Richard Branson may buy Hugh Hefner’s Playboy for $300 million: report
27 May 2009
Playboy, the US gentleman's magazine, founded by Hugh Hefner and his associates in 1953 in Chicago, Illinois, is reportedly up for sale with a price tag of $300 million, with British billionaire Sir Richard Branson's Virgin Group, being named as the possible buyer.
The New York Post reported quoting unnamed sources that many private equity firms had been approached including Providence Equity Partners and Apollo Capital Partners, but all of them declined to cough up $300 million that Hefner is seeking for a company whose market value is said to be less than $100 million.
According to the British media, Branson may like to add the iconic 'Bunny' to his stable, but nothing has yet materalised and a Virgin Group spokesperson declined to comment.
Hugh Hefner's Playboy empire has fallen on hard times and the company is burning cash as it posted net losses for every quarter last year and is also saddled with a $115-million debt.
On 11 May, the company reported a net loss for the first quarter ended 31 March 2009 of $13.7 million, more than three times the $4.2 million it lost in the same quarter last year.
Like many newspapers and magazines in the US that are toppling over like dominos in the current global economic meltdown, Playboy has lost its old charm and is forced today to compete with internet porn, which makes the magazine look like a Tom and Jerry comic book.
The magazine lost about 600,000 readers between 2002 and 2008. Sales of the once favourite of college kids and young professionals are three million per issue, compared to seven million in 1972.
Its circulation has dropped from a peak of 6.6 million in early 1970s to 2.5 million readers, according to the Audit Bureau of Circulations.
Although it is still America's best selling men's magazine, it is a far cry from the 53,991 circulation figures it attained during its maiden launch 56 years ago and the November 1972 edition which sold 7,161,561 copies
The first edition of Playboy in December 1953 was undated as Hefner was unsure whether he would be able to bring out a second edition. The first edition, incidentally was produced in the kitchen of his home at Hyde Park on the South side of Chicago.
Priced at 50 US cents, the first edition's centrefold featured nude photos of Marilyn Monroe.
Playboy's co-founder Eldon Sellers' mother had suggested to Hugh Hefner that the magazine be named Playboy, the name of Chicago sales office of an automobile company called Playboy Automobile Company, where she worked.
The second edition carried the now famous logo of the Bunny, complete with a bow tie, designed by art designer Art Paul. Hefner chose the logo of the Bunny since he felt it had a humorous connotation and bunnies are known to be frisky and playful.
Hugh Hefner had made a bold statement in his very first edition of the magazine by saying, "If you're a man between the ages of 18 and 80, Playboy is meant for you."
After the first edition with Monroe became a hit, several Hollywood big names of their times like Raquel Welch, Sophia Loren, Elizabeth Taylor, Brigitte Bardot, Madonna and Kim Basinger, have been featured on the covers of Playboy.
Hefner is reported to have always regretted taking the company public, even though he holds nearly 70 per cent of the voting stock with Wells Capital being the second-biggest shareholder with a 10-per cent stake, followed by Fidelity with 7 per cent.
In the past, Hefner had turned down many buyout offers and had said publicly that he would give the controlling rights of the company to his teenage sons, Cooper and Marston.
A Playboy spokesperson told the New York Post, "We have not received a proposal for purchase, nor has Hefner indicated that he will listen to proposals regarding a sale. However, as a public company, we will listen to proposals that could create value for all of our shareholders."
One source told the New York Post, ''Everyone says he'll never let go, that he'll take it with him to the grave.''
Many industry experts believe that the company is past its prime and is no longer viable in the 2009 internet age. Moreover, the company has no core business that is lucrative and its overheads are way too high.
To compound the problems, Hefner, with his huge ego, refuses to adapt and change to the current business scenario
They say, gone are the days of the 1950s, when boredom and need for change made the magazine a hit mainly among the young generation but today it has lost out on even on the intellectual side, where a large number of people purchased the magazine not only for the nude pictures, but some excellent articles.
All those young generation guys who were once Playboy fans have now grown old, and will have to wait and see whether the Bunny's ownership will be as frisky and playful as Hefner first visualised it in 1953, if it falls in the lap of Richard Branson.
