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Profits Down at Playboy, Primedia

Both continue to seek ‘cost efficiencies.’



By Jason Fell
11/06/2008

The soft economy continues to take its toll on magazine publishers. Two more—Playboy and Primedia—reported financial declines today through the first nine months of the year.

Playboy—which eliminated 80 staffers company-wide last month in a cost-cutting effort—reported a year-to-date net loss of $10.4 million, compared to a $6 million net income during the same period last year. For the third quarter, the company reported a $5.2 million net loss, down from a gain of $2.6 million during the same period last year.

Revenue through the first nine months was down more than 12 percent to $222.3 million. Third quarter revenue was $70.4 million, down from $82.8 million during the same quarter last year. In the publishing division, revenue was $62.5 million through the first nine months, down nearly 10 percent from last year.

Playboy attributed the overall losses, in part, to a $6.3 million restructuring charge. Excluding the charges, the company reported a net income of $1.1 million. The company said it expects ad revenue in the publishing division to be down 17 percent in the fourth quarter.

While Primedia did not report profit losses, income was down significantly from last year. Year-to-date, the company reported a net income of $27.5 million, plummeting nearly 95 percent from $504.1 million during the same period in 2007. For the third quarter, net income was down roughly 97 percent to $12 million.

The falloff is due in part to publisher and distributor Source Interlink's purchase of Primedia’s Enthusiast Media group in August 2007 for approximately $1.2 billion in stock.

Revenue through the first nine months slipped 2.1 percent to $230.7 million, while third quarter revenue dropped 4.8 percent to $76.8 million.

According to Primedia president and CEO Charles Stubbs, the third quarter was an “important transitional quarter” for the company as it “continued to focus on strategic and operational development by investing in significant growth opportunities with our Web properties and implementing substantial cost efficiencies across our operations.”

Primedia's new homes group saw revenue drop 28.8 percent during the third quarter to $9.3 million and revenue from its distribution business fell 8.7 percent. Meanwhile, revenue from its apartments division—which accounted for 70 percent of the company's overall revenue—grew slightly to $53.6 million, compared to $52.4 percent during the same period last year.

Adjusted EBITDA year-to-date increased 16.3 percent to $46.9 million.

By Jason Fell
11/06/2008




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