(3 of 3)
The drug allegations are the most sensational of the clouds that have gathered over Hefner's empire of late. The company's annual report last September indicated that earnings for fiscal 1974 fell a staggering 48% from the preceding fiscal year. During the same period, Playboy's circulation fell by a quarter of a million (current circulation: 6.1 million). His fledgling two-year-old Out magazine was holding its own, but not much more. Aside from the Playboy clubs in England (which turn a neat profit thanks to their gambling parlors), the company's hotel-and-clubs division continues to drain profits from the flagship magazine, and Hefner's ventures into moviemaking have been disastrous (his most recent film: The Crazy World of Julius Vrooder). In an unpleasant omen for any corporation, the two outside members of Playboy Enterprises' board of directors resigned last month, citing as their reason "the current adverse publicity."