Playboy may scale back magazine after losses soar

NEW YORK -- Executives at Playboy's parent company are considering cutting the magazine's frequency, reducing circulation or raising prices in order to save the money-losing publication.

"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," Jerome Kern, interim chief executive for Playboy Enterprises Inc., told analysts on a conference call Monday.

His remarks came as the company reported a growing first-quarter loss, suffering from falling revenue and big one-time charges.

Playboy Enterprises recorded a loss of $13.7 million, or 41 cents per share, compared with a loss of $4.2 million, or 13 cents per share, in the same quarter a year ago.

Charges for restructuring and write-downs on the value of its assets totaled $8.7 million, or 26 cents per share.

Revenue fell 21.5 percent to $61.6 million as the global slump in advertising and retail markets hurt the company's publishing, entertainment and licensing businesses.

U.S. revenue for the flagship magazine fell 16 percent to $13.5 million, or 22 percent of total revenue. And the company said it expects to report a 39 percent decline in magazine advertising revenue during the quarter ending in June.

The print/digital unit, which includes the U.S. magazine, international and special editions and Web sites, saw a 26 percent drop in revenue to $26.1 million. That unit posted a net loss of $3.6 million in the quarter, wider than the $2.8 million loss in the year-ago period.

The company said the monthly Playboy magazine would combine its July and August issues to reduce printing and distribution costs. By billing it as a "double issue," the company does not have to reduce the annual subscription price.

Beyond that, Kern said the company was exploring various scenarios to ensure profitability or "at least break even," but he could not say "whether or when we can get there."

In a statement, Kern also highlighted the parent company's cost-cutting moves, noting a 25 percent drop in jobs since October is yielding annual savings of $18 million.

Most recently, the Chicago-based company said in March that it was closing its New York office by May 1, laying off most of the 100 employees who worked there.

Shares fell 10 cents, or 3 percent, to close Monday at $3.21.