HEF II : Christie Hefner Moves to Bring the Troubled Playboy Empire Into the ‘90s

SHE IS UNABLE TO RECALL much of her suburban Midwestern childhood, but one image is clear: Fifteen-year-old Christie Ann Gunn is belting her soprano heart out as Daisy Mae in a production of “Li’l Abner,” the highlight of her summer at Interlochen, a music camp in Michigan. It’s a plum role, for which the slender brunette endures having her hair sprayed blond and her bosom artificially padded to approximate her character’s pneumatic physique.

Her mother and stepfather have made a special trip up from Highland Park, Ill., a suburb north of Chicago, to see the show. Christie knew they would. Just as predictably, her real dad didn’t come. Hugh Marston Hefner, who left his wife and two children when Christie was 6 to devote himself to a magazine that idealized women who looked like Daisy Mae, was back at the Playboy Mansion in Chicago. Christie hadn’t really expected him to make the trip. Still, she was disappointed. Like any child of divorced parents, she was eager to win his approval.

IN THE 21 YEARS since, Christie Ann Hefner has reclaimed her father’s surname, taken control of the company he left his family to found and come to limit her singing to sessions at the Yamaha baby grand in her Chicago apartment. Last November, she was named chairman of the board and chief executive officer of Playboy Enterprises Inc., replacing her father in those jobs, entrusted by him with the task of maneuvering the corporation into the next decade.

The Playboy empire was built around Hefner’s personal “quest,” as he calls it; the corporation’s namesake magazine embodies his celebration of sexuality and has always fed voraciously off his private life, including the recent cover and pictorial of his new bride, Playmate of the Year Kimberley Conrad. But his image has changed: No longer the rogue bachelor, he is a 64-year-old married man who honeymooned with his homebody 26-year-old wife on the grounds of the Playboy Mansion in Los Angeles’ Holmby Hills. Having recovered from a 1985 stroke, he spends his time looking backward, working on his autobiography, rather than forward. He has chosen to step out of the swinging limelight as well as the boardroom, which means that his company now depends on Christie Hefner for its survival and its future.

It’s a challenging inheritance. The company is in grave need of rehabilitation, a victim over the past decade of poorly planned expansion efforts that backfired, wanton spending, ineffective management and an explosion of competing publications that has eroded the flagship magazine’s circulation from a high of 7.2 million to its current 3.7 million. Playboy was hardly the only publication to suffer; many of its contemporaries are dead, and no other men’s magazine can yet match even its diminished circulation. But the combination of a magazine whose annual ad pages are now at half its 1,400-page peak and the drain from failed ancillary businesses jeopardized the corporation.

Christie believes that the way to save Playboy is to build a new kind of corporation: a diversified company that updates its bunny image for the 1990s and expands beyond it, into new, non-Playboy businesses. At its peak, the magazine was a how-to manual for men who wanted to emulate Hugh Hefner’s life style, but his daughter can hardly hope to market memories of a bygone era. If Hugh Hefner was the participant entrepreneur, the man who sold sex based on his personal definition of liberation, his daughter sells it as an executive who understands the importance of packaging. In her revised vision of the corporation, the sex of the CEO is no longer the pesky issue it has been--because overt sexuality is about to become a smaller piece of Playboy’s pie.

Take the company’s new catch phrase for its product: “quality fun for grown-ups.” Christie’s father disposed of the puritan ethic; her goal is to enhance his converts’ leisure time and to expand her target audience. Playboy magazine, says Arthur Kretchmer, its longtime editor and senior vice president of the publishing group, has always been aimed at men “whose psychological age is 30.” Christie is after men and women that age and younger, who have survived the workaholic 1980s and want to get more out of the little free time they have. Her mandate is to reach further into their lives than her father ever did, with everything from a late-night magazine-format television show to single-interest magazines. She’s even prepared to discard the bunny logo to snare a wider clientele: One of her first acquisitions as CEO was Sarah Coventry jewelry, a costume-jewelry house aimed at women whose budgets dictate K mart but whose tastes demand more choice. Christie is going after not just the upscale readers who can afford the electronic equipment and clothing touted in the magazine but also middle-class Americans interested in a more economical good time, as well as foreign consumers, who have always prized the Playboy logo more highly than do their stateside counterparts.

