Playboy CEO Scott Flanders Wants to Get The Magazine Back At Least to the Break-Even Point

Playboy’s 3Q statement was released today.

Playboy CEO Scott Flanders comments: Good morning, everyone. When I started here four months ago, I knew the Playboy brand was an unusual and amazing asset. But in meeting with our partners and licensees in international markets, I have had the chance to see first-hand how truly powerful Playboy is, particularly in its global appeal.

I’ve also seen just how flexible this brand can be in terms of the products and services that can be aligned under its banner and how great an affinity it creates with consumers.

I believe that we have not yet realized the full potential of the brand. There is obvious growth potential in licensed products and particularly the location based entertainment or clubs business. But I think we can create momentum in other businesses as well.

As a first step, I am working to change the company’s culture. I am encouraging our people to more aggressive, more entrepreneurial, and more creative. I also have asked them to move out of their silos of their individual businesses and to think and act as if they operate across divisions. I am determined to create a more results oriented environment.

As part of that effort, I named Alex [Alex L. Vaickus] to the newly created position of President. This new organizational structure will more tightly integrate our businesses, creating a more collaborative work place that fosters creativity, drives growth, and not incidentally focuses on profitability.

As President of our successful licensing business, Alex has been an effective steward of the brand. He knows how to grow a business, as demonstrated by his success in turning licensing into our highest margin and most profitable business. I am confident our media business will similarly benefit from his experience and talent.

Like other companies, Playboy is working against a changing and challenging media landscape in a weak consumer economy. As a company that is a relatively small player, particularly in the publishing and TV businesses that are dominated by multi-brand companies, we also face challenges that are unique to our size and lack of scale.

I believe it is paramount that we determine what we can do best and handle the remainder through partnerships with others who can provide the expertise or volume that we need to operate as efficiently and effectively as possible.

This could mean creating joint ventures or it could mean additional outsourcing. Our options are varied and we are in conversations with a number of potential partners. I expect to have something concrete to report to you shortly.

Cost-cutting also remains a focus. Although much work has been done already, we will continue to look at opportunities to reduce overhead expense, particularly related to support functions and corporate overhead. At the same time, we want to continue to invest in the initiatives that benefit the brand and the bottom line, such as our content and creative teams.

The media businesses are all about creating and acquiring compelling content that audiences will pay to consume. This is something that we do well and that I expect will remain a core in-house competency. We have already seen a fresh new attitude begin to emerge in the magazine and the November cover of Playboy Magazine featuring Marge Simpson is a good example of that.

To help build a bridge across our businesses, I am planning to create a greenlight team that will ensure all of our content is representative of the brand in terms of quality and positioning and ideally transferable across our multiple distribution platforms.

As I have said repeatedly since joining the company, I believe that Playboy Magazine plays a critical role in supporting the brand and we will remain a magazine publisher. But we cannot continue to lose significant sums of money in this business. Two weeks ago, we told our advertisers that we will be lowering our rate base which will help reduce the magazine’s losses and Alex will give you more details on that in a minute.

I want to return the magazine to at least break-even, if not to profitability, but we will need to take even bolder steps to accomplish that goal.

In digital, the most powerful profit opportunity is our subscription pay business. This is about content but also about direct marketing, finding potential subscribers, converting them into customers, and retaining them for long periods of time.

We also plan to take advantage of new revenue streams created by social networks, including interactive games. We are working on ways to capitalize on our popularity on Facebook, where we have well over 1 million fans, the largest of any media brand.

In addition, our mobile initiatives in the Americas are gaining traction and we are encouraged by what we see.

TV was for many years the growth driver of this company. Online competition has changed this business, probably for good. But I believe that TV has a future and should remain a profitable and crucial piece of our content offerings. We are working to improve buy rates and operating margins with a particular focus on Playboy TV.

We are currently looking at ways to reposition the channel and will keep you updated on our progress.

Licensing is expected to remain our most profitable and highest margin business. In consumer products, we need to be more aggressive about finding new product lines, territories, and particularly strong licensees.

We recently met with Cody’s management to review their plans for our line of fragrances. They are a great partner — global, experienced, creative, and marketing oriented. We will look for more of these kinds of partners who can provide the scale needed to accelerate our growth.

Our entertainment venues, our clubs, may offer the single biggest potential of all but again it’s a question of finding the right partners and getting beyond the current tight capital markets, which tend to stifle significant new investments. This will be an even greater focus for the company in the future.

We have made some important first steps but we have a lot of work ahead of us.

Be the first to comment

Leave a Reply