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Playboy Eyes VOD Growth

8 May, 2007 By: Erik Gruenwedel

Increased competition in adult entertainment video-on-demand on cable television hurt linear network programming options and resulted in a 12% decline in first quarter (ended March 31) 2007 entertainment revenue for Playboy Enterprises Inc.

The Chicago-based company said increases in Playboy VOD revenue were not enough to offset declines in linear network programming, which saw domestic TV revenues fall 13% to $19.7 million, compared to $22.3 million last year.

Online and mobile entertainment revenues increased 2.6% to $15.7 million, from $15.3 million last year.

Overall revenues increased 4% to $85.4 million, from $82.1 million during the same period last year. Net income increased to $1.5 million, from $800,000 last year.

“We are pleased with what we are seeing in VOD, which includes strengthening the product and working on marketing to consumers,” said CEO Christie Hefner, in an analyst call. “We think that reflects the strength of our competitive position.”

Hefner said the VOD growth is offsetting declines in revenues from the linear movie networks as additional cable systems convert adult product to the newer platform.

The CEO said growth with Playboy TV depends on the nascent subscription VOD, which Hefner said is available to less than half of U.S. cable households.

“We are optimistic we will see additional rollout of this premium product over the year,” said Hefner.

Playboy expects to generate 20% to 25% growth in licensing revenue of consumer products in 2007.

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