Private Posts 2008 Financials

BARCELONA — Even European adult entertainment giants have been affected by the global recession. Private Media Group today posted its final 2008 financial results, which revealed that net sales shrank by 5.3 million euros.

For the year ending Dec. 31, 2008, Private posted sales of 19.7 million euros compared to 25 million the previous year. The biggest drop came in the company’s DVD and magazine division, which decreased 3.2 million euros to 7.7 million.

The company’s Internet sales decreased slightly to 4.4 million euros, a drop-off of 0.2 million. Broadcast sales dropped as a result of a non-recurring TV licensing deal for German-speaking Europe, and wireless distribution sales decreased as well.

Private expects Internet, broadcasting and wireless sales to increase this year, particularly on the Internet side due to its purchase of online retailer Gamelink, which posted sales of $16.4 million in 2008.

“The acquisition of Gamelink is a significant development that will substantially contribute to our growth, while creating economies of scale,” Private CFO Johan Gillborg said. “As part of our digital strategy we have concluded that the combination of Private with a major online retailer and accomplished platform developer is the best approach to achieving our goals. The combined content assets of Private and core competencies of Gamelink offer a compelling new business model.”

As a result of transitioning to new media platforms in the broadcast, Internet and wireless markets, excluding the positive impact of the Gamelink acquisition, Private expects to post a growth in gross profit this year by 4.2 million euros.

“We have been transitioning our business model from linear to digital content production and distribution over the last 18 months and this has affected our margins,” Gillborg said. “As DVD and magazines sales have rapidly declined, we have made great progress moving to digital business with significant new media distribution deals and the monetization of our expansive library of content. We are now a leading adult content provider on all major digital platforms, and as they continue to build out and get larger, we project aggressive growth in both sales and net income. Specifically, we project the biggest gains to be achieved through Internet, broadcasting and wireless. During the 12-month period ending December 31, 2008, these platforms were responsible for 61 percent of our sales.”

Another avenue the company has targeted for aggressive growth is IPTV. Private has contracted with 36 major platform operators in 18 countries in Europe. Private currently has penetrated more than 75 percent of the European IPTV market.