The adult entertainment publishing industry is hurting so much that Larry Flynt, publisher of Hustler magazine, and Joe Francis, producer
of "Girls Gone Wild" videos, announced in a press release earlier this year that they were petitioning Congress to provide a financial bailout for the porn industry. That initiative has fizzled, but one of the grandfathers of the industry -- Playboy Enterprises Inc. (NYSE:PLA) -- has been open for sales talks since February. Now, it has upped the ante, placing a $300 million price tag on the company, the New York Post reported Friday.
If that is true, Playboy would be seeking a premium of more than $200 million given its market cap of around $88 million based on Thursday's closing price of $2.53 a share. In this economic environment where media assets have been shunned, partly because of the weak advertising market, that price may be a bit ambitious, even a heartbreak, for the founder of the company, Hugh Hefner, who said recently his biggest mistake was taking the company public.
Our sister blog Corporate Dealmaker documented the woes of Playboy in February, when it first indicated it might sell out. Since the winter, Playboy has continued to cut costs as the company closed its New York office while laying off 100 people and combined its July/August issues.
Playboy is dealing with the same conundrum that other publishing sectors are experiencing: how to profit on its content as consumers are likely getting similar and even more salacious content for free on the Internet. Apparently, sex these days doesn't always sell. - Gerald Magpily
