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Playboy reports profit plunge

Chicago- Playboy Enterprises Inc. reported today that fourth-quarter earnings dropped 20 percent, as revenues remained under pressure at the Chicago adult-entertainment company’s broadcast and publishing operations.

In the Dec. 31 quarter, Playboy had net income of $3.7 million, or 11 cents a diluted share, down from the year-ago period’s $4.6 million, or 14 cents a share.

Revenues declined 5.3 percent to $86.2 million from $91.0 million.

In the latest period, Playboy noted, results were pulled down by a $1.8 million charge linked to a legal settlement, as well as $800,000 in additional expense related to changes in the company’s accounting for certain trademark costs and other contracts. But the drag of those items was essentially offset by a $2.6 million tax benefit.

Like other publishers and providers of broadcast material, Playboy has been hurt as former readers, viewers and advertising dollars migrate to Internet-based platforms. Playboy faces specific pressure because the Web has made adult-oriented entertainment easy and inexpensive to obtain.

At Playboy’s publishing group, which owns Playboy Magazine, revenues slipped to $25.2 million from $26.7 million in the year-ago period. In what the company called the result of cost-cutting measures, the publishing group’s operating loss eased to $500,000 from a year-ago loss of $3.1 million.

Revenues from licensing, a significant source of funds at Playboy, rose to $8.9 million from $7.5 million.

At the media company’s entertainment group, which operates Playboy’s domestic TV, international offerings and online subscriptions, revenues fell to $52.1 million from $56.8 million a year ago. But profits dropped to $4.7 million from $12.3 million, mainly because of certain legal costs and what the company called “weakness in the domestic TV business.”

Playboy’s per-share results landed a penny short of the 12 cents many analysts had been projecting.

“Looking at the quarter,” said Chairman and Chief Executive Officer Christie Hefner, “continued strong profit growth in licensing and a significant improvement in publishing results helped us deliver on our guidance for full year 2006.”

While the year just ended “clearly has been challenging for the domestic TV and magazine businesses, growth in our licensing, online, international TV and mobile initiatives support our belief that these businesses will drive the company’s performance going forward.”


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