at $185 million USD total. (Hefner currently owns only 33% of the company.)

In recent years Playboy's profits have been down anyway, largely due to internet competition. After all why go through the embarrassment of buying a magazine and then telling people "I read it for the articles!" when you could get the same photographs and thought-provoking articles on the internet?

Thus Playboy Enterprises Inc. has been slashing jobs in recent years and combining units. Profits are so low the company has lost more than $200 million in the last 2 years and had to reduce the guaranteed number of copies they would sell (the rate base to advertisers) to 1.5 million from its previous 2.6 million.

From 1989 to 2009 it was Christie Hefner (daughter of the founder) who had been serving as the CEO. Last year she was replaced by Scott Flanders who wanted to turn the company more into a brand management company (selling the logos of Playboy Bunny and other icons to movies and other entertainment venues). While that would certainly help boost Playboy's popularity and their profit numbers, it is doubtful it would be enough.

During the first 3 months of 2010 sales dropped 48% and revenue dropped 30%. Scott Flanders was downsizing the company and the slashing of jobs meant cuts to the editorials too.

So will Playboy (which includes cable TV channels) be sold back to Hugh Hefner who will hopefully pump new life into the aging icon? Possibly. At this point the company is a sinking ship.

My advice to Hugh Hefner: Buy it back, bring back the thought-provoking articles that made Playboy "The New Yorker" of men's magazines, and make the website "free" and subsidized by advertising instead of the current rate of $7.95/month if you sign up for a year. As websites go Playboy.com has become incredibly underrated... you can read all the articles, movies reviews, celebrity interviews, etc for free... but there's no archive of old articles and they're competing with other internet companies on the basis of porn, but still trying to promote themselves as a general men's magazine with lots of articles.

My point is the website would be more popular and more profitable if it was completely free and supported by advertising instead (and frankly Hugh Hefner is rich enough already). If Hefner claims complete ownership the company will cease to be about the profits. He can go back to his roots, luring in men and hopefully getting them to read something that will provoke their brains.

I also think part of Playboy's problem is that the women shown within are so ridiculously unattainable that most men now dismiss the magazine because they know its unrealistic. The women in Playboy are so... sterile and perfect they're just not real any more. The Playboy ideal of beauty has become so unattainable that its become a turn off.

See Also
Playboy at Work