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Commitments and Contingencies
 6 Months Ended
Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Leases
As of June 30, 2024 and December 31, 2023, the weighted-average remaining term of our operating leases from continuing operations was 4.7 years and 5.2 years, respectively, and the weighted-average discount rate used to estimate the net present value of the operating lease liabilities was 7.1% and 7.0%, respectively. Cash payments for amounts included in the measurement of operating lease liabilities attributable to continuing operations were $2.1 million for the three months ended June 30, 2024 and 2023, and $4.5 million and $4.3 million for the six months ended June 30, 2024 and 2023, respectively. There were no right-of-use assets obtained in exchange for new operating lease liabilities during the three months ended June 30, 2024. Right-of-use assets obtained in exchange for new operating lease liabilities attributable to continuing operations were $1.2 million for the three months ended June 30, 2023. Right-of-use assets obtained in exchange for new operating lease liabilities attributable to continuing operations were $0.6 million and $2.4 million for the six months ended June 30, 2024 and 2023, respectively.
In conjunction with the Yandy Sale in the second quarter of 2023, we entered into a sublease agreement with the buyer of Yandy in relation to its warehouse and office space for the remaining term of the lease, which expires in 2031.
Net lease cost recognized in our unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2024 and 2023 is summarized in the table below (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Operating lease cost$2,105 $1,928 $4,190 $3,819 
Variable lease cost266 343 640 745 
Short-term lease cost445 581 848 1,291 
Sublease income(232)(196)(454)(265)
Total$2,584 $2,656 $5,224 $5,590 

Maturities of our operating lease liabilities as of June 30, 2024 were as follows (in thousands):
Remainder of 2024$4,129 
20257,900 
20267,314 
20274,832 
20282,458 
Thereafter5,773 
Total undiscounted lease payments32,406 
Less: imputed interest(5,340)
Total operating lease liabilities$27,066 
Operating lease liabilities, current portion$6,438 
Operating lease liabilities, noncurrent portion$20,628 
Legal Contingencies
From time to time, we may have certain contingent liabilities that arise in the ordinary course of our business activities. We accrue a liability for such matters when it is probable that future expenditures will be made and that such expenditures can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount.
TNR Case
On June 21, 2024, we settled the previously disclosed litigation against our subsidiary Playboy Enterprises International, Inc. (together with its subsidiaries, “PEII”), which was brought by Thai Nippon Rubber Industry Public Limited Company, a manufacturer of condoms and lubricants and a publicly traded Thailand company (“TNR”). No party to the lawsuit admitted any liability or wrongdoing in connection with the settlement agreement. The TNR lawsuit was fully dismissed with prejudice by the court on August 1, 2024.
AVS Case
In March 2020, PEII terminated its license agreement with a licensee, AVS Products, LLC (“AVS”), for AVS’s failure to make required payments to PEII under the agreement, following notice of breach and an opportunity to cure. On February 6, 2021, PEII received a letter from counsel to AVS alleging that the termination of the contract was improper, and that PEII failed to meet its contractual obligations, preventing AVS from fulfilling its obligations under the license agreement.
On February 25, 2021, PEII brought suit against AVS in Los Angeles Superior Court to prevent further unauthorized sales of Playboy-branded products and for disgorgement of unlawfully obtained funds. On March 1, 2021, PEII also brought a claim in arbitration against AVS for outstanding and unpaid license fees. PEII and AVS subsequently agreed that the claims PEII brought in arbitration would be alleged in the Los Angeles Superior Court case instead, and on April 23, 2021, the parties entered into and filed a stipulation to that effect with the court. On May 18, 2021, AVS filed a demurrer, asking for the court to remove an individual defendant and dismiss PEII’s request for a permanent injunction. On June 10, 2021, the court denied AVS’s demurrer. AVS filed an opposition to PEII’s motion for a preliminary injunction to enjoin AVS from continuing to sell or market Playboy-branded products on July 2, 2021, which the court denied on July 28, 2021.
On August 10, 2021, AVS filed a cross-complaint for breach of contract, breach of the implied covenant of good faith and fair dealing, quantum meruit and declaratory relief. As in its February 2021 letter, AVS alleges its license was wrongfully terminated and that PEII failed to approve AVS’ marketing efforts in a manner that was either timely or that was commensurate with industry practice. AVS is seeking to be excused from having to perform its obligations as a licensee, payment of the value for services rendered by AVS to PEII outside of the license, and damages to be proven at trial. The court heard PEII’s motion for summary judgment on June 6, 2023, and dismissed six out of 10 of AVS’ causes of action. AVS’ contract-related claims remain to be determined at trial, which is set for September 30, 2024. The parties are currently engaged in discovery. We believe AVS’ remaining claims and allegations are without merit, and we will defend this matter vigorously.
New Handong Arbitration
On February 8, 2024, PEII and certain of its subsidiaries initiated arbitration in the Hong Kong International Arbitration Centre (the “Arbitration”) against PEII’s terminated China licensee, New Handong Investment (Guangdong) Co., Ltd. (“New Handong”). In October 2023, PEII’s subsidiary terminated its license agreement with New Handong due to ongoing, uncured material breaches by New Handong. PEII and its subsidiaries are seeking damages, including the payment of outstanding guaranteed minimum royalties, the payment of all guaranteed minimum royalties for the remainder of the term of the agreement, and other contractual damages for a variety of breaches. Such breaches include unauthorized sales of products, underpayment of earned royalties, failure to use approved trademarks and affix official holograms to all products, and the use of unapproved sublicensees. PEII and its subsidiaries are also seeking a declaration that the termination of the agreement was lawful and valid and the issuance of a legal order to require New Handong to refrain from any further manufacture, sale, distribution or other use of any Playboy intellectual property or products. While PEII believes it has strong claims against New Handong, and that the facts of the matter support those claims, even in the event PEII were to obtain all the relief it seeks from the Arbitration, PEII can provide no assurance or guarantee that it will be able to enforce the results of the Arbitration against New Handong or recover any or all monetary awards from New Handong.
Former Model Case
On July 5, 2024, a former Playboy model filed a complaint against the Company, certain of the Company’s affiliates and A&E Television Networks LLC (“A&E”, and collectively, with the Company and its affiliates, the “Defendants”) in California Superior Court for claims arising from A&E’s “Secrets of Playboy” show (the “A&E Show”) which showed certain Playboy videos that depicted the former model. Neither the Company nor its affiliates participated in any way in the creation, production, distribution or airing of the A&E Show, nor did the Company or its affiliates license or otherwise authorize use of the videos in the A&E Show. The complaint alleges, among other things, invasion of privacy, appropriation, distribution of private explicit video, negligence and unfair competition by the Defendants to the detriment of the former model. The lawsuit seeks at least $2 million in damages from the Defendants. The Company believes the plaintiff’s claims and allegations with respect to the Company and its affiliates are without merit, and it will defend itself vigorously in this matter.