Playboy Enterprises (NYSE: PLA) reported another bad quarter yesterday, as Steven Mallas reported. It's no secret that Playboy is struggling because of changing demographics and the economy, but the post-earnings release conference call included another bombshell: The monthly magazine that was founded in 1953 may not be monthly for much longer.The Wall Street Journal reports (subscription required) that "Playboy magazine, which has a guaranteed circulation of 2.6 million, this summer will combine its July and August issues to save money on printing and distribution, a move it says could be a precursor to a permanent curtailing of frequency."
On the conference call, CEO Jerome Kern admitted that "it is clear that this company cannot continue to sustain significant losses in a business that now comprises less than one quarter of the company's revenue base."
Yes: The magazine that made the company famous now comprises less than a quarter of its revenue. Playboy is dead, long live Playboy? As the company looks to return to profitability, the company's new management -- Hugh Hefner's daughter was exiled after her reign of terror -- has realized that, given the company's weak balance sheet, there can be no sacred cows.
The good news for shareholders is that the brand has expanded enough that it can make money with a dramatically smaller cost structure and licensing deals. Whether it can be profitable enough, quickly enough to provide strong returns remains to be seen.
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