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Playboy Q3 Profit Up, DVD/Video Sales Down

2 Nov, 2004 By: Erik Gruenwedel

Despite a $100,000 sales drop, to $1.3 million in worldwide sales of Playboy-related DVD and home video product for the third quarter ended Sept. 30, Playboy Enterprises reported an 8 percent increase in revenue, to $80.2 million.

For the nine-month period, worldwide DVD and home video sales fell $300,000, to $3.6 million, compared to the same period last year.

Playboy last week streamlined its online, home video and cable operations into a new Playboy Entertainment Group, headquartered in Los Angeles that resulted in layoffs of 20 staffers, primarily in marketing and sales in home video.

“Our DVD and home video businesses will benefit from this consolidation because it gives us the opportunity to leverage the direct-marketing capabilities and expertise that reside within our online group,” said Christie Hefner, Playboy chairman and CEO. “We anticipate selling a larger number of DVDs through direct-marketing and e-commerce outlets.”

Hefner said Playboy had recently signed a supply agreement with Infinity Resources — owner of numerous DVD retail sites on the Internet — to be the exclusive supplier of adult DVD products.

“These will include, of course, Playboy-branded product, but will also allow us to leverage our expertise as an aggregator of other adult content,” Hefner said.

With an ongoing proliferation of broadband and wireless technologies, Hefner said Playboy would begin delivering more and more of its video content via non-TV distribution channels, including video on demand.

“We estimate that we are in approximately 50 percent of Time Warner's 4.6 million VOD households and expect to be in 85 percent by year-end,” said Hefner.

The company is working on a VOD deal with Comcast and is beta testing a Playboy Mansion video game for retail release in early 2005.

A 36 percent increase in print advertising, 28 percent increase in international TV sales and rollout of video-on-demand services helped the Chicago-based media company report net income of $1.9 million, or 6 cents per diluted share, compared with a loss of $900,000, or 3 cents per diluted share, during the same period last year.

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