Variety bought by Deadline owner Penske Media, Third Point
The Hollywood trade paper Variety has been acquired by Penske Media Corp. and its financial backer, hedge fund Third Point, for about $25 million, in a power shift for the world of show business and a transformation of the industry's most famous news brand.
Santa Monica-based Penske already owns Deadline.com, the website that has in just six years become a dominant news source for show business professionals and, together with online competitor Wrap and a resurgent Hollywood Reporter, stolen much of the thunder that belonged to Variety for its 107-year history.
The fact that Penske, a digital media company headed by Chief Executive Jay Penske, won a nearly seven-month long auction held by Variety's British owner Reed Elsevier signifies how dominant a force the Internet has become in Hollywood. While Variety competes online, its five-day-a-week daily edition and weekly magazine are no longer the must-reads in Hollywood that they once were.
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In an interview, Penske said he believed Variety had faltered due to complacency, and that he intended to make it "absolutely fundamental and indispensable" to its readers in Hollywood.
He has not yet determined, however, what key changes he will make, including whether he will stop publishing either or both print editions. "Before we make any substantial changes, we need to spend more time with the current team," he wrote in an e-mail. "We need more data."
But he says Deadline and Variety will continue as separate and distinct entities, though some staffers may contribute to both.
"We see an incredible opportunity for future collaboration while remaining editorially independent," he explained.
Combining a famous print brand with a growing digital competitor could prove potent, but Penske faces a serious challenge in Variety. Despite several rounds of layoffs, its financial status has rapidly deteriorated in the face of shrinking ad sales. The organization has a staff of about 120.
As recently as 2006, Variety earned a profit of about $33 million on $92 million of revenue, according to a knowledgeable person who requested anonymity because they were not authorized to disclose financial information. This year, it is on track to eke out a profit of about $6 million on $45 million in revenue.
