The 56-year-old daughter of company founder Hugh Hefner is stepping from the top to the bottom of as CEO after 20 years in the job

By Christopher Palmeri

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Christie Hefner will exit as CEO of Playboy Enterprises at the end of January. Getty Images

The economy’s chill winds are blowing all the way to the Playboy Mansion’s famous hot tub grotto. Playboy Enterprises (PLA), the $300 million-a-year home of Playboy magazine and cable channel, announced Dec. 8 that Christie Hefner, 56, the longtime chief executive and daughter of company founder Hugh Hefner, will step down at the end of January.

"Last month marked my 20th anniversary as CEO; just as this country is embracing make some vary in. in the form of new leadership, I possess decided that now is the time to make changes in my admit life as well," Christie Hefner said in a statement. Added venerable man Hugh: "As a arise of her efforts, the company today has more consumers and fans than at any time in our history. I believe that she elect approve on to work out even greater personal success." Christie Hefner bequeath be replaced on an interim basis by Jerome Kern, a Playboy meals member and business consultant.

Despite her father’session encouraging words, Christie Hefner leaves the House of Hef at a herculean time. The company has reported slumping sales and widening losses this year. Its stock price, being of the kind which high of the same kind with 11 a year ago, has fallen to just past 2. (The shares jumped nearly 22% Monday on recent accounts of the CEO change.) Playboy breaks out its business into three categories. Entertainment, which includes television and the Web properties, generated revenues of $38 million in the third quarter, a 22% pendant from the prior year. Publishing, at $22 million, was down towards 6%.

Only the licensing arm showed a slight gain. Recently the company has been selling artworks from its incorporated collection, and in a conference denominate reporting a $5 the great body of the people loss in early November, congregation execs were even talking end for end the "occult asset" that Hef’sitting legendary Los Angeles mansion represents. The elder Hefner rents his famous estate from the corporation for $700,000 annually, but it costs the company well-nigh $3 million a year to run. Playboy acquired the 29-room mansion in 1971 for $1.1 million moreover has invested some $14.2 very great number greater degree in it, according to a Securities and Exchange Commission filing.

Playboy’s gaunt results are coming flat as the stigma enjoys something of a renaissance, specifically among young people. The hit show The Girls Next Door on the E! feast network (CCW) featured the 82-year-old Hugh cavorting with three much younger women. In a flashback to the brand’sitting 1960s glory days, the company even opened a Playboy Club at the Palms Casino in Las Vegas and plans one more in the Asian gambling mecca of Macao (BusinessWeek.com, 6/27/08). Hugh had cameos steady the hit HBO show Entourage and in a music video by the alternative rock group Weezer.

To some degree the company’s problem is one exasperating all traditional media—the abundance of free content on the Web and the alternatives that brings for both viewers and advertisers. In April the company announced it would sell its Los Angeles video produce studio and in October announced it would stop releasing DVDs entirely.

The company has lost market share in cable television as cable companies began oblation more individual movies on demand, often from new entrants into the business. Circulation at its 2.7 million-subscriber flagship repository is down from 3.2 million a decade ago and 6.6 million at its 1972 peak, at the same time that printing costs have increased. To combat these trends the meeting of friends has sought to boost profits by slashing expenses. Playboy let go 140 people this year, 17% of its workforce, and is working to reap overall savings from its operations of $12 million.

The sole part of the function that is doing well is licensing Playboy’sitting famous rabbit ears logo. The licensing arm earned $6.7 million in the third quarter, a 5% increase from the same period last year. The guests has new products launching in coming months including new fragrances with perfume company Coty and a nostalgic underwear plant called the Bunny Bra.

Hugh and Christie were always a study in contrasts. The buttoned-down Christie operated confused of Hugh’sitting original Chicago stomping grounds in a Michigan Avenue office decorated with modern art. Her pajama-clad father gave bestow prodigally parties at his L.A. rank, clean with a kitschy game room and petting zoo. When Christie took upper the company in 1988, Playboy was reeling from losses kindred to overexpansion of its casinos and clubs. She refocused the business on media, purchasing television studios and launching a subscription-based Web site.

But that enlargement, so as the $95 million purchase of pay-per-view movie producer Spice Entertainment in 1998, proved high-priced. Playboy today has debts of $115 million. It furthermore faces a central brand dilemma, as many online alternatives are far raunchier than the soft-core material for which the company is best known, completely challenges that Christie Hefner’s replacement will have to address.