Hugh Hefner still has it at 83-years old. Well, he still controls 70% of Playboy Enterprises Inc. (NYSE: PLA), which rose nearly 50% since yesterday on news that the 56-year-old company has a new potential buyer. Published reports say former Playboy president Jim Griffiths along with private equity firm Golden Gate Capital, offered to buy the “bunny ears” firm for $300 million. Playboy separately has been in recent talks with Iconix Brand Group (NASDAQ: ICON) to sell itself.
Why the hubbub? Playboy has one of the most recognized and popular brands in the world. No doubt there is potential there. The company’s business units have been struggling however. Playboy recently reported continued declining revenues and earnings for its Q3 over last year. Free adult entertainment on the Web and declining magazine ad sales are contributing to the company’s decline.
Playboy has its challenges ahead. A new owner would need to revive the maturing brand so that it relates to a more contemporary audience. Playboy may have made some headway here under the leadership of former CEO and Hef daughter, Christie Hefner. The reality is that the company founder is very much still connected to the brand. Is an 83-yeard old, free-swinging bachelor what Playboy represents today? Probably not. While Hefner is still very popular and an icon himself, any new buyer would need to walk the tightrope of leveraging Hefner’s history with a new brand experience.
But Hefner may still be staying around. Former Freedom Communications head Scott Flanders took over as Playboy’s new CEO in July, and is looking to grow the company by focusing on brand licensing and nightclubs. Whether a turnaround exists is irrelevant at this point. Brand restructuring is what the bunny needs, if not it may find itself falling into the annals of iconic obscurity.