Hugh Hefner is quick to admit that he could not orchestrate such a transformation--nor does he want to. “The business side of business doesn’t light my fire,” says Hefner, who has backed off from everything but his first love, the magazine, during the past several years. His daughter, on the other hand, lives for the corporate victory: She took over as president of Playboy Enterprises in 1982, when the company was crippled by $51.7 million in losses (the first ever reported) and a $20-million debt, and spent six years digging the business out of the hole, to its current wobbly, if more promising, status. Last summer, her father suggested a formal transference of power. After all that time spent correcting other people’s mistakes, she was to have the chance to rebuild Playboy in her own image.

CHRISTIE STANDS IN stark contrast to her father. If his was a reign of passionate autocracy, she is the efficient democrat. Hefner, for all the outrage he engenders among those who see him as either an antiquated sexist or an irredeemable libertine, has an oddly pixieish quality--an easily loosed giggle, a cockeyed smile, an amused fascination with the life he’s lived. He’s been an informal king: His friends and acquaintances, most of his employees, even his daughter, call him Hef. Christie, who displays a protective, almost parental concern for her father when they are together, is warier with people and with words. She comes off cool, a woman determined to remain in control--a hard-nosed guardian of the bottom line who employs a dizzying vocabulary of business jargon.

His style is silk pajamas and self-indulgence. Christie prefers dress-for-success and self-denial. Everything about her screams business first, from the conservative center-parted hairdo she’s worn for years to the go-with-everything summer pumps that spare her a moment’s indecision about what shoes to wear. Since the mid-1970s, Hef has ruled from the sybaritic exile of the Playboy Mansion West, even though all of the company’s divisions, except for video, are based in Chicago and New York. Christie, the corporate scrapper, is known for her availability and her frequent appearances on both coasts.

The one quality the two Hefners do share is a willingness to work hard, complemented by seemingly inex haustible energy. They both inspire an almost cult-like adoration from their employees. Michael Perlis, hired as publisher of Playboy last April after three years as president of the International Data Group, a leading publisher of computer magazines, rattles off a string of flattering adjectives about his new boss. As for any flaws in her personality, he says, “I’d have to work hard to think of where she has to improve.” Others speak, with a mixture of admiration and intimidation, of her remarkable ability to process information quickly. Christie carries a tiny, leather-bound notebook wherever she goes, to capture the sudden clever thought--even into the bedroom, in case she wakes up in the middle of the night with an inspiration.

She finds the notion of “down time” wasteful, and the workday sacrosanct. Teresa Lemon, a friend since Christie’s days at New Trier High School, knows better than to invite her to lunch. That would break Christie’s concentration; her discipline demands that they meet for dinner instead. When she cooperates with the media, she insists on strict ground rules--formal appointments with cutoff times, no shared meals, no visits home, no hanging around to watch her work, all of which, Christie believes, would hamper her ability to get things done. And she has little patience for the by now too-familiar questions about what a nice girl like her is doing in a place like this. As far as Christie is concerned, only people who misunderstand what Playboy is about see her as a woman running a company fueled by sexual stereotypes, and she’s never going to be able to change their minds. She no longer feels any need to try.

All that matters, right now, is getting down to work. Her new title, she says, gives her “permission to kick it into gear.”

CHRISTIE’S MASTER PLAN for overhauling Playboy Enterprises can best be described as discount expansionism: Although she believes that the company has to diversify to succeed, she does not intend to pay full price for her projects and acquisitions. Either the company will share the financial burden of new ventures with other corporate partners, or it will go after cut-rate goods--what William Stokkan, her licensing and merchandising group president, calls “undervalued companies” that Playboy can pick up on the cheap and then restore to full value. It’s an attempt to cut back on the kind of risk-taking that has gotten Playboy into financial trouble before.

