Playboy Enterprises, Inc. (NYSE: PLA) Is The Buyout Priced In?

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Playboy Enterprises, Inc. is a global media and men's lifestyle company whose ubiquitous bunny programming and content is available worldwide on television networks, websites, mobile platforms, radio, and for over 50 years, in print. The company has three segments: Entertainment, Print/Digital, and Licensing. The Entertainment group operations include the production, marketing and sales of programming under the Playboy, Spice and other brand names, which are distributed through various channels, including domestic and international television (TV) and satellite radio. Print/Digital group operations include the publication of Playboy magazine, special editions and other domestic print businesses. Licensing group operations include the licensing of consumer products carrying one or more of its trademarks and/or images. It's now been over a month and a half since the most recent earnings for Playboy was announced. Second quarter 2010 segment income declined to $0.4 million from $3.6 million last year. The 35% increase in licensing profits was partially offset by lower Entertainment Group income and higher corporate expense. Playboy expects the advertising revenues to be lower by 45% in the first quarter of 2010, and the market seems to have adjusted for those expectations. Shares zoomed before the announcement after Hefner himself made an offer to take the company private again at a premium price to the previous day's close, but since then, share have been hovering around $5 a pop. However, shares have struggled to catch up with the entertainment-diversified industry, which has tacked on a healthy 3.78% this year. But who can easily rule out the performance of playboy which has gone through many ups and downs, while public and private, for over five decades? Playboy had $24.6M in cash at the end of last year and doesn't seem to suffer from any serious liquidity issues. The proposal to take the company private by Heffner for $5.50 a share in cash is still under review and values the sexy franchise at $185M. And how about those rumors of Penthouse taking over instead? Playboy said Hefner is "not interested in any sale or merger, selling Hefner's shares to any third party or entering into discussions with any other financial sponsor." For more information visit

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Playboy Enterprises, Inc. (NYSE: PLA) Is The Buyout Priced In?

By: Ronald Russo

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