Playboy Spends 17.6 million on Club Jenna

[gonzo]

LOS ANGELES — Playboy Enterprises’ acquisition of Club Jenna was a $17.6 million deal, according to a Securities and Exchange Commission filing Wednesday.

The purchase, announced in June, includes websites, DVD titles, film production assets and retail distribution. Playboy also is incorporating Club Jenna’s DVD content into its pay-per-view TV offerings nationwide and will make use of the company’s contract stars in future productions.
Playboy paid $7.7 million at closing, with additional payments of $1.6 million, $1.7 million, $2.3 million and $4.3 million required in 2007, 2008, 2009 and 2010, respectively.

The deal also included “future contingent ‘earnout’ payments based primarily on sales of existing content of the acquired business over a 10-year period.”
At the time of purchase, Playboy chairman and CEO Christie Hefner said that “Club Jenna is a very attractive business, which we believe will be both financially accretive and strategically complementary as we continue to execute our multiplatform strategy.”

Both Jameson and her husband, Club Jenna President Jay Grdina, signed personal service agreements with Playboy in conjunction with the acquisition. But Jameson retains her industry persona and is free to appear in promotions for toy companies, mainstream advertisers and others.

The Club Jenna deal, brokered by Peter Holt Gardiner of Eclipse Entertainment Capital LLC, was said to be a coup for the publicly traded Playboy, which entered the hardcore DVD market for the first time in 2005 with the launch of Spice Studios and is facing increased competition in the PPV sector from Hustler TV and the impending launch of Penthouse's own PPV channel.
On Tuesday, Playboy Enterprises Inc. announced a loss of $3.3 million as it pared 30 jobs and U.S. TV sales fell in the last quarter.

Playboy said U.S. TV sales fell 17 percent to $20.9 million in the quarter after a loss of exclusivity with DirecTV Group Inc., which dropped two of five Playboy channels. Rising competition from video-on-demand services also hurt U.S. TV sales. International TV sales rose 11 percent to $13.2 million.