CHICAGO, IL – Playboy Enterprises Inc. announced on Tuesday that it will cut its flagship magazine’s bate rate to 3 million, which represents a reduction of 4.7%. A magazine’s base rate is the estimated circulation that publishers use as a basis for advertising prices – generally speaking, the higher a magazine’s base rate, the more appealing a venue it is to its prospective advertisers.In a recent filing with the Securities and Exchange Commission (SEC), Playboy stated that this was its first base rate adjustment in 10 years, and that the magazine maintains its position in a base-range of 3 million to 3.4 million.
Playboy said it will be raising its advertising CPM (cost per thousand impressions) 8% next year, but due to the reduced rate-base, the “out-of-pocket” increase will only be 3%.
Playboy also announced it will raise the magazine cover price of Playboy by $1, beginning with its February 2006 issue. Playboy added that it has already tested the price increase in half the country and is encouraged by the results.
The company said the adjustments were in part a response to increases in paper and postage costs, and weak advertising in the “men’s” field, making the increased sale price a stronger business model, due to the overall reduction in advertising revenues.
The filing also disclosed Playboy’s acquisition of ICS, Inc., owners of adult.com and the popular webmaster message board gofuckyourself.com (GFY). Playboy said it expects the ICS acquisition to create the opportunity to promote its websites to a broader audience via affiliate networks operated by ICS, and to roll out new products, sites and distribution outlets.
In its filing, Playboy also announced that it has signed an agreement with Comcast Corp. for distribution of its movies on Comcast’s various video-on-demand (VOD) platforms, and to distribute Playboy TV as a subscription-based VOD service. According to its filing, Playboy expects to roll out its initial offerings through Comcast in December of this year.
Playboy said it expects to release on its earnings for the third quarter, which ended September 30th, on November 2nd.
