Playboy.com beefs up to woo Wall Street
The Net unit of Playboy Enterprises is dipping into the Web's fountain of youth for new content and executive talent to help update its swinging image as it prepares to go public.
The company, a unit of Playboy Enterprises, today announced that it has appointed Net veteran Kevin Mayer as chief executive. Mayer, 37, previously served as executive vice president and general manager of Walt Disney's Go Network portal.
In addition, the company has acquired the racy, 6-month-old Rouze.com for an undisclosed amount. The financial terms of the Rouze acquisition were not made public, but Playboy says it is an equity deal with revenue sharing. Rouze will be a wholly owned subsidiary that will retain its own online identity and be integrated into Playboy.com.
The moves come just weeks after Playboy.com filed for an initial public offering, in which it hopes to raise $50 million.
"Our vision has remained remarkably constant, in that the nature of a lifestyle and entertainment site is that it can aggregate a lot of men and monetize that traffic through the sale of advertising, product and incremental content," said Playboy Enterprises CEO Christie Hefner, who took the helm from her father, Hugh Hefner, more than a decade ago.
Still, the company's acquisition of Rouze and its executive shuffle can be seen as 11th-hour plays to smooth the path to its IPO, according to analysts.
"Playboy is looking to bolster itself," said Jeff Hirschkorn, an analyst with IPO.com. "They are trying to diversify and beef up their entertainment and bring in a good CEO because their goal is to be a global enterprise."
Like its new parent, Rouze lures men with nude pictorials and, as Playboy always reminds the public, it has articles, too. Hefner said that a major motive for acquiring Rouze was its people. The site targets men 18 to 25 years old and offers lifestyle articles, an auto guide, and a shopping area with gadgets, music and other items.
Also today, Playboy.com named Ed Mullen, president of holding company Marketing Services Group and former CEO of Net marketing firm CMG Direct, as vice chairman.
Since spinning off its online unit in January 1998, Playboy Enterprises has been steadily building its Web site with e-commerce and auctions, along with pay-per-view, sports, food and investment content. The company has long aimed to draw a substantial part of its future earnings from its Net venture.
Playboy.com says it plans to stay focused
on the convergence of its lucrative cable-TV programming with
its Web site. Analysts have said that although Playboy.com's converged offerings have been slow to take shape,
they will be an important area for the company when it comes to streaming revenue from subscription-based
content and product sales.
So far, the results have been mixed. Playboy's Club Lingerie, a fashion show that was broadcast on cable and online, drew more than 565,000 visits in one day. The company's fee-based Cyber Club, which got off to a strong start when it was launched in July 1997, has grown to 43,000 subscribers, who pay either $6.95 per month or $60 annually for access to exclusive nude pictorials and other content.
Still, Playboy.com has been growing. It garnered 112 million page views last month, and revenues for the fourth quarter more than tripled to $8 million from $2.3 million for the same quarter in 1998.
Hefner said that Mayer is expected to use his Net experience to lead the charge toward the IPO.
"Getting a chance to run a big company is very compelling for me," Mayer said. "We've all been looking at what Rouze has done and been very impressed with the attitude they've been able to develop. It's going to help us continue to expand our appeal and attack this market in a creative way to provide utility and entertainment."