• Portfolio, Friday, January 23, 2009 9:30 AM

Playboy Enterprises is downsizing its New York office and transplanting its magazine staff to Chicago. "A small number" of the New York-based editorial and licensing employees will have the option of relocating to Chicago, while most will be laid off.

Company insiders say the plan to dramatically cut costs by abandoning the expensive office space on Fifth Avenue in Manhattan has been under consideration for most of the past year. But editorial director Christopher Napolitano was reluctant to relocate his family. It is happening now because of a shift at the top -- the departure of CEO Christie Hefner and her temporary replacement by board member Jerome Kern.

Napolitano will remain with the company as an editor at large, operating out of a much smaller New York office. Meanwhile, former Maxim editor in chief Jimmy Jellinek, who until now has been running Playboy's Web site, will become editorial director.

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