HORRORS! IS PLAYBOY DONE?
Hefner’s death said toopen the door to magazine’s closing
THE
death of Hugh Hefner on Wednesday could also spell the demise of Playboy magazine, Media Ink has learned.
The 64-year-old iconic title, which launched Hefner’s empire back with Marilyn Monroe on its first cover, once had an iron grip on young male readers — and advertisers’ cash — but in recent years it has oozed red ink, along with readers and advertisers.
Rizvi Traverse, the company that in 2011 bought a controlling stake in Playboy Enterprises for $207 million, has one year after the death of Hefner to buy the founder’s 33 percent stake in the company.
Several months ago, Rizvi hired investment banker Moelis & Co. to figure out how to finance that purchase, sources said.
Rizvi may raise the cash needed to buy out Hefner by selling the magazine, sources said — although that has yet to be determined.
Meanwhile, in the 2011 sale Rizvi promised to publish a print version of Play- boy only as long as Hefner was alive, one source familiar with the deal told Media Ink.
“Hef’s contract with Rizvi stated that they were required to publish the magazine, and he got to be editor as long as he lived,” the former staffer said.
“So while he might not have been highly involved in the day-to-day, just him being alive served as a shield,” the source added. “And those of us working there always assumed that they would shut the magazine down the second he passed away.”
Others think it may take six months.
“At some point in 2018, I think we’ll see the print
magazine cease to exist,” said James Kaminsky, an editorial director at Playboy a decade ago.
Of course, Rizvi, whose portfolio of investments includes stakes in Twitter, Square, Snapchat and Flipboard, is not in the business of losing money on its investments.
Playboy, if not shuttered, could be “outsourced” or sold, the source said.
Rizvi was not talking on Thursday about its plans for Playboy — a faded but still noted brand around the globe. HEFNER, in reality, had little day-to-day input into Playboy the last several years.
He left that to his youngest son, Cooper, 26. who is the title’s chief creative officer. Cooper gambled earlier this year that a return to nude models would appeal to a new generation of young men — but so far that gamble has not paid off.
In truth, the decision mattered little to Playboy’s bottom line. The magazine is a money-loser. Playboy Enterprises, overall, is profitable, only because of its licensing efforts. Most of its estimated $100 million a year in revenue comes from licensing deals, sources said. The licensing part of the business throws off about $10 million to $15 million a year in profits, sources said.
It sells the iconic rabbit ears logo around the world on a wide variety of products from clothing to jewelry to, naturally, condoms.
While licensing its famous logo to others is profitable, the magazine that started it all has lost money for years — with some estimating that it bleeds as much as $5 million in red ink a year.
A lot of that red ink has to do with circulation. At its peak in 1972, Playboy sold 7.2 million copies a month — its high-water mark.
As recently as 2010, the magazine was boasting a monthly circulation of 2.5 million and working to maintain its status as the largest circulation men’s magazine. It consistently outsold its racier rival, Penthouse, founded by the late Bob Guccione Sr.
Guccione died bankrupt, with creditors grabbing his artwork to satisfy debts and his beloved Manhattan townhouse being auctioned off.
Hef still had his mansion but his magic touch seemed to wear off years ago. Circulation had fallen to about 700,000 in 2016 when Playboy CEO Scott Flanders decided to nix nude models.
Circulation then quickly fell to 500,000. After Cooper brought back nudes, circulation climbed back up to its current 579,000 level. THE rise of internet porn led to the decision to drop nudity.
The company hoped in February 2016 to recapture mainstream advertisers by abandoning nudity.
Using scantily clad models, Flanders believed, could attract more advertisers while at the same time giving it greater display on mainstream newsstands, where its risqué content kept it hidden in backs of stores or behind blinders.
Briefly, the new strategy seemed to work — then the bottom dropped out. Advertisers who tried it briefly did not re-up, subscribers dropped off, and newsstand sales, while up double digits, were still only a tiny slice of its overall circulation.
Younger readers were attracted but not in large enough numbers to off-set the angry older subscribers who dropped their subscriptions. THERE are some who still
hope for a Playboy revival.
“I think a lot of veterans would love to see a successful handoff to Cooper — the passing of the bunny to the son,” said Cindy Rakowitz, a former senior VP of Playboy Enterprises and the president of the Playboy modeling agency, who left in 2001 after a 16-year career.
But the odds of that happening are long.
The staff has gone through more than one upheaval in recent months, and Cooper was never viewed as a popular heir to the throne, according to insiders.
And the financial challenges that all magazines face are more acute at Playboy, which has always struggled for ads.
Said Kaminsky, “I think the idea that the magazine will spring back to life is unrealistic.”
Ben Kohn, the managing partner at Rizvi, is much more interested in the licensing side, said one source close to the present company.
“He says constantly that he doesn’t want to be in the media business,” said one source who recently left the company.
An expression of Kohn’s, he said, is: ‘Being in the media business is like trying to catch a falling knife.” HOW much Hefner’s one-third stake could fetch is open to debate. In the spring of 2016, Rizvi Traverse made a futile bid to sell all of Playboy for $500 million, which included assumption of about $150 million in debt. The disappointing offers that came were in the $300 million range — and the “for sale” sign was glumly taken down. With a similar valuation in today’s market, the financial source estimated that Hefner’s stake would be worth about $50 million — a far cry from even last year. It would be enough to make Hef weep.