Playboy Enterprises, Inc. (NYSE: PLA) reported a disappointing fourth quarter, with more questions arising about the longterm viability of its business model. According to Playboy's earnings report, it lost $1.1 million in the last quarter of the year on stagnant revenues of $85.9 million.

Though the poor earnings reflect a one-time charge related to the sale of its Andrita television studio, it is the general condition of the business, not the specific figure that the company lost, that is driving concerns.

Though international TV revenue and online revenue rose by 10% and 2% respectively, domestic TV revenue dropped 10% and entertainment revenue dropped 3%. What everyone knows Playboy for, of course, is Playboy Magazine, which saw a slight drop in long-stagnant revenue which now is only $24.7 million – as a result of less subscriptions and advertising. This is a trend even management admits won't be reversed soon, as it anticipates a further 30% loss in magazine revenue just in the first quarter of this year because of continued shrinking advertising.

Chief Executive Christie Hefner, mustering optimism, said in the earnings report, “we expect licensing to report another year of growth in our consumer products business as we expand our distribution and product lines, as well as open new Playboy concept stores...We also expect to close another location-based entertainment deal, building a pipeline that will provide a steady stream of openings to those high-margin, high-profile venues in years to come."

Christie Hefner is referencing the only real bright-spot in Playboy's business – brand recognition. This has allowed Playboy to grow licensing revenues 18% to $10.5 in the quarter. The company also plans on outsourcing its Web commerce and merchandising operations to more experienced companies.

The question then becomes, for how long will Playboy be a viable brand when the underlying business that built that brand – Playboy Magazine – is in seemingly hopeless decline? The market sentiment seems decidedly negative at this point, with Playboy shares still down for the day 4% after losing as much as 10% in early trading.

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