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PLAYBOY ENTERPRISES CUTS DVD PRODUCTION AND SLASHES 80 JOBS
By: Andy Powell, Staff Writer -10-16-08 - 12:00 a.m. PDT
This hot news flash came across Reuters yesterday and it is truly showing how the American Economy is having a massive effect on the Adult Film Industry as a whole.
With retail stores reporting DVD sales down by as much as 14% and rentals down as much as 12% in both Heterosexual and Gay and Lesbian Adult films, it's no wonder that we are hearing about the giants of our industry feeling the pinch of this economy.
Playboy Enterprises will cease all DVD productions and will be cutting up to 80 positions at Playboy Enterprises's payroll as part of their new strategy that is projected to save well over $12 million dollars a year in expenditures.
CEO Christie Hefner put out Playboy's plan in the report filed with the U.S. Securities and Exchange Commission (SEC).
As part of reducing costs, Playboy Enterprises (www.playboyenterprises.com) will be shutting down its DVD operations all together and, Playboy will consolidate its West Coast offices, outsource newsstand sales, make the switch to lighter magazine paper, and will be over looking employee travel, entertainment and overtime expenditures.
Our goal is to return the company to solid profitability in 2009," CEO Christie Hefner wrote in a letter to employees. "When we reported earnings two months ago, we indicated that we expected to reduce expenses by $10 million, with approximately half coming from corporate and other overhead and the other half from the publishing and television businesses.
Hefner continued..."Today we are announcing the specific actions being taken to achieve those goals."
According to Chairman of the Board Hugh Hefner, Playboy will continue to increase their attention on internet content delivery and other digital media platforms while eliminating their DVD production unit over the next several months.
Playboy Enterprises, Inc is in now way in trouble of shutting down so please do not fear that JRL fans. While PlayBoy Enterprises did post a loss for the third quarter which ended Sept. 30th, the restructuring costs account for a third of the company's projected $6 million in charges against operating income for Playboy Enterprises.
The company is well-positioned to weather these difficult economic times," Hefner said. "Our balance sheet is strong, our debt level is reasonable with a below market interest rate of 3 percent, and we have a solid cash position of more than $25 million and access to a $50 million revolving credit agreement."
Playboy Enterprises, Inc is a strong institution both financial and branded and they should see the rewards come through on their fouth quarter earnings report that's due out December 30th, 2008.
As of Wednesday October 15, 2008, Playboy Enterprises (PLA) stock closed at $ 2.10 a share.
To show how the economy has taken a serious dive for Playboy, their 52- Week high reached $ 11.80 a share.
To get a full profile of Playboy Enterprises, Inc's financial status, Click here.
