Hefner considers selling Playboy

Playboy Enterprises, the men's magazine publisher, is in talks to sell itself to Iconix Brand Group.

Iconix, the owner of the Candie's and London Fog clothing brands, has looked at Chicago-based Playboy's finances, said one of its people, who declined to be identified because the talks are not public. The discussions may not lead to a transaction, the person said.

Playboy's market value had dropped to about US$100 million ($137 million), as circulation plunged at the namesake magazine Hugh Hefner started in December 1953.

Iconix chairman and chief executive Neil Cole is looking for acquisitions to add more brands that the New York-based company can license to retailers and manufacturers.

"Neil Cole has done a phenomenal job of taking some of these lost brands and developing them into something," said Gilbert Harrison, chairman and chief executive of Financo, a New York-based adviser and investment bank."

Playboy's management has been looking for a buyer since Scott Flanders was appointed as chief executive in June, said a person close to the situation. Flanders, the former chief executive of Freedom Communications, replaced Hugh Hefner's daughter, Christie Hefner, who had run Playboy since 1988.

Hugh Hefner, 83, has a controlling stake in Playboy, with about 70 per cent of class A voting shares, and 28 per cent of the class B shares.

The company had US$103 million in long-term financial obligations at the end of September.

Cole founded Iconix, which owns Danskin and Mossimo, in 1992. Revenue has more than doubled in the past two years to US$216.8 million last year.

In addition to its magazine, Playboy licenses products bearing its bunny logo, and creates videos for its website and cable-television networks. Licensing revenue in the first nine months of the year declined 14 per cent to US$28.1 million.

Playboy magazine garnered a following for its fiction, including selections by Margaret Atwood and Vladimir Nabokov, and American football coverage, as well as its photos of nude women.

The company ran a chain of branded clubs, staffed by women dressed in bunny outfits, as well as a premium cable channel.

The magazine's circulation dropped 9.2 per cent to US$2.45 million in the six months through to June, compared with a year earlier, according to the Audit Bureau of Circulations.

Industry-wide, consumer magazine circulation fell 1.2 per cent in the period.

In the third quarter, Playboy's net loss narrowed 3 cents a share, from 19 cents a year earlier, according to a November 5 statement.

- BLOOMBERG