Proving that not even the supposedly recession-proof adult industry can escape the global economic downturn, Playboy Enterprises has announced it will be outsourcing production of its flagship title.
American Media Incorporated, the fourth largest magazine publisher in the US, will assume responsibility for production, circulation, advertising sales, marketing and “other support services” at Hugh Hefner’s famous magazine, leaving only editorial in the hands of Playboy Enterprises.
“Our goal is to focus our resources on what we do best, which is to create compelling content,” said Playboy Enterprises CEO Scott Flanders in a statement. “At the same time, we were looking to partner with companies who can manage the operations of the magazine more effectively than we can as a stand-alone publisher.”
Playboy is forecast to lose US$8 millon this year and is hoping to arrest the profit slide by outsourcing, with a view to restoring profitability in 2011.
The move will result in about 25 job cuts, leading to a fourth-quarter charge of US$2 million, Playboy said, adding that some of the positions will be transferred to American Media.
Under the terms of the deal, Playboy will pay American Media a flat fee, with incentives to increase both advertising and circulation revenue. The current agreement will expire at the end of 2014.
Playboy Enterprises itself is also currently locked in talks to be sold for a sum of around US$300m.
A string of veteran print titles have folded in the US over the last year, as economic pressures and the growth of online takes their toll. In August, Readers Digest was forced to file for bankruptcy, whilst the Christian Science Monitor became the first national daily newspaper to abandon print by moving to an online-only model in April.
In March, one of the oldest newspapers in the US, the Seattle Post-Intelligencer, closed its print edition after 146 years in the business.
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