Playboy Finally Closing Spice Deal

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Operators who may have feared that Playboy Enterprises
Inc.'s $100 million purchase of the Spice adult pay-per-view service would cut into
their lucrative revenue split agreements will have little to worry about once the deal is
completed March 15, Playboy said last week.

Playboy expects to close its purchase of Spice today (March
15) more than a year after announcing the deal.

Although the deal has meant the sale of one of the most
profitable of Spice services -- Spice Hot -- to adult movie producer Vivid Video, the fear
that Playboy would water down Spice's saucier content appears to be unfounded.

The biggest concern of most operators was that the generous
revenue splits that Spice offered -- between 70 and 80 percent -- would be pared down to
Playboy's average split of 60 percent, once the deal was closed. But according to Jim
English, president of Playboy Television Networks Worldwide, Spice's split rates will
remain the same.

"The splits they [operators] had before March 15 will
be the splits they have on March 16," English said. "We are not raising the
price [of the service], we're just trying to make the service better for
operators."

The biggest change will be the combination of Adam &
Eve, a Spice movie channel, and AdultVision, its Playboy counterpart, into one channel
called Spice 2 on June 1.

English added that Playboy intends to expand the Spice
movie lineup -- which had offered between eight and 10 movie premieres a month -- to 17
beginning June 1. And though the Spice Hot service -- noted for its more sexually explicit
content -- is no longer part of the Spice fold, most operators will not be able to tell
the difference, English asserted.

He said that most operators will continue to offer Spice
during the day and Spice Hot at night. The only difference will be that Spice Hot is owned
by another company.

Playboy agreed to purchase Spice in February 1998, in a
cash and stock deal valued at about $100 million. The deal makes Playboy the dominant
player in the adult PPV market with about 19 million of the 23 million adult viewing homes
in the country.

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