America’s Playboy is being pursued by its rival, FriendFinder Networks Inc, which owns Penthouse magazine. Playboy has been continuously incurring losses due to decline in advertising revenue and falling circulation.
Penthouse is looking to challenge Playboy?s promoter Hugh Hefner’s offer who has put out a bid to buy all the outstanding shares of its New York-listed firm Playboy Enterprises for $5.50 per share amounting to $185 million. Penthouse is looking to outbid Hefner, even as he looks to de-list the company.
Playboy, which publishes local editions in over 40 countries, is banned in India for its adult content. However, if Penthouse publishers FriendFinder Networks acquires the magazine, a watered-down version of Playboy may enter India, sources in the publishing industry said.
?FriendFinder Networks has been eyeing an entry in the Indian market for some years and an active role in Playboy Enterprises may help them enter India among other Asian countries,? a publishing industry executive said.
However, it may not be a cakewalk for Penthouse. According to Playboy Enterprises, Hefner controls the voting shares in the company and is not looking to merge or sell the company at this juncture. Playboy has two classes of stock?Class A (shares with voting rights) and Class B (shares without voting rights). Currently, Hefner owns 69.5% of Class A shares and 28% of Class B shares.
Hefner is now looking to buy the remaining shares of Playboy (both Class A and Class B) from the market before making the company a private entity. However, according to US-based financial analysts, if Penthouse manages to buy out the 72% of class B shares and the balance Class A shares, Hefner will be put under pressure to merge or sellout his company that was established in 1953.
The Playboy magazine in the United States has been loosing money consistently. In 2009 it sold advertising space based on an assured minimum circulation of 1.5 million copies, down from nearly 2.8 million the previous year. And this is the point its rivals are driving home to the shareholders of Playboy Enterprises thereby building a case for its outright sale or merger.