Playboy Reports 3rd Quarter Results

CHICAGO — Playboy Enterprises, Inc., announced a net loss of $5.2 million for the third quarter ended Sept. 30 after $6.3 million in restructuring charges and provisions for reserves. Excluding those charges, the company reported net income of $1.1 million, which compares to net income of $2.6 million in the third quarter last year.

Third quarter 2008 revenues were $70.4 million, down from $82.8 million last year, in part reflecting the company’s decisions to sell its television studio assets and outsource its e-commerce operations. Lower Corporate Administration and Promotion expense and improved performance in the Licensing and Publishing Groups were offset by lower Entertainment Group results.

“We were pleased to return the company to profitability, excluding charges and reserves, but we can do better," PEI Chairman and Chief Executive Officer Christie Hefner said. "We believe that our focus on growing our licensing business, creating content for use on integrated media platforms and streamlining our operations will enable us to navigate through these difficult times and produce profitable growth next year.

"Early next year, a new website will debut that is more closely integrated with the magazine, and we expect to see growth in our total print and online audience and ad sales as a result."

Third quarter 2008 Playboy TV revenues rose both year-over-year and quarter-over-quarter. However, the sale of the Andrita television studio assets led to a decline in third quarter domestic TV revenue to $14.6 million compared to $17.6 million last year. Also, continued consumer migration from pay-per-view to the video-on-demand platform led to lower movie network revenues.

Other revenues were also down in the quarter in part due to a decrease in sales of DVDs. The company recently announced that it plans to exit that business.

The Publishing Group reported a segment loss of $1.3 million in the 2008 third quarter, an improvement from the $1.4 million loss reported in the prior year. Although Playboy magazine advertising and circulation revenues were down in the quarter, reductions in marketing, editorial and subscription collection costs more than offset the revenue decline.

The Licensing Group reported third quarter 2008 segment income of $6.7 million, a 5 percent increase compared to last year. Total consumer products revenues were up 7 percent year-over-year, led by a 12 percent increase in royalties from apparel and accessories.

As previously announced, the 2008 third quarter results included restructuring expense of $2.2 million as well as a total of $4.1 million in provisions for reserves related to a receivable from the sale of an asset and to archival materials. There were no comparable expenses in last year’s third quarter.

The complete report is available at the Playboy corporate website