New York: Not even sex, it seems, is recession-proof.

Last week, Playboy Enterprises reported that it had lost money in the first quarter of 2008, making it another casualty of the economic downturn and the squeeze between old media and new media.

The company had a profit in the corresponding period last year.

Playboy said its weak spot was the domestic media division, which publishes the company’s flagship magazine. The division got a scissors kick from the difficult advertising climate and from the easy availability of bare flesh on the internet.

In a news release, Christie Hefner, the chief executive of Playboy, attributed the problems to “the dual challenges of structural transformation in our traditional media business and a difficult US economy,” while also citing “unprecedented changes in the way consumers access and use media content.”

In a telephone interview, she was more upbeat.

“I think what’s true is that we’re recession-resistant,” Hefner said.

“Less than 20% of our revenue comes from advertising, so we’re much less vulnerable than other media companies.”

Playboy, she said, has deals to open casinos and introduce a men’s perfume, as well as plans to upgrade its online operation and improve its content. New initiatives include the Playboy Audience Network, which will put videos on YouTube.

Nevertheless, last week’s earnings report was not a pretty picture. The company showed declines in all its domestic units and it lost $3.1 million in the quarter on revenue of $78.5 million.

In the 2007 period, Playboy earned $1.4 million on revenue of $85.4 million. Certain divisions fared better than others. Domestic television revenue was down 16% and online revenue 3%,while the publishing group, which includes the flagship magazine, dropped 14%.

Yet those who are less than delighted with Playboy’s first-quarter performance would do well to change their focus, suggested Hefner, 55, the daughter of Playboy’s founder, Hugh M Hefner. They should stop looking at the company as a whole and start considering its individual parts, she said.

She pointed to the consumer products division, which sells women’s apparel, workout clothes, jewellery, linens and barware.

“We’re projecting high singledigit growth” in that unit, she said. “I think most fashion brands would be very happy with that in this environment.”

The division has suffered a bit from the weakness in retailing, she said. But because its sales are spread across the world, with 40% in Asia, 40% in Europe and 20% in the United States, “we can sort of balance our regional weaknesses,” she said.

She pointed to the strength of the media division internationally, as well as the success of a licensing agreement that in 2006 led to the Playboy Club at the Palms Casino Resort in Las Vegas.

“We’re on track to open an even bigger entertainment venue with gaming in Macau next year,” Hefner said. “I think, by any standard, our licensing business is doing extremely well.”

Licensing is a nice part of the Playboy story, said Ed Moran, director of production innovation at the consulting firm Deloitte. “The brand has equity and value, and there are people who will pay you to put it on their product.How many other magazines are out there that can do that?”

Still, Playboy is emblematic of the problems facing risqué publications in a world where there is no shortage of such material.

“When you look at the magazine and digital side, it’s fraught with challenges,” Moran said.

“Their model worked very well when what they sold was hard to come by, but now they’re living in a world where there are zero distribution costs because of the web and a tremendous variety of sexual material that is limited only by your ability to search for it.”

Further eroding Playboy’s strength is the ubiquity of video cameras and the software to upload and share images. “It’s hard to command the same pricing when supply has gone up so dramatically,” Moran said.

Hefner said that such analysis missed the point. “There isn’t anything different about the fact that people can access explicit sexual content on the internet,” she said, “because they could access it in other forms before.”

Source : DNA