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Playboy to spin out Net unit

Playboy Enterprises says it will spin off its new media operations from publishing, apparently a sign of the company's success on the Web.

Playboy Enterprises said today it would spin off its new media operations from publishing, apparently a sign of the company's success on the Web.

While many print publications have struggled on the Web, Playboy has thrived. The Playboy.com site, launched only in 1994, is one of the most visited on the Web, and its fee-based site called Cyber Club, less than six months old, has more subscribers than most others. That has been a boon to the company, because publishing revenues have disappointed some investors despite recent gains.

"We've concluded that the significant companywide opportunities that this new business represents for Playboy will be best realized by establishing it as its own division," said chief executive Christie Hefner in a statement. "While new media will continue to be closely connected to publishing in terms of its editorial attitude and quality, we plan to leverage the assets of the entertainment group via pay-per-visit and subscription revenues and of our catalog and product marketing groups via e-commerce."

The company said the decision came after a recent review of its new media business that was presented to the board of directors.

However, Hefner cautioned: "It is important that we remain attentive to the value of our publishing business and particularly of Playboy magazine, which plays a vital role in driving the global image and recognition of the company."

Those comments have been echoed by other print publishers, who worry about cannibalizing their print publications as they expand on the Web.

Besides Playboy.com, Playboy's Cyber Club is doing well: It has 22,000 paying subscribers.

The company added that Marianne Howatson, president of the publishing group, has decided to leave as a result of the reorganization. Hefner said Howatson was "instrumental" in the development of plans for new media. It now will begin a search for a new president and begin reporting new media revenue and operating income as a separate line item.