Although successful in cutting $7.4 million in overhead costs, principally in the publishing sector, Playboy Enterprises (PLA-$4.25) still reported a net loss for the second-quarter ended June 30 of $2.1 million, compared to $1.9 million in profit for the prior year period. Additional restructuring initiatives to cut spending further lay ahead in the second half of 2008, according to Chairman and Chief Executive Christie Hefner.
Advertising sales for the third-quarter magazine issues are closed, and management said it expects to report an additonal 10 percent decrease in advertising pages compared to last year, according to its second-quarter 10-Q filed with the SEC.
The firm is also dealing with the fallout from changes in consumer behavior for its digital content. Rival demand from video-on-demand platforms is stealing traffic from its traditional pay-per-view distribution channels.
To stem faltering growth, Playboy's near-term business strategy is the trite "slash-burn" maneuver. Ms. Hefner told analysts on its second-quarter earnings call that the company would implement an additional $10 million in cost reductions, half from TV and publishing and half related to corporate administration, in the second half of the year.
Hefner said the cuts in expenditures were "critical" to the company moving forward with solid footing in 2009. What she modestly forgot to mention, however, is that Playboy is still on the hook for an aggregate $8.3 million in guaranteed purchase payments (due in 2008 - 2010) for the 2006 acquisition of Club Jenna, a hardcore film production company founded by porn star Jenna Jameson.
Did the stripper best the chief executive?
Advertising sales for the third-quarter magazine issues are closed, and management said it expects to report an additonal 10 percent decrease in advertising pages compared to last year, according to its second-quarter 10-Q filed with the SEC.
The firm is also dealing with the fallout from changes in consumer behavior for its digital content. Rival demand from video-on-demand platforms is stealing traffic from its traditional pay-per-view distribution channels.
To stem faltering growth, Playboy's near-term business strategy is the trite "slash-burn" maneuver. Ms. Hefner told analysts on its second-quarter earnings call that the company would implement an additional $10 million in cost reductions, half from TV and publishing and half related to corporate administration, in the second half of the year.
Hefner said the cuts in expenditures were "critical" to the company moving forward with solid footing in 2009. What she modestly forgot to mention, however, is that Playboy is still on the hook for an aggregate $8.3 million in guaranteed purchase payments (due in 2008 - 2010) for the 2006 acquisition of Club Jenna, a hardcore film production company founded by porn star Jenna Jameson.
Did the stripper best the chief executive?
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Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.
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