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:
“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.