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Can Playboy be Saved?

Playboy founder Hugh Hefner
Byron Gamarro | Getty Images
Playboy founder Hugh Hefner

Hugh Hefner maybe 84, but he's far from retired.

He's the only guy in America who gets to work and play in pajamas.

However, Hef's in a huff over Playboy , the company he created 57 years ago.

He doesn't like what's happening to the brand, and so Hefner has partnered with Rizvi Traverse Management to propose buying all of the outstanding shares he doesn't currently own for $5.50 apiece, taking the company private.

"My guess is he's probably going to have to pay more than this," says David Bank at RBC Capital Markets, one of the few analysts covering the company. Bank believes current management has been doing "an exceptional job at the early stage of this turnaround", so he isn't sure why Hefner is making the move. Bank speculates that Hefner isn't pleased with the pace of improvement, and maybe things would move faster without the pressure of quarterly earnings reports. "I can't image that strategically there's an issue," he says.

Once word got out that Playboy was in play, another player jumped in.

Our Melissa Leelearned that FriendFinder, which publishes Penthouse, will make a counter offer within 24 hours. "Obviously we want the assets," the company says. However, Hefner said in his proposal he does not plan to sell the company, and he owns nearly 70 percent of the voting shares. "Not only do you have to have someone come in with a higher bid," says analyst David Bank, "but you have to have someone come in with a higher bid that Hef wants to sell to...If Hef doesn't want to sell, this company won't get sold."

Playboy's financial centerfold hasn't been a pretty picture.

The company's been losing money for years—it's hard to make people pay for something they can get online for free.

Hefner's offer values Playboy at $185 million, which doesn't seem much for a brand which is one of the most well known in the world. The company's management team is in the middle of slashing staff, streamlining operations, outsourcing publishing, cutting licensing deals, all to transform Playboy from a media company into a brand management company. "They're really in the magazine business to generate brand business," says David Bank," apparel, consumer products, location based entertainment, fragrances, drinks cigarettes, condoms, just about anything you could put the Playboy label on."

Hefner's proposal also indicates he's concerned about the editorial direction of the magazine. Bank calls that "a really odd comment", considering that Hefner apparently has a lot of input into the magazine, and Playboy has been trying to make the publication "more relatable to the current generation."

Can going private save the company?

Does the Playboy brand have the cachet to sell enough shirts and club experiences to create an empire worth more than its miniscule $185 million market cap? Or does the company need new ideas?

Submit your suggestions in the comment section- They can be serious or funny...but keep them family friendly.

  • Based in Los Angeles, Jane Wells is a CNBC business news reporter and also writes the Funny Business blog for CNBC.com.

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