Playboy Emulates Disney Formula in Diversifying but Keeping Image
The bow-tied bunny still stands for sexy female centerfolds, lively interviews and men’s fashion tips, but behind the flagship magazine a pragmatic new philosophy is emerging at Playboy Enterprises Inc.
Gone are the company-owned key clubs and casinos, the luxurious Chicago mansion and the Big Bunny jetliner--trappings that reflected and reinforced founder Hugh Hefner’s hedonistic image.
In their place, Hefner’s daughter, Christie, has built a leaner organization that, while more fiscally sound, is decidedly more staid--right down to its recent acquisition of the Sarah Coventry jewelry line.
In her six years as president, Hefner, 35, has pared Playboy to its core of publishing, licensing and video businesses. The proof of her pruning shows up on the bottom line: profits in the past seven quarters.
She took charge of a company reeling from the loss of lucrative casino licenses in Britain, denial of permission to operate a casino in Atlantic City, declining magazine sales and a faltering cable TV channel.
Under her leadership, Playboy has closed the last of its company-owned key clubs and disposed of its interests in movie theaters, modeling and book and record clubs.
David Leibowitz, an investment banker with American Securities Corp, said: “The entire management team headed by Christie has repositioned the company to the point where profitability is now the norm, and the potential for the future is probably brighter than at any time in the last several years.”
Having righted and steadied the ship, Hefner is charting a course for Playboy that partially follows the successful example of an unlikely model: Walt Disney Co.
Just as Disney formed Touchstone Pictures and Buena Vista Syndication to make and distribute movies with uncharacteristically adult themes, Playboy hopes to expand by escaping its traditional image.
“In our case, it’s sort of the flip side of Disney,” Hefner said. “We make products for adults, and under the Playboy name they have a particular aura that is sexy and fun. That’s an aura that works for certain products but not for others.
“If we want to be able to expand as a licensor or publisher or video-film creator, we’d like to be able to do that without the Playboy name as a restriction.”
So in addition to its array of Playboy and Playmate brand videotapes, casual apparel, jewelry and accessories, the company plans to become a distributor of similar products that will not carry the Playboy name or bunny emblem--and theoretically will have a broader appeal.
“It’s the mass market, that middle market, that’s of most interest to us,” Hefner said.
The first move in that direction was Playboy’s quiet acquisition of Sarah Coventry in November through its neutrally named new subsidiary, Licensing Unlimited Inc.
The new strategy does not mean that the Playboy trademark has outlived its usefulness. Playboy magazine, with an average paid circulation last year of more than 3.6 million, is still the company’s strongest suit, though circulation may never again approach the 1972 zenith of 7.2 million.
The magazine survived a government crackdown on pornography and a ban by 7-Eleven stores in 1986. The publication contributed more than $98 million to the company’s 1987 revenues of $162 million. Sales of video products, including the revamped Playboy Channel and video centerfolds, added about $29 million, followed by $23 million from other publications and $10.5 million from licensing and merchandising.
Although the Playboy Channel has had trouble holding subscribers, the company maintains high hopes for its video unit, which has released its first Playmate video in eight months, thanks to a new distribution deal with HBO Video.
Playboy’s $11-million profit in 1987 and strong performance in the first nine months of the current fiscal year followed a $62-million loss in 1986. Before turning profits in 1984 and ‘85, the company had notched a string of losses stretching back to the first quarter of fiscal 1982, the year Hefner took over for her father.
“In the early years after I took over, we were of necessity mostly engaged in the business of closing down businesses, selling off businesses and solving old problems,” she said. “In the last few years I’ve been much more able to put my mark on the company, and that’s coincided with my father’s desire to be much less involved in the operations of the company.”
Her father, who lives in the Los Angeles Playboy Mansion, reduced his involvement in the company after suffering a stroke about three years ago. He retains the titles of chairman and chief executive officer, still approves every Playboy magazine cover and centerfold shot, and provides “creative input” on the home-video products.
While she speaks admiringly of her father, whom she calls “Hef,” Hefner said the company he built into one of the great business successes of the 1960s ran into trouble in the 1980s because it hadn’t kept pace with changing attitudes about leisure time.
Some analysts also blame her father’s preoccupations. “He spent more time supervising the photo sessions for the centerfolds than he did reading the balance sheets of his company,” said Dan Lee of Drexel Burnham Lambert Inc. in New York.
Hef’s daughter, in contrast, is an active, thoroughly involved boss. She was described by Robyn Radomski, Playboy’s chief spokeswoman, as demanding and energetic.
Hefner said she shares her father’s enthusiasm for business but not his penchant for pajama-clad hobnobbing with the jet set.
“What I like to do is have the chance to speak to the National Press Club or lecture on a case study on my management style at the Harvard Business School or host a dinner party for high-level prospective investors,” she said.
An honors graduate of Brandeis University, with a degree in English and U.S. literature, Hefner joined Playboy in 1975 after working for a year as a journalist for the Boston Phoenix, a weekly newspaper.
Her parents divorced when she was 3. Her mother, Mildred, remarried; Christie Hefner used her stepfather’s name, Gunn, until 1973, when she renewed her relationship with her father and took back his name.
She lives within walking distance of Playboy headquarters here and splits her working time among company offices in Chicago, New York and Los Angeles, where her boyfriend, a TV executive, lives.
Hefner called herself “a business person, first and foremost,” and a feminist.
“I realized many years ago that there would be some people out there who would never be satisfied with what I did,” she said.
“My mission in life is not to change everybody in the world. My mission in life is to make the best of this extraordinary opportunity and believe, as I do, that the vast majority of people will judge me honestly and objectively.”
