from www.suntimes.com – When a company is publicly traded, it bears the expense of stating in detail that it has many mouths to feed.
Aside from the employees and suppliers that are standard fare for any business, the public company must issue reports that show the handiwork of its outside lawyers, bankers, accountants, public relations advisers and human resource consultants.
It must list its directors and their backgrounds and publish stockholder lists that show the people and firms with major holdings. It creates the impression that a public company has many people making decisions and many to answer to.
Playboy Enterprises (PLA) has all this. It even has a chairman and a chief executive officer who are not named Hugh Hefner. It is all a veil, unusual for a company based on baring it all. Playboy is the preserve, the boudoir, the retreat of Hefner, who started it all in Chicago with that famous Marilyn Monroe magazine cover in 1953.
Playboy’s importance to Hefner is actual and metaphorical, given that the company owns his residence, the Playboy Mansion in Los Angeles, and by its own disclosure charges him just $800,000 a year to rent it, an amount that doesn’t come close to covering taxes, landscaping and other costs to keep up 29 rooms on 5½ acres.
Hefner has a good deal here, but it’s what you’d expect for a guy who owns 69.5 percent of PLA’s Class A voting shares, plus 28 percent of the nonvoting Class B stock issued to the riffraff. For all the window-dressing and silk pajamas, it’s still a company run by Hefner for Hefner.
The company said Monday that Hefner has offered $5.50 a share for the part of it he doesn’t own. The proposal was a 40 percent premium over the last prices of the shares before the offer. PLA closed Friday at $5.37.
Because the company has declining revenues and relevance, the offer invites a couple of interpretations. One is that Hefner sees a way to take out shareholders on the cheap and has a plan to return operations to wealth and glory for himself. The other is that Hefner is a desperate 84-year-old just trying to save his contribution to the world.
Whatever the case, investors haven’t made money on this bauble for years, unless they were among the brave souls who picked it up in late 2008 at close to $1 a share. It has rallied since then on buyout speculation and on Playboy’s efforts to cut losses, but it has yet to slash its way to viability.
Hefner’s move brought out a counteroffer from the owners of Penthouse magazine that was nominally higher. It was made to the board, but Hefner’s response is what matters. “I’m buying, not selling,” he said on Twitter.
He’s not going anywhere until he goes the way of all flesh. An analyst covering Playboy, David Miller at Caris & Co., indelicately confronted that point, saying in a June 30 research note that Hefner’s lifestyle is a drain on the company, adding, “We believe Mr. Hefner’s death could result in a material stock price uptick on the notion that the mansion could eventually be sold, which would leave the company net debt free.”
Miller’s estimate could be off, given that Playboy has $100 million in debt and it’s not a great time to sell in Los Angeles.
What other company does so much for its top guy? Consider this from the company’s regulatory filing, which has a hilariously detached explanation for why it pays the expenses of an old lecher.
A passage reads, “Crystal Harris, Holly Madison, Bridget Marquardt, Karissa Shannon, Kristine Shannon and Kendra Wilkinson, the stars of The Girls Next Door on E! Entertainment Television, resided in the mansion with Mr. Hefner at various times in 2009 and 2008.
The value of rent, food and beverage and other personal benefits for their use of the Playboy Mansion was charged to Alta Loma Entertainment, our production company. The aggregate amount of these charges was $0.3 million and $0.4 million in 2009 and 2008, respectively. In addition, each of these individuals receives or has received payments for services rendered on our behalf, including appearance fees.”
Services rendered? Sheesh, CEOs have been sacked for stashing one mistress on the payroll, but they weren’t in the porn business.
The sexual revolution that Hefner heralded in the 1950s has long since stormed past him. What Hefner once sold in a magazine is downloadable everywhere, from companies with no corporate linens to launder. Playboy and its pretenses have been outflanked and undersold. Somebody ought to run the news up to the mansion.