She has a new management team to implement her ideas, a handful of young, hungry media types who talk eagerly about golden opportunities and building from the ground up. The “new hires,” who report only to her and speak of Hef from a deferential distance as “Mr. Hefner,” include Perlis; James Spanfeller, publishing group senior vice president, marketing, and Steve Cohen, vice president, communications and promotions. But she also depends on such select company veterans as Stokkan and Richard Sowa, president of Playboy Video Entertainment Group.

Each division--licensing, video and publishing--plans to grow. Licensing will branch out beyond products carrying the Playboy logo and has already made three purchases: Sarah Coventry; a minority interest in Thomas duPont’s duPont Registry magazine, a catalogue of classic cars being offered for sale, and the Critic’s Choice home-video catalogue, which dovetails with Playboy’s existing home-video business.

The video division announced the pending demise of the foundering Playboy Channel in August, citing overall division losses of $4.9 million in fiscal 1988 and a drop in subscriptions from 750,000 in 1984 to 400,000 this past June. It will be transformed in December into a pay-per-view nightly adult entertainment channel, “Playboy at Night,” which, Playboy hopes, will silence complaints from parents and church groups concerned that children have access to unsuitable programming.

Christie has also announced plans for a program to be aired in Europe called “Playboy Late-Night,” a combination of Playboy-produced R-rated material with locally generated programming from broadcasters in Italy, France and Spain. In this country, Playboy will introduce “After Hours,” a magazine-format show aimed at the key 18-to-34-year-old audience, produced by the company’s Alta Loma Productions.

As for the healthiest part of the company, the publishing division, Christie plans to launch new magazines, possibly concentrating on travel or electronics, or any area where Playboy has rapport with advertisers. They, in turn, should shore up Playboy’s position in the glutted magazine marketplace. “In five years, I don’t want my ad sales executives to be out selling only Playboy against the family of Time, of Hearst and Conde Nast. I’m going to let Kay Graham be the last CEO who has got one major magazine (Graham’s Washington Post Co. owns Newsweek).”

THE RESTRUCTURED company will move to a new home after 20 years in an Art Deco building on tony Michigan Avenue. This fall, Playboy Enterprises takes over the top two floors of the venerable American Furniture Mart, built in 1924, with a commanding view of Lake Michigan. As the largest corporate tenant, Playboy has the right to impose its name on the entire structure; its ubiquitous bunny emblem will sit above the main entrance, and the logo will hang in the lobby.

Christie ran the numbers on the new space before she signed the lease and boasts, “We’ll save $11 million in 15 years on this lease.” It is the perfect symbol of the new Playboy: a beautiful bargain. But it is clear, from the way she strides around the construction site, that this building means much more to her than merely a smart deal. This is her present to herself, the symbol of a new administration. The old offices look like Then: dark wood, earth-toned furniture, swooping curved walls and oppressively low ceilings; each one a rabbit warren from which the occupant rarely strayed. The new space looks like Now: vast open areas and, as the centerpiece, a mammoth set of skylights above a two-story atrium.

“It will be a very different, fresh-looking space,” Christie says, “so it was very appealing in terms of a symbolic statement for the company. Building for the future as opposed to being tied to the past--a chance to bring people together.”

To ensure the rapid exchange of information, catwalks span the atrium on the top floor, so that no one will have to waste minutes walking its circumference. This is no place to stroll or amble. The edict has gone out: Christie Hefner says she expects her people, from now on, to “hit the ground running.”

HUGH HEFNER USES that same phrase to describe the young daughter he glimpsed on occasional visits. “Christie hit the ground running when she was a little bitty kid,” he says, “and you can see it in old pictures. She was a super-achiever from the beginning, and it was important for her to excel. You can see it in preschool movies--alive, electric, just the way she unwraps a package for Christmas. She just takes control of the situation and does something with it that’s appropriate.”

Richard Rosenzweig, executive vice president of Playboy and Hefner’s right-hand man for more than 20 years, remembers “a rather special first impression” of a high-school-age Christie when he was asked to attend a meeting among Hef, his ex-wife, Millie, and his daughter. Millie (who now works for her daughter in the personnel office in Chicago) was facing the breakup of her second marriage. Rosenzweig expected an awkward scene. Instead, Christie took over the meeting and spoke on her mother’s behalf, in what Rosenzweig describes as a “very dynamic, very specific way,” managing to broker a deal in which her mother received financial and emotional support.

