Since the beginning of November, Hefner has paid about $3.55 million to acquire a total of 238,000 shares of Playboy Enterprises Inc. The stock was priced from $14.40 to $15.35 a share, a premium compared to the $13.09 Hefner paid earlier this year when he bought $5 million worth of Playboy shares.
In September, Playboy invested $12 million for online distribution purposes, specifically ICS, which owns Adult.com GFY.com, RealityCash, Webmaster Access trade shows and CinemaPlay Entertainment Group, a Chatsworth, Calif.-based video distribution outlet.
Hefner's recent stock purchase shows his faith in the company's focus on high-margin, low-capital businesses such as online services and licensing at the expense of its flagship publishing arm. Hefner founded the company in 1953.
At the time of the ICS deal, Playboy said it expected the purchase to create an opportunity to promote its websites to a broader audience through affiliate networks operated by ICS, and to roll out new products, sites and distribution outlets.
“The acquisition was part of [our] strategy to expand online revenues through bolt-on acquisitions in that space,” Playboy spokesman Jay Jay Nesheim said. “We acquired an affiliate program infrastructure that will give us the opportunity to expand our traffic reach across all of our properties, including the subscription clubs, online store and new digital Playboy magazine.”
Joe Lensman, who continues as president of Adult.com after the ICS-Playboy deal, earlier told XBiz that adult entertaiment’s prime money-earning business model has dramatically shifted over the last decade.
“Online is the future of adult entertainment and this allows the company to grow in several categories while at the same time it shows Playboy’s commitment to webmasters and to its customers,” he said.
Playboy's stock price has risen from $11.33 in January to a high of $15.45 earlier this month. In trading on the New York Stock Exchange on Tuesday, Playboy shares gained one cent to $14.95.
