The erotic magazine has switched to a no-nudes policy but some analysts see the brand as overvalued: ‘The reasons for its existence are no longer in place’

Playboy business on sale for $500m – but is there still money in the bunny?

What price a pair of bunny ears with a long history, an erotic magazine with a faded pedigree, and a Hollywood mansion with an octogenarian sitting tenant? It’s a question media mergers and acquisitions analysts are trying to answer after the private equity firm Rizvi Traverse put Playboy Enterprises up for sale last week.

While the sale of a media asset with roots in the struggling print sector is not in itself surprising, the fact that Playboy has hung a $500m asking price on the entire company while it is midway through a rebranding exercise has shocked some in the company.

Playboy’s bankers, Moelis & Co, have said they haven’t been approached by bidders and some executives see a sale as premature and would rather see the rebranding completed before a sale.

If a buyer can be found, it will be the second time the brand has changed hands in four years; in 2011, the company was taken private and started transforming itself into a brand-management company.

The potential buyer would be taking on a brand that is trying to escape decades of shoddy deals that cheapened Playboy’s image. The company has extricated itself from unprofitable licensing deals, regained control of its website – now considered safe for access from a work environment – and has, with much fanfare, revamped the magazine as a no-nude, mid-shelf men’s mag.

But while the decision to drop nudity – at least of the knickers-off kind – falls into line with the needs of mainstream advertisers, it’s created strife within the Hefner clan.

Playboy magazine publishes last issue featuring naked women Read more

Patriarch Hugh Hefner, 89, still retains a veto over content as well as a lifetime guarantee of residency at the famous Playboy mansion and a yearly stipend estimated at several million dollars – a deal that mimics one the late Penthouse pornographer Bob Guccione forged to live out his days at his Upper East Side mansion in New York.

While Hefner has gone along with the management’s no-nudes policy, his 24-year-old son Cooper Hefner came out railing against the decision, accusing the management of sidelining him.

He disagreed with the decision to put the mansion, valued at $200m, up for sale. “My concern is making sure that there is a company that people care about in 15 years,” he told Business Insider.

That anxiety is shared by Playboy’s private equity vendors; in 2014, the company refinanced $147m of debt with a single lender after its financial performance deteriorated further. Recent figures suggest it is losing $6m a year in the US, losses offset by licensing fees from 30 international editions.

The problem for Playboy’s management is familiar to all print publishers and, separately, to pornographers: print is in sustained, seemingly irreversible, decline; subscription pornography like the Playboy channel, once profitable with revenue from hotel customers, has been supplanted by free web porn.

Despite high brand recognition Playboy does not appear to have a ready way to access a younger generation of consumers. Short of a foreign buyer with a ready overseas market looking to tap the Playboy lifestyle ideal, there’s little to reflect it in contemporary cultural aspirations and ideals, says publishing analyst Samir “Mr Magazine” Husni.

“The brand has no future because the reasons for its existence are no longer in place. Just the name is more of a liability than an asset. I doubt anybody will pay that much. They’re living in a dream world.”

Facebook Twitter Pinterest Playboy’s circulation peaked in the 1970s. Photograph: Alamy

Husni believes that magazines are an accurate reflection of society and that Playboy has lost its reflection. Dozens of porn or soft porn titles that existed through the 60s and 70s have folded. Playboy has hung on longer thanks, in part, to its strong brand; a brand it is struggling to reposition for the millennial era.

In 2013, in preparation for its 60th birthday, the company brought in a sexual anthropologist to help make the content more appealing to a new generation.

Playboy sold off its Spice channels and other TV and digital properties to internet porn giant Manwin then reacquired control of the Playboy site in an attempt to take the brand upmarket with fashion deals, including one with Italian house Dolce & Gabbana. Apple also agreed to take Playboy content.

The potential sale of the brand comes as valuations of digital properties are hitting new highs. The German publisher Axel Springer paid $343m for control of Business Insider last year, while Vice Media is now valued in excess of $4bn after receiving investments from Walt Disney and 21st Century Fox.

But rival pornographer Larry Flynt doubts the company can refloat the Playboy vessel. He has called the no-nude plan akin to rearranging deckchairs on the Titanic and mischievously suggested he might buy the mansion, replacing Playboy Bunnies with Hustler Honeys.

“I know he’s getting old but I didn’t know he’d lost his mind,” he told CNN. “How can you take the most important feature of your magazine and drop it? What it became notorious for.”

“Playboy is no longer an appropriate channel for sex and sex advice, and nobody today refers to themselves as a Playboy man – the designation no longer exists. It had a great life, a healthy life, and it served a great role but we should recognise that everything has a life cycle.”

Still, under the new management, Playboy has shown signs of life.

While the magazine itself is not published in China, Playboy-branded products from clothing to shoes and accessories are sold in 3,500 retailers. Out of Playboy’s $1.5bn in annual retail sales worldwide in 2013, more than $500m came from China, according to company figures. CEO Scott Flanders called the figures “testament to the tremendous power of our brand”.

Facebook Twitter Pinterest Christie Hefner, daughter of Hugh Hefner, has pushed for change at Playboy. Photograph: Katherine Anne Rose/The Observer

The magazine, meanwhile, reports that advertising page numbers have risen since it dropped nudity. But that may not be the same for sales. One newsstand vendor in Manhattan reported just a handful of non-nude issue sales – a fraction of the last full nude issue featuring Baywatch star Pamela Anderson.

In its new incarnation, the photography is softer. The women tend to look more come-hither than post-coital; the stories less tales of masculine adventure than a more modern interest in cultural and social issues.

The non-nude policy is a triumph for Hefner’s daughter Christie who had been advocating the change for decades as circulation fell from a peak of 5.6m to less than a million today. Whether it works or not she has pulled off a remarkable feat.

It was a standing joke within the industry that whatever changes the company’s New York editorial team would institute, the magazine would return from Los Angeles looking exactly as it has always done. A sense of deep sclerosis had set in.

On the occasion of the magazine’s 50th anniversary, a sad bunny told this reporter of her dismay that Hefner had chosen her least favorite colour, yellow, for her costume to match the background of her centrefold spread. Hefner would not be swayed by any amount of imploring; policy was policy, she was informed, no changes.

The changes at Playboy are not being introduced without upset and pain. Scott Flanders has been accused of creating a difficult work environment. Following a party in 2011, Flanders was accused of failing to observe expected boundaries between a CEO and female employees and was sent for sensitivity training, according to the Wall Street Journal.

This, as much as anything, may explain why Playboy is in turmoil. The mansion, replete with jacuzzis and grottoes and lounges, was designed explicitly for boundary-challenging adventures – the Playboy ideal – or marketing illusion – of an idealised heterosexual playground. But with the family battling management, management battling investors, the company laden with debt and the global value of its bunny ears hard to establish, Playboy remains a proposition that seems stuck in an older, Mad Men, era.

“The company clearly has value. The US licensing market is untapped. The brand recognition is up with Coke and Apple, so it would seem to have potential,” says one Playboy executive. “Hef has right of veto and he’s the de facto editor-in-chief but, at 89, obviously out of touch.”