Monday, August 9, 2010

Penthouse goes down to 11 issues a year but still bids for Playboy

Penthouse July/August 2010

Penthouse has, for the first time in its forty year US published history, issued a combined issue for July and August. Although in the mid sixties, when it was first released in the UK, it didn't manage an edition every month for its first three years (1965, 1966 and 1967) since 1968 in Britain and in its first full year in the US (1970) it has published an edition every month. Penthouse is following the route of Playboy who also issued a combined summer edition last year to save money. However, they will find, as Playboy did, that the loss of an issue also means loss of advertising revenue as well but given both magazines are making a loss it is obviously still worth doing.

Playboy July/August 2010

Last week Playboy Enterprises inc. released its second quarter figures showing a net loss of $5.4 million compared with $8.7 million for the three months ending June 2009. In theory this looks like an improvement but, in fact, last year's quarter included $9.1 million in one off costs, largely relating to closing the New York office and this year similar one off costs only amounted to $1.6 million so in fact this year's results are worse than 2009. In addition revenue dropped 10% to $56 million

The situation was worse looking at the magazine where revenues dropped a staggering 38%. Even the website and digital editions couldn't help with an overall loss of 26% for the print and digital divisions. TV revenue dropped 5% as well and the share price dropped to $5.34 (down from a high of $32 in 1999).

The one piece of good news for PEI was that the licensing division revenue was up 23%. This is despite the fact that shops like WH Smiths over here have been withdrawing Playboy branded goods, such as pencil cases, aimed at children.

Playboy Store on Oxford Street

The London Playboy store on Oxford Street, which opened in September 2007 closed late last year; obviously finding that the market for pink diamante encrusted jackets at £600 was limited in a recession. The 4000 square foot, three floor shop must have cost, and lost, a fortune. Agent Triple P used to walk past it very day on the way to his office but only visited it once, with B. It was designed entirely for women and there wasn't a single thing there to appeal to chap about town other than some of the lingerie on a girl about town, of course. Actually, that wasn't too interesting either and both B and Triple P decided we preferred Agent Provocateur.

Playmates Lindsey Vuolo (November 2001) and Lauren Anderson (July 2002) flank Christie Hefner at the Playboy London store launch on September 27th 2007

Given its parlous financial state it is something of a surprise, therefore, that Penthouses' owners, FriendFinders Networks Inc., launched a $210 million offer to buy Playboy last month. However, 84 year old Hugh Hefner, who already owns 70% of the shares in PEI and is currently trying to structure a deal to buy the remaining shares and go private once more, says he doesn't want to sell as he is concerned for the future direction and heritage of the magazine. Nevertheless, Playboy's directors have formed a special committe to look at FFNI's bid whilst Hefner's move remains a proposal rather than a formal bid.

Playboy August 2010

Without Hefner agreeing to sell his 70% a deal looks unlikely. In the meantime, Playboy has gone out on a limb to gamble on the fact that there really are people who buy the magazine for the articles by launching a work safe Playboy site ( which has no naked women on it (but plenty in lingerie). Sadly, it is an inferior FHM clone aimed at the 25-35 age group. When is Playboy going to realise that the 40-66 market is largely untapped?