UPDATE 2-Playboy loss widens, search continues for CEO

*Q1 net loss of 41 cts share

*Q1 rev of $61.6 million down 22 percent

*Shares fell 3 percent before recovering (Adds CEO comments)

NEW YORK, May 11, (Reuters) - Playboy Enterprises Inc PLA.N, publisher of one of the world's best known adult magazines, posted on Monday a wider first-quarter loss under the weight of a depressed advertising market and slow consumer spending.

The company, which has said it would be open to discussions about an outright sale, reported a loss of $13.7 million, or 41 cents per share. This compares with a loss of $4.2 million, or 13 cents per share, in the year-ago period.

Before restructuring and impairment charges, the company lost 15 cents a share for the quarter.

Blaming in part an economic slowdown that has curtailed advertising spending, the company said revenue declined to $61.6 million from $78.5 million a year before.

To make up for revenue shortfalls, the company has been sharply cutting costs, including a 25 percent reduction in staff numbers since last October.

Shares of Playboy dropped 6 cents or 1.8 percent to $3.25. Earlier, they traded as low as $3.12.

Playboy’s flagship magazine has been particularly hard hit, though the company said on Monday that the “magazine’s bottom line will improve in 2009 versus last year.”

Playboy Interim Chief Executive Officer Jerome Kern added, however, that the magazine’s performance is not acceptable and changes will be made.

“It is clear that this company cannot continue to sustain significant losses in a business that now comprises less than one quarter of the company’s revenue base,” he said on a conference call. “As a result, we are looking at making radical changes to the magazine business model, from lowering the rate base, to increasing prices, to reducing frequency.” The magazine is now published monthly.

Kern later said that the company should soon have a new CEO in place. Kern took over the job from Christie Hefner, daughter of founder Hugh Hefner, who stepped down earlier this year.

“Our annual shareholder meeting will be held on Wednesday. and the board meets immediately there after. The major topic of discussion at this meeting is slated to be the choice of a CEO,” he said. “I’m not sure when a decision will be announced, but I’m confident that there will be a full-time, not interim, CEO hosting the next earnings call in August.” (Reporting by Paul Thomasch; Editing by Derek Caney and Gerald E. McCormick)