AOL Money & Finance

Makeover needed: Playboy

More

This post is part of a feature on companies and products that our bloggers think are in need of a makeover. See all 26.

They had to twist my arm to write about Playboy Enterprises Inc. (NYSE: PLA). At least that's the story I am telling my wife and I am sticking to it.

The problem Playboy faces -- as do other purveyors of adult entertainment -- is a simple: why buy a cow when you can get the milk for free. That's a crude and probably sexist metaphor, but an accurate one. Not only is the amount of porn on the internet mind-blowing, but increasingly it's free and can be accessed anonymously. For Playboy and its competitors, the problem is only going to get worse because the popularity of these sites appears to be soaring.

Wall Street already has little faith that the Chicago-based company can redeem itself. Shares in the company built by Hugh Hefner have dropped more than 82% this year. The company has been a mess for years. Net income in the second quarter was a puny $2.1 million, or 6 cents per share. Revenue fell 14% to $73.4 million as higher licensing revenue did not offset the declines in its media business.

Particularly worrisome was the loss in the publishing unit of $1.9 million following declines in circulation and advertising at the domestic edition of Playboy magazine. Advertising pages dropped a whopping 10 percent in the third quarter.

Playboy needs to reinvent itself in a hurry. The magazine did stand for free speech along with showing pictures of naked women. Hugh Hefner deserves credit for paying for the obscenity defense of his good friend Lenny Bruce, a comic who tested the bounds of taste back in the 1950s and 1960s. Without Bruce, there could have been no Howard Stern. Maybe it can take stands on issues besides silicon versus saline implants.

The company recently closed down its DVD business and probably should shutter the magazine as well and convert itself into a purely digital operation. The Playboy Playmate really is an idea from the 1950s when guys were supposed to covet the girl next door. The Playmates are supposed to appear wholesome. Playboy's competitors do not place their models under those types of restrictions.

Investors have argued for years that Playboy would rebound once Hefner died. Well, the original playboy looks healthy as a horse. Maybe it's the young girlfriends. Maybe it's how he gets his "exercise." I don't know but I am curious. For his company to survive, however, it needs to evolve beyond his vision of the brand from the 1950s.

Does Playboy need a makeover? What would you suggest? Be sure to check out the other makeover posts.

Reader Comments (Page 1 of 3)

Symbol Lookup
IndexesChangePrice
DJIA+17.4610,023.42
NASDAQ+7.122,112.44
S&P 500+2.671,069.30

Last updated: November 09, 2009: 12:04 AM

BloggingStocks Exclusives

Hot Stocks

DailyFinance Headlines

Latest from BloggingBuyouts

TheFlyOnTheWall.com Headlines

BioHealth Investor Headlines

WalletPop Headlines

My Portfolios

Track your stocks here!

Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

BloggingStocks Partners

More from AOL Money & Finance

WalletPop Headlines