• by Erik Sass  @eriksass1, May 22, 2009

An often-controversial American magazine is actively courting corporate suitors -- but so far, to no avail. After announcing in February that the company is open to the idea of a buyout, Playboy Enterprises has been trying to stir interest among possible buyers, including Apollo Capital and Providence Equity, according to the New York Post -- but these and other prospective purchasers have balked at the $300 million asking price.

The latest report suggests a growing sense of urgency at the company, whose executives are committed to taking it private. Like other consumer magazines, Playboy has seen both newsstand sales and ad pages decline over the last couple of years, with losses accelerating during the ongoing recession.

In the second half of 2008, average newsstand sales fell 23% compared to the second half of 2007, from 213,325 to 163,998; the 2008 figure represents a 63% drop from newsstand sales of 436,526 in 2001.

The Publishers Information Bureau has the magazine's ad pages down 22% in the first quarter of 2009, compared to the same period last year, falling from 103 to 80. (This follows an earlier decline of 5.7% in 2008 compared to 2007.)

In light of this prolonged slump, it's not surprising that the company's market capitalization has tumbled from $367 million in 2004 to about $75 million today. In fact, the company received a warning from the New York Stock Exchange that it faced delisting unless it could boost its market capitalization over the $100 million minimum required by NYSE. It's understandable why investors might be leery of paying a premium of 300% over the market capitalization.

Currently, 70% of the company's voting shares are controlled by founder Hugh Hefner, Wells Capital holds 10% and Fidelity owns 7%. The February announcement that the company would be open to acquisition came shortly after CEO Christie Hefner stepped down in January. Hugh Hefner is said to be reluctant to sell the company he led for over half a century, but appears to be acquiescing to the strategy recommended by top Playboy executives.