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Playboy’s Private Parts: Hef’s Brand Management Move

Hugh Hefner, who rounded out 2010 in the news for his engagement to December 2009 playmate of the month Crystal Harris, kicked the year off with relationship news of another kind: taking Playboy private at $6.15 a share.

The terms of the deal might not be exactly what shareholders had in mind, a Reuters columnist says, but Playboy, which was founded in 1953 and has been publicly traded since 1971, is up against a lot.

“It isn’t just that the magazine business has lost its footing with advertisers. The peddling of pornography has changed dramatically and left Playboy’s trademark tamer approach in trouble. The company is at a decisive crossroads: it must decide whether to go for broke in the titillation department or become a brand business. Either route is fraught with danger.”

A company release yesterday suggested Hefner knew which direction he wanted to take the 57-year-old company. “I believe this agreement will give us the resources and flexibility to return Playboy to its unique position and to further expand our business around the world.”

CEO Scott Flanders said in the company release that the transaction positions Playboy well on the road towards becoming a brand management company. “This transaction will advance our efforts by strengthening our balance sheet and streamlining our operations, while creating opportunities to participate in new ventures.”

The transaction’s expected to be completed right around the end of first quarter 2011.

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