Hugh Hefner Wants More

In light of internet porn and a major decline in all magazine sales across the board, Hugh Hefner is still looking to purchase the part of Playboy he, himself, doesn’t already own. Hefner is convinced Playboy can still turn profit despite the famous magazine’s drop in sales.

According to Playboy, Hefner is in no way interested in selling or merging and is concerned selling Playboy may “threaten the brand and its legacy.” Hefner suggested joining forces with Rizvi Traverse Management LLC, a private equity firm, to assist in making Playboy private.

Not long after Hefner’s offer was announced, Playboy’s competitor, Penthouse said it would also make a bid. However, Hefner, who presently owns roughly 70% of Playboy’s voting shares as well as 28% of the non-voting stock, will not be outbid nor sway from his objective.

Hefner is offering $5.50 per share in cash and based upon the number of shares outstanding on April 30th, Playboy’s Editor-in-Chief’s proposal is worth nearly $122.5 million—valuing the company at around $185 million. According to Hefner, Rizvi Traverse has been working closely with “major lenders regarding potential financing” and added they are “highly confident ample financial resources will be available to complete the transaction.”

Presently, most of Playboy’s income comes from licensing the Playboy brand itself for consumer products. Its licensing unit generated a $21 million income in ’09; coupled with another $9.9 million from its television properties and merely $1.6 million alone, from the magazine (founded by Hefner in 1953) and its online site. Last year, Playboy reported a net loss of $51.3 million.

CEO of Penthouse and owner of FriendFinder, Marc Bell, said his interest in Playboy is more focused on their online presence and cell phones than print. “The real focus is on the digital side…It (Playboy) needs to be run like a 21st century company.”

The Publishers Information Bureau reported Playboy Magazine generated 44% of the company’s $240 million in revenue last year and sold 311 ad pages for this country’s editions—down substantially from 765 in 2000. Circulation has dropped by roughly a million copies during the course of the same period, to 2.02 million…in 1975, it was over 5.6 million.