The deal to save Playboy (NYSE:PLA), which has been in decline for years, appears to have fallen apart. Iconix Brands wanted the Playboy brand, one of the most visible in the world, but had little interest in the company’s faltering magazine and video divisions.
The end to the Iconix negotiations leaves Hugh Hefner’s company very few places to turn.
It is widely known that the interest in Playboy has been replaced by online pornography and X-rated digital content. In the third quarter, the company’s revenue dropped to $56 million from $70 million in the same period the year before. The company lost over $1 million. Playboy has $26 million in cash, but that is more than offset by $103 million in financing obligations.
Playboy’s stock has moved from $2.50 in September to $4.20 on confidence that Inconix or some other company would buy the company or some part of its assets for more than the firm’s $130 million market cap. The break down of negotiations is likely to push Playboy’s shares back toward $2.
Playboy, without a buyer, will become another old media company exercise in cost cutting, until, at least, there are no more costs to cut.
Douglas A. McIntyre
Top Gaining Stocks
Top Losing Stocks