Playboy's Loss Is Smaller Than Estimated as Penthouse Publisher Cuts Costs

Playboy Enterprises Inc., the target of competing takeover bids from founder Hugh M. Hefner and the owner of Penthouse magazine, posted a smaller quarterly loss than analysts projected after lower restructuring costs.

The Chicago-based company had a second-quarter loss excluding items of $3.8 million, or 11 cents a share, according to a statement today. Analysts expected Playboy to lose $4.95 million, or 15 cents a share, the average of estimates compiled by Bloomberg.

Playboy reported a restructuring charge of $1.6 million linked primarily to staff reductions, less than the $3 million it predicted in June.

The company earlier this week said its board has formed a special committee to evaluate Hefner’s offer of $123 million to acquire all the shares he doesn’t already own. The bid of $5.50 a share values the entire company at $185 million. Hefner, 84, controls 70 percent of the Class A voting stock and 28 percent of the Class B non-voting stock,

Playboy didn’t say whether its board has met with executives from FriendFinder Networks Inc., which offered $210 million to acquire Playboy, a 14 percent premium to Hefner’s bid.

FriendFinder, based in Boca Raton, Florida, publishes Penthouse magazine and runs adult websites. The company’s chief executive officer, Marc Bell, on July 15 requested a meeting with Playboy’s board. Bell has since declined to say whether any meeting has taken place or been scheduled. Martha Lindeman, a Playboy spokeswoman, wouldn’t say whether the board plans to meet with Bell.

Fewer Magazines

Profit at Playboy’s magazine group fell as the company published fewer issues in the U.S., cut the circulation number it guarantees to advertisers and fought a lawsuit related to editions in Mexico.

Playboy Class B shares fell 1 cent to $5.38 at 4:15 p.m. in New York Stock Exchange composite trading. The stock has increased 68 percent this year.

Revenue was $56 million, down 10 percent from $62 million a year earlier. Analysts estimated on average revenue of $58 million. Net loss, which included litigation expenses, was $5.4 million, or 16 cents a share, in the second quarter compared with $8.7 million, or 26 cents, a year earlier.

To contact the reporter on this story: Brett Pulley in New York at

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