The girl her father calls “an old soul” had relentless goals for herself. “I’m a very competitive person with myself,” she says, “and it was very important for me to get great grades. It was very important for me to get great test scores. It was very important for me to get into a great college. It was very important for me to do things well. I think that’s who I am, frankly.”

At Brandeis University, where she majored in English and American literature, an invitation to Phi Beta Kappa posed a peculiar dilemma. Christie had never been particularly close to her stepfather. She had always felt close to her father, even though their time together was limited. Did she want to appear on the scholastic fraternity’s roll as Christie Ann Gunn? Or did she want to acknowledge Hugh Hefner, after all this time, with public recognition of their relationship?

She had her named changed legally, back to Christie Ann Hefner. Hef’s voice still falters just a little when he reflects on the gesture, which, as far as he was concerned, “certainly established security in terms of the love.” A year later, in 1975, he offered his daughter a job. She arrived in Chicago as special assistant to the chairman, or, as Rosenzweig puts it, “his eyes and ears as a Hefner,” now that her father had moved to Los Angeles. She went on to publish single-issue Playboy Guides and then became the head of corporate marketing, responsible for Playboy’s 25th-anniversary events. In 1982, she felt confident enough about her performance--and concerned enough about a “morale crisis” among employees who wondered where the company was headed--to ask her father for a promotion to president. It seemed a tricky pairing: a 29-year-old woman with no formal business background taking over a troubled company. She took office in the same month that Playboy lost its Atlantic City gambling license, having already faced the devastating closing of its lucrative London casinos. The company’s retail efforts were stalled, the signature clubs were on the wane--all would eventually be closed--and the magazine’s circulation and ad pages had begun to slide. Even Hef was willing to admit that his long-distance, laissez-faire management approach had backfired. Christie recalls his analysis of what he had bequeathed to her: “ ‘Gee, Christie,’ he said, “ ‘I feel like I went to the party and you had to clean up the next morning.’ ”

She put a stop to the financial hemorrhaging right away. “When I took over,” she says, “I said, ‘I want a daily cash report. I want to know how much money went in and how much money went out.’ The then-treasurer looked at me like I was crazy. A moment went by and a light went on behind his eyes. He said, ‘Ah. You think about this like it’s your money.’

“And I said: ‘You bet.’ ”

AFTER SIX YEARS OF budget- and personnel-slashing, she moved up to CEO and chairman of the board, earning more than $321,000 in the past fiscal year. The company has continued to lose money--it just posted a $3.8-million net loss for fiscal 1988-’89--and at the moment, Christie has little more than intentions, optimism and a game plan. But if it is too soon to judge the results of her new-found power, she has managed to woo the financial community, which regards her efforts with good will.

Financial analyst David Leibowitz, who has tracked the corporation for more than a decade for the Manhattan investment banking firm American Securities Corp., finds the European television idea “a gem of a move . . . whose rewards can be very important, not just in terms of TV, but in terms of enhancing the Playboy name.” He’s withholding judgment on the stateside pay-per-view idea until after its debut. He thinks Playboy’s home-video products will help the magazine regain its feet, and he believes that stepped-up licensing efforts, particularly in Europe, could be extremely profitable.

But Leibowitz cautions that “everything done at the magazine has long-range implications” for all the Playboy divisions and concedes that the company “has had its difficulties” in acquisitions and new businesses in the past. “It will,” he says, “require hands-on care from management.”

Management, at the moment, faces its own, internal pressures: not the old, debilitating stress of failure but the edgy, watchful tension felt by executives whose divisions are being realigned. Playboy magazine is run by a cadre of Hefner loyalists who speak of Hef as they would of a family member. Kretchmer, who refers to himself as Hef’s “very capable buddy . . . Danny Glover to his Mel Gibson,” finds Christie “very careful” about not intruding. “She’s not deferential, but she’s very polite. She basically comments after things are published. If she has anything to say, she lets me know, but she really doesn’t impose policy at all.” But it can’t last forever. The magazine, though still the centerpiece of the corporation, is now one portion of an expanding publishing division, answerable not only to a new CEO and publisher but to executives from other parts of the company. Stokkan of licensing and merchandising, for one, is “concerned about the magazine’s ability to stay as current as it should. It needs to be updated.” His success at selling Playboy-logo products depends on the magazine’s continuing credibility.

