Playboy CEO: TV Biz Is Changed ‘For Good’; Focused On Licensing, Gaming And VOD


Layoffs, an executive team reorg and other cost-cutting helped Playboy (NYSE: PLA) narrow its Q3 losses — but the company’s media businesses still aren’t fully turned around. So that means more layoffs. CEO Scott Flanders said the company had to reduce overhead expenses in “support and corporate” — though he hinted that Playboy might actually be adding to its “creative teams,” since the content they produce is what would ultimately add to the bottom line.

But Flanders admitted that online porn sites had “probably changed [Playboy’s] TV business for good.” So the company is still pinning most of its hopes for growth on international licensing: clothing, fragrances and flashy entertainment complexes.

Flanders and new President Alex Vaickus talked up Playboy’s fragrance deal with Coty, saying that the new colognes it launched (complete with an expensive TV campaign) had become “market leaders” in Italy and and Germany. But Playboy thinks it can make more money on licensing in the U.S., too — including the launch of a branded boutique hotel in South Beach, Miami, early next year.

Digital: Q3 revenue to Playboy’s subscription site was down by 20 percent; Vaickus said it was because the company spent the quarter relaunching its free site. The “lack of attention to traffic and conversions” led to the decline, but he said October analytics were showing a turnaround. Flanders said the company was working on a plan to leverage its “million-plus” Facebook fans, as well as mobile and online game initiatives. (Playboy is launching an MMO that lets players “manage” virtual Playmates, with Irish game developer Jolt Interactive).

TV: Playboy saw a $2 million decrease in domestic TV revs; Flanders said the continued shift to VOD was driving the decline, but that “overall subscriber numbers remained stable.” He said the company would “consolidate some networks” but in a way that still gave distributors and viewers access to enough content — with one specific network designed to feed web-based content to the TV, for example. He added that negotiations with cable and satellite providers to get premium positioning for the Playboy Channel (like HBO or Showtime) as opposed to just an adult service, were on track to improve revenues. Meanwhile, its reality shows like Girls Next Door and Kendra were doing so well on E!, that the company is launching another spin-off this quarter.

Print: Playboy will continue publishing 10 issues per year. This year the company combined its July/August issues; in 2010, it will combine Jan/Feb. It also plans to lower its production volume from 2.6 million to 1.5 million; the change will “lower ad and circulation revenues, but save us millions in production costs,” Vaickus said. Still, the company is expecting a 38 percent decline in ad pages for Q4 — and while reducing circulation and frequency will help save costs — it won’t get the mag to breaking even or profitability. So Vaickus said the company is still “looking for another option.” (A potential sale or JV?)

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