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Brian McGough: "I really like Ami’s point where he said his company had a “new lease on life.” This company [Playboy] has a new lease on life.
Basically what you have to do is think of this as a 68 year old start up. This is a brand that has historically been very counter-cultural and very socially divisive. It talked about LGBTQ rights, drug legalization, segregation, and sexual wellness. Those things can be very taboo.
There was about a 20 year time period where Hugh Hefner wanted to turn this into a media company, and that’s where there is a certain generation out there that has a natural bias against this company because they think it’s a magazine.
It’s not a magazine. There is no magazine anymore. This is a consumer goods company."
“Playboy has 3 billion dollars worth of goods out there right now with the Playboy bunny on it. 1$.5 billion of that is in China. It just signed a JV in India which could be just as big as China. There is no reason why it can’t. That’s $3 billion in total revenue but only $61 million dollars that shows up on its PnL.
The point is, the rate of royalty on that is 2%. That’s the lowest I’ve ever seen in my career. As I look at royalties, basically it is in between 6-12 is where you want to end up. This company couldn’t renegotiate any of these bad Hugh Hefner deals until he died. New management has come in and these guys are rock stars as they have worked to renegotiate these licensing arrangements.
Over a 5 year time period, they have an EBITDA target of $100 million dollars, which is pathetic. It’s a joke. They are going to blow through that in the worst way."
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