The seismic rumblings promise to continue in the coming months--and those familiar with the once and future CEOs expect that they, too, will have to sort out their roles. One Playboy Mansion regular sees “a competition, the strain, between these two incredible egos.” The two Hefners may agree that Christie has controlled Playboy’s day-to-day operations for years, but they still have slightly different takes on who, finally, is in charge. Christie, when asked to compare herself to other women in media, such as editors Helen Gurley Brown at Cosmopolitan, Grace Mirabella at Mirabella, or Tina Brown at Vanity Fair, laughingly says, “I don’t want to sound self-aggrandizing, but I’m Si Newhouse,” owner of the New Yorker, “not Grace Mirabella. Hefner is your Helen Gurley Brown analogy.”

When her father explains the power structure, however, it sounds like this: “She’s working for me. I’m the guy that owns the company.” If they disagreed? “We would do what I thought we should do.”

But that’s theory, and pride of ownership, talking. In practice, Hef cannot recall ever rejecting one of his daughter’s projects. He settles for monthly visits from her and daily updates, often passed along by Rosenzweig. He may own the show, but he does not really run it anymore.

IN THE END, IN terms of Playboy’s future, the verbal jousting doesn’t matter: What counts is that Hugh Hefner, owner of 70% of the stock in this most private of publicly held companies, has already made certain, as part of his estate plan, that Christie will become the majority stockholder upon his death. Eventually, her control will be absolute. Her younger brother, David, is a computer consultant in Bishop who keeps a discreet distance from his father’s life and has never been involved with the company.

Despite Christie’s assertion that her promotion is “energizing, not enervating,” there are times when she seems prey to the stress that permeates any company in flux--let alone a legacy that has a father’s life invested in it. She is an eager, engaging speaker who, at a news conference to announce her video plans, sounds convincingly hell-bent for success. But her hands betray a certain nervousness; never still, they clasp each other, toy with a necklace, straighten a lapel, flip back the deep waves that frame her high forehead. Sometimes, at rest, those hands tremble, ever so slightly.

Uncomfortable at large parties--”Don’t you find you end up having the same superficial conversation 10 times over?”--she prefers a more circumspect social life, one that revolves around having dependable old friends over for the occasional homemade dinner and song session at the baby grand, or quiet evenings spent reading. For the past eight years, she has managed a long-distance commuter’s romance with Imagine Entertainment producer Jim Korris; when in Los Angeles, she stays with him and pops over to the mansion to visit and play tennis.

The time-locked questions faced by most working women in their mid-30s--whether, and when, to start a family--intrigue her, but her job allows only speculation at this point. “Jim and I have a more fundamental problem to solve, and that is that my company is in Chicago and his industry interests are in L.A.,” she says. Until one of them can relocate--and, given her commitment, she expects it would have to be Korris--the prospect of a family “doesn’t seem like something imminently attractive.”

For now, she is too busy being the definitive good daughter, half of what her father considers a “uniquely intense” relationship. “I am closer to her,” he says, “than many parents and their children who were raised in more traditional ways.” Though they both talk a good game about the past--Hef denies any residual guilt, and Christie strenuously rejects the idea that she harbors any resentments, even as she recalls that missed Daisy Mae performance--there is an almost palpable urgency to their feelings for each other. Christie still can be surprisingly vulnerable when it comes to her father. In the weeks before his wedding, she proclaimed her desire to talk about anything but the event. It was his party. But days before the ceremony, she eagerly displayed a photo of the gift she’d ordered--a custom-made crystal replica of the wishing well where her father proposed to Kimberley--and fretted about whether he’d be pleased by it.

A friend of Hef’s was at the mansion one afternoon when ex-wife Millie was visiting and heard her remark to Hef that Christie still lives for the compliment from him. Christie has devoted herself to the chance to earn that praise, and more: She has become the custodian of his immortality.