Playboy to seek permanent restraining order preventing implementation of discriminatory provision of Telecommunications Act

Business Wire, March 24, 1997

CHICAGO--(BUSINESS WIRE)--March 24, 1997--Playboy Entertainment Group today said that, in light of the Supreme Court's decision not to hear arguments in its case at the preliminary injunction stage to have Section 505 of the Telecommunications Act of 1996 declared unconstitutional, it will seek a permanent injunction barring enforcement of the Act's provision.

"We are extremely disappointed with the Court's decision," said Christie Hefner, chairman and chief executive officer of Playboy Enterprises, Inc. "We believe that Section 505 is unconstitutional, as well as impractical and unnecessary."

Section 505 requires new redundant and expansive blocking equipment be installed in millions of cable homes regardless of whether a customer needs or wants it. Alternatively, it prohibits cable operators from offering adult-themed services like Playboy two-thirds of the broadcast day, making it available from 10 P.M. to 6 A.M. The ostensible purpose of Section 505 is to block audio and momentary bits of video programming that can accidentally "bleed" through from premium or pay-per-view channels on some cable systems.

In March 1996, shortly after the Telecommunications Act was passed into law, Playboy obtained a temporary restraining order preventing enforcement of Section 505. After a three-judge panel in U.S. District Court in Wilmington, Del., denied Playboy's request for a preliminary injunction in November, the company appealed that preliminary injunction decision to the Supreme Court. The District Court subsequently issued an order blocking enforcement of Section 505 pending Supreme Court review.

With the Supreme Court's decision not to hear its case at this preliminary stage of the proceedings, Playboy said that it will return to the District Court, seeking a permanent restraining order and a stay of implementation, pending further hearings.

The company argued that, in addition to violating free speech, Section 505 is unnecessary because Playboy's service already is scrambled and Section 504 of the Act -- which the company supports -- requires cable companies to offer audio and video blocking to any customer who requests it for any television network.

"Playboy has always supported the right of individuals to control what comes into their homes," said Hefner. "Section 504 of the Act clearly meets these needs. Section 505 does not increase parental control; it reduces adults' choices."

The company also noted that the provision is discriminatory, in that it does not require that other premium and pay-per-view channels be blocked, even when they show the same programming as Playboy.

"In addition," Hefner said, "enforcement of Section 505 could create unnecessary expense for customers, if cable systems pass along to their customers the cost of installing new blocking equipment."

Section 505 requires cable companies to install either traps or converter boxes to affected cable systems, whether or not the customer needs or wants to be able to block any form of programming.

Playboy TV is currently available in approximately 21 million cable households representing more than 500 cable systems. The company said that the approximately 5 million households that receive its network through direct-to-home satellite services are not affected by Section 505. -0-

Playboy Enterprises, Inc. is an international media and entertainment company that publishes Playboy magazine in the United States and licenses editions internationally; develops and markets other branded media products, including newsstand specials, calendars, books, CD-ROMs and an on-line service; creates and distributes programming for domestic pay television, worldwide home video and international television; markets the Playboy trademarks on apparel, accessories and products sold around the world; and operates a direct marketing business, including the Critics' Choice Video, Collectors' Choice Music and Playboy catalogs.

CONTACT: Playboy Enterprises, Inc., Chicago

Investor Relations Contact:

Martha Lindeman, 312/751-8000, x2650

or

Media Relations Contacts:

Rebecca Theim, 312/751-8000, x2656

Jim Nagle, 310/246-7667