Sports Illustrated's swimsuit edition has long been a magnet for controversy, mainly from parents who do not like the contents. To each his own, but I find it interesting that this year's installment may not find its way to Wal-Mart (NYSE: WMT) shelves, for a totally different reason.

WMT's problem with the magazine is really a problem with the wholesaler's demand for a seven-cent surcharge on delivery of each copy of the magazine. However, this New York Post article notes that the problem goes far beyond WMT and the swimsuit edition.

The article says that the problem boils down to two wholesalers: Source Interlink and Anderson News. The duo enacted the surcharge three weeks ago in hopes of "shoring up" a money-losing business. However, it certainly appears that this strategy may have backfired, as Time Inc., Bauer Publications, and American Media (three publishing giants) all refused the surcharge.

With the newspaper industry in decline and big layoffs at a lot of big newspapers, this is a tough time to be a journalist. But someone forgot to tell that to the elite sportswriters who, according to The New York Times, are receiving offers of double or triple what they earned at newspapers to write for Yahoo! Sports (NASDAQ: YHOO) and ESPN. Even Sports Illustrated lost star columnist Rick Reilly to ESPN -- for a reported $3 million per year.

The Times quotes sports agent Leigh Steinberg: "It's the exact same model as what happened to athletes. We're seeing free agency for sports journalists."

In spite of all the complaining and gnashing of teeth about the decline of journalism, I would argue that the internet is the best thing that has happened to the industry in a long time. The rise of aggregators and syndication has probably created a decline in the number of reporter jobs available -- but less duplication of efforts is good.

Last week, for the first time ever, Chinese men had a chance for that once-a-year spectacle that so many American men have counted on for decades: the Sports Illustrated swimsuit edition. While pornography is still outlawed by the communist government, it's a wall that appears to be on its way down. Soft-core pornography is becoming more available, and some websites are going even further.

It seems likely that as China continues it's sprint toward modernization, pornography will one day be legal there. When that happens, the adult entertainment industry will gain access to a huge new market. I would continue to monitor China's laws and, in the event that pornography is legalized, take a long look at stocks like Playboy Enterprises (NYSE:PLA) and New Frontier Media (NASDAQ:NOOF).

Of these two companies, New Frontier has been performing far better of late. But an iconic American brand like Playboy may find new life in China, where all things American (like baseball) are the rage.

The Publishers Information Bureau of The Magazine Publishers of America tracks magazine revenue and advertising pages each month. The study covers all major magazines and weekly newspaper inserts.

PIB, as it is called in the industry, takes gross pages and multiplies them by published rates for advertising pages by magazine. So, discounting is not reflected in the numbers. Assuming that the market makes all major magazine discount at about the same rate, the numbers are good from a directional standpoint.

In the period from January to July 2006 compared to the same period in 2005, the larger magazines at Time, Inc. did not do terribly well, and indication that revenue and operating profits at the group may not be strong for the second half of the year. With the costs of postage, ink, and transportation rising, mostly due to higher oil prices, margins will be squeezed unless revenue is rising smartly.

In the seven month period, Sports Illustrated ad revenue was up .9% to $346 million. Ad pages for SI were flat.

In addition to its recent acqusition of video sites Game Daily, Userplane and Truveo, all designed to capture gamers' eyeballs, Time Warner has also been rolling out a strategy to capture sports fans' eyeballs. Time Warner recently announced the launch of mySI, its customizable desktop application of Sports Illustrated. Sports fans will be able to have the latest sports news, scores, highlights and lowlights, statistics and trivia on their favorite football teams sent to them automatically throughout the day while at work. By next year, mySI hopes to include obsessive coverage of both professional baseball and basketball. Makes playing Texas Hold'em online seem like a productive use of time.

Turner Network Tevelevision, a division of Time Warner, this month teamed with PGA of America to bring together live TV coverage of the PGA Championship won by Tiger Woods, in addition to four different broadband channels of streaming video via PGA.com Pipeline. Viewers could watch the action live from the greens on TNT, or viewers could select "Player Cam" and follow a group of players as they tried to chip their way up the leaderboard. Viewers could also try to improve their own game by selecting pointers from the pros on the PGA Learning Center. Viewers could also chose from the many player profiles and favorite moments in golfing history via Inside the Ropes.