By Lucia Moses of Mediaweek
Playboy Enterprises Inc. (PEI) announced that it would outsource
most operations of its namesake magazine to American Media Inc.
with a goal of restoring its profitability by 2011.
News of the agreement comes following speculation that PEI was in
talks to sell the magazine. The company
slashed its rate base 38 percent to 1.5 million effective in
2010 and combined its January and February issues, but admitted
that further dramatic steps were needed to stem its losses.
Playboy is on track to lose about $8 million in 2009,
according to the parent company. Under the agreement, it expects to
reduce that loss to $5 million in 2010 and become profitable in
late 2011.
Under the agreement, AMI will be paid fees to handle
Playboy’s production, circulation, ad sales, marketing and
support services, while PEI will continue to handle the editorial
content.
PEI will take a $2 million fourth-quarter restructuring charge
related to the elimination of about 25 jobs, some of which will be
transferred to AMI, according to the deal announcement.
Playboy will join AMI’s stable of men’s titles, including
Men’s
Fitness,
Muscle & Fitness and
Flex. AMI’s
other titles include
Star and
Shape.
“By joining forces with American Media, we will be able to
significantly reduce our cost structure and leverage the economies
of scale related to manufacturing, distribution and marketing that
are available to this large, multi-title publisher,” PEI chief
executive officer
Scott Flanders said.
Playboy Outsourcing Most Magazine Operations
Nov 25, 2009
By Lucia Moses of Mediaweek
Playboy Enterprises Inc. (PEI) announced that it would outsource most operations of its namesake magazine to American Media Inc. with a goal of restoring its profitability by 2011.
News of the agreement comes following speculation that PEI was in talks to sell the magazine. The company
slashed its rate base 38 percent to 1.5 million effective in 2010 and combined its January and February issues, but admitted that further dramatic steps were needed to stem its losses.
Playboy is on track to lose about $8 million in 2009, according to the parent company. Under the agreement, it expects to reduce that loss to $5 million in 2010 and become profitable in late 2011.
Under the agreement, AMI will be paid fees to handle
Playboy’s production, circulation, ad sales, marketing and support services, while PEI will continue to handle the editorial content.
PEI will take a $2 million fourth-quarter restructuring charge related to the elimination of about 25 jobs, some of which will be transferred to AMI, according to the deal announcement.
Playboy will join AMI’s stable of men’s titles, including
Men’s Fitness,
Muscle & Fitness and
Flex. AMI’s other titles include
Star and
Shape.
“By joining forces with American Media, we will be able to significantly reduce our cost structure and leverage the economies of scale related to manufacturing, distribution and marketing that are available to this large, multi-title publisher,” PEI chief executive officer
Scott Flanders said.
