Exhibit 10.5

                            PLAYBOY ENTERPRISES, INC.

                                  May 24, 1999

Herb Laney
Playboy Enterprises, Inc.
680 North Lake Shore Drive
Chicago, IL. 60611

Dear Herb:

This is to confirm the following new compensation arrangements which we have put
in place for you:

1.    If all or any portion of the Catalog Group is sold during the term of your
      employment, you will receive two and one-half percent (2.5%) of the book
      gain which Playboy Enterprises, Inc. ("Playboy") realizes on such sale or
      sales. Book gain means the excess of the fair market value of the total
      consideration received by Playboy over the book value of the assets sold.
      You and Playboy have agreed on the amount of the approximate book value
      for the two Catalog Group businesses which are most likely to be sold
      (i.e., the "Critics' Choice" video and "Collectors' Choice" music
      businesses) as of June 30, 1998. That book value, and the corresponding
      calculation of the book gain, will be subject to adjustment for legal,
      investment banking and accounting fees incurred and to be incurred in
      connection with a sale or sales, as well as any other adjustments in
      accordance with generally accepted accounting principles. In the event of
      a partial sale, book value and all relevant adjustments will be allocated
      in a reasonable manner. Your 2.5% of book gain will be paid to you in cash
      when and as Playboy receives the consideration for the sale or sales.

2.    If the buyer of all or a portion of the Catalog Group does not hire you
      and Playboy terminates your employment, Playboy will pay you twelve (12)
      months severance at your then current salary.

3.    If you are offered a job by the buyer of all or a portion of the Catalog
      Group and you accept employment with that buyer, you will be entitled to
      receive from Playboy only the payment described in paragraph 1. above. If
      you choose not to work for that buyer, you will be entitled to terminate
      your employment with Playboy upon the closing of the sale of all or any
      portion
<PAGE>

May 24, 1999
Herb Laney
Page Two

      of the Catalog Group (the "Closing") and, if you so terminate, you will
      receive from Playboy twelve (12) months severance at your then current
      salary starting upon the Closing and payable monthly in accordance with
      Playboy's ordinary practices.

4.    In the event of a sale that results in your termination/separation from
      employment with Playboy, you will be entitled to exercise for three (3)
      months after the date of termination/separation those Playboy stock
      options in which you were fully vested on the effective date of the
      termination/separation.

5.    If your termination/separation from employment with Playboy occurs in the
      last quarter of our fiscal year, Playboy will also pay you a pro rata
      portion of your incentive compensation for that fiscal year (at the time
      incentive compensation is payable to other executives at Playboy).

If you agree that the foregoing properly describes the additional arrangements,
please sign, date and return to me the enclosed copy of this letter. You are
also, of course, welcome to call me with any questions about these arrangements.

                                           Very truly yours,

                                           PLAYBOY ENTERPRISES, INC.


                                           /s/ Howard Shapiro

                                           Howard Shapiro
                                           Executive Vice President

ACCEPTED AND AGREED TO:


/s/ Herb Laney
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       Herb Laney


Date       6-2-99
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