Hugh Hefner prepares to hang up his silk pyjamas

After more than half a century of conceiving, perfecting and living out the life of Mr Playboy, Hugh Hefner may be preparing to retire. Shares of struggling Playboy Enterprises Inc surged yesterday on a report that the company may sell out to Iconix Brand Group, owners of Echo, Mossimo and London Fog.

But what would anyone want with Playboy? The once super-selling, highly-literate magazine is barely making one-fifth of its once formidable 6m circulation; its website has been overtaken by more specialised direct-to-action competitors; Playboy Channel revenues are essentially flat.

Still, stock in Playboy Enterprises is held by major financial players, including Fidelity Investments, the largest investment fund in the US, Barclays Global Investors and Blackrock.

The answer is licensing: there's no problem with bunny's ears, and the logo remains among the top 20 recognisable consumer brands in the world. The company's licensing business has never been better, increasing from $5.5m at the end of 1999 to $40.4m last year.

In its most recent re-incarnation, Playboy has spawned a hit TV show (The Girls Next Doorand its spin-off, Kendra), a Hefner biography (Mr. Playboy: Hugh Hefner and the American Dream by Steven Watts) and there's talk of a Hefner biopic starring Robert Downey Jr.

Playboy has been for sale since the spring after the board forced Hefner's daughter, Christie, from a 20-year term running the firm.

Though 83-year-old Hef might never concede it, being the perennial playboy has become a hassle. Yes, he has two new blonde 19-year-old girlfriends, twins Kristina and Karissa, but in September he sued his estranged wife Kimberley Conrad Hefner (Playmate of the Year in 1989) for divorce, claiming infidelity. He asked for $18m and requested the judge cut her allowance in half to $20,000 a-month.

Then, last summer, former bunny Izabella St James published Bunny Tales: Behind Closed Doors at the Playboy Mansion in which she revealed Hef was not such a dynamite lover after all. St James said Hef pops Viagra twice a week, Wednesdays and Fridays, and sleeps with up to four girls at a time, who are duly encouraged to shout out "Oh daddy!" at the appropriate moment.

"It seemed to me he just laid there like a dead fish," St James went on uncharitably, adding that Archie the house dog would often pee on the curtains, adding to "the general scent of decay".

But if Hefner sells up, who might take his place as Mr Playboy? The leading contender is Midlands-born Peter Acworth, a former Barings banker and founded of Kink.com, a suite of S&M and bondage-themed websites.

Acworth, 39, says he got the idea after he read in a British tabloid about a fireman who sold pornographic pictures on the internet. "He had made a quarter of a million pounds over a short period doing nothing very clever at all. So I basically just ripped off that idea."

It's a long way from bunny ears; Kink.com's brand icon is a forked tail.