Penske Media Corporation, the owner of Nikki Finke's Deadline Hollywood, has finalized a deal to purchase Variety — a digital age story of a blog buying Hollywood's oldest trade paper in a bid to reverse the print publication's declining fortunes.
The purchase price for the 107-year-old paper was not disclosed, but Reed Elsevier had for months struggled to sell Variety. The print publication's public profile and revenues have declined precipitously over the past five years.
Meanwhile, Finke herself was silent on the purchase, which was announced on Deadline by Mike Fleming, Variety's deal columnist for many years. Fleming suggested that big changes were in store for the trade.
"I would be surprised, for instance, if Variety continues behind a pay wall, or continues to exist in its current form as a daily and weekly print publication," Fleming wrote.
Also read: What’s Variety Worth and Who Will Buy It?
Insiders at Variety told TheWrap that Finke would have no immediate role. Finke did not immediately respond to a request for comment from TheWrap. Insiders had told TheWrap that tension had arisen between Penske Media Chairman and CEO Jay Penske and Finke because he would not give her a role running the trade.
"She's having a major tantrum because he won't give her the keys," one of those insiders told TheWrap.
Successive bidders had circled the asset, only to walk away from Elsevier's asking price of $40 million.
Also read: Variety for Sale as Hollywood Trade Struggles in Digital Era (Updated)
The price was believed to be about $25 million. Reed Elsevier continually lowered its price, and then offered financing to the buyer, according to people familiar with the process.
In a statement announcing the sale, Penske implied Variety would be getting some digital sprucing up, while lauding the trade's legacy.
"Since 1905, Variety has been the world’s premier entertainment news source, and is today one of the most recognized global media brands," Penske said. "We are thrilled to welcome Variety and its exceptional team into the PMC organization. As part of this significant acquisition, we plan to rapidly build upon Variety’s foundation while extending this invaluable brand’s presence across the web, broadcast, mobile, and international markets.”
Penske purchased Deadline in June 2009 for a reported seven-figure payout to Finke, the site's founder, plus a lucrative five-year employment contract.
The prospect of Hollywood's most vituperative journalist being brought into the same family as the controversy-averse trade publication struck many as an awkward union.
Finke had been pushing hard for Penske to buy Variety, according to individuals with knowledge of the deal.
Finke does not appear in public and her interpersonal skills notoriously involve dressing down executives, threatening rivals and publicly browbeating colleagues who win her disfavor. (When her own publisher, Lynne Segall, left for the Hollywood Reporter, Finke published a column suggesting that Segall had worsened her diabetes.)
Finke could not be more different than Variety's current editor, Tim Gray, a mild-mannered and accomodating veteran of the trade.
Also read: Variety Bleeds Talent, While Newsroom Morale Suffers
Less than a decade ago, Reed Elsevier put Variety on the auction block along with a group of less prominent trade publications for $2 billion. But it ended the sale when the bidding did not surpass $1 billion. Since then, advertising has collapsed for many print publications, and Variety has faced stiff competition from digital rivals including Deadline and TheWrap, who have taken market share and proven more editorially aggressive.
Variety has also had to compete with long-time rival the Hollywood Reporter, which relaunched its website and folded its daily print editions, launching a glossy weekly in its place.
It does not appear that the two insider brands will merge, but other Penske properties share content across their different channels. Deadline often links to movie trailers released on Penske's YouTube channel, ENTV, for example.
The Inglewood-based owner of Deadline and six other digital properties, including India.com and MovieLine, partnered with private equity firm Shamrock Capital Advisors to buy Variety. In the end, Penske partnered with Third Point LLC to fund the purchase.
Bidding for Variety started in the late spring and went through the summer before the 33-year-old Jay Penske, the eponymous CEO and son of automotive tycoon Roger Penske, finalized the deal.
Billionaire supermarket magnate Ron Burkle withdrew an offer in late August, the New York Post reported. Then, New York-based hedge fund Avenue Capital, owner of the National Enquirer, dropped out. Both had reportedly offered less than $25 million.
The oldest of the Hollywood trades, Variety has been struggling with declining advertising and circulation for several years.
Variety remains a profitable enterprise, despite struggling to compete in the 24/7 news cycle.
TheWrap has reported Variety is believed to earn $45 million in annual revenue and $6 million to $7 million in profit. But that is about half of what the trade brought in a decade ago.
In its heyday in the 1990s, Variety earned 30 to 40 percent profits, with annual revenues that once reached $90 million.