While losses on the magazine front are nothing new, the drop-off in TV business had traders worried. Upon news of the warning, the stock price fell by 22 percent, down $1.89 to $10.92.
“Given the changing dynamics of the domestic TV business combined with the challenges in the publishing industry, it is clear that we need to realign our cost structure to perform satisfactorily in this new environment,” Playboy Chairman and CEO Christie Hefner said.
Hefner went on to say that the company expects “weakness in publishing and domestic TV” to continue. But by offering her predictions for how the company would rebound, she gave a hint at why the Bunny was being beaten on TV.
“We expect a number of positive developments in the second half including video-on-demand product launches,” Hefner said.
In other words, as viewers switch to VOD, they abandon Playboy, which lacks a serious VOD presence.
To compound frustrations for the company’s TV efforts, DirecTV recently dropped the Playboy-owned Spice HD.
While long-term solutions for the company lay in building its VOD presence, the immediate future holds belt-tightening measures.
According to Hefner, stockholders who have seen revenue fall by 1.7 percent to $82.1 million, can expect reductions in “all categories of discretionary spending.”
