Playboy Posts $3.3 Million Loss
By: Carlos Martinez

CHICAGO - Pushed by its down domestic television business and dropping sales in its publishing unit, Playboy Enterprises posted a $3.3 million loss for the second quarter, the company reported today.

The quarterly results issued during its quarterly earnings conference call, showed the company posted $80.5 million in total revenue with a $3.3 million loss or about 10 cents a share. During the same period a year ago, the company reported revenue of $82.9 million with a profit of $4.6 million or 14 cents a share.

The figures also include a $1.9 million restructuring charge of about 9 cents a share.

“The challenges we face center around our two largest businesses of domestic publishing and domestic TV, each of which is in the midst of significant industry-wide structural changes,” said company Chairman and CEO Christie Hefner.

“On the magazine side, we are seeing lower revenues stemming from shifts in advertising spending to other media and a difficult newsstand market combined with higher paper and postage expenses.”

Playboy’s latest numbers equaled those forecasted by analysts polled by Thomson Financial. The company had warned investors that it would lose money during the quarter and that it would implement a cost cutting plan that would reduce its budget by $4.5 million.

Playboy’s magazine unit saw its revenue drop by 7 percent during the quarter from a year ago, to $23.8 million, compared to $25.5 million in 2005. The Entertainment Group, which includes its television unit, reported a 3 percent drop to $47.5 million, from $48.9 million a year ago.

The company blamed part of the television sector’s troubles on the loss of exclusivity on DirecTV along with growing competition on cable.

But Hefner said the company will see an upturn later this year, thanks to its efforts in the video-on-demand market.

“We believe that our performance will begin to improve in the fourth quarter as a result off the rollout of Playboy as a subscription video-on-demand product, the opening of our venues at the Palms and the leveraging of our recent (Club Jenna) acquisition and reductions in spending.”

Meanwhile, the company’s stock was selling at $9.17 per share this afternoon, with a 52-week high of $15.88, reached on Nov. 18, with a 52-week low of $8.90, reached on June 14.

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