Playboy ousts three executives

The Playboy Entertainment Group, coming off severe losses in the fourth quarter, has discharged three of its top executives, led by Sol Weisel, executive VP of production and operations.

Three investment bankers -- UBS, Bank of America and RBC Capital Markers -- downgraded the stock of parent company Playboy Enterprises last month. They found fault with the TV Networks division's difficulty in getting more cable operators to sell Playboy to their customers through subscription video-on-demand instead of pay-per-view.

Subscriptions are a more stable form of revenue than pay-per-view, which is an impulse buy. And Playboy's soft-core programming looks tame compared with the X-rated movies most cable systems include in their overall menu. (Playboy itself offers hard-core movies through its wholly owned Spice Networks division.)

Michael Savner, media analyst for Bank of America, said he downgraded Playboy's stock because even the company's management "does not expect to see domestic-TV revenue growth in 2007, due to increased competition and ongoing difficulties with the VOD transition."

Some cable ops are reluctant to offer the 24/7 Playboy TV network to customers for a monthly subscription fee because they have to funnel 30% of every dollar to Playboy. With pay per view, the cable op typically hands over only about 10% of the average subscriber dollar, pocketing the remaining 90%.

Playboy Shop

Playboy's argument for subscriptions is that the number of customers would shoot up because they'd get not only the 24/7 network but 30 hours of Playboy on Demand for the same monthly price.

The two other executives who lost their jobs last week are Dan Smith, VP of production for the Playboy Entertainment Group, and Tom Furr, VP of on-air promotion.

Late last year, Playboy engineered a major shift at the top, pushing out James Griffiths, president of the entertainment group, and Ned Nalle, president of programming. The company brought in Bob Meyers, awarding him the new post of president of media, which encompasses both the entertainment group and the publishing operation.