Variety is very much the old guard of Hollywood trade publications. It's been eclipsed by competition from Deadline, TheWrap, and The Hollywood Reporter. But when parent company Reed Business Information sells Variety, it'll cost well north of the previously reported $40 million.
The New York Post reported last week that super market magnate Ron Burkle was a key player in the small group of bidders vying for Variety. Burkle bought Blackbook Media in January, but compared to the other possibles he's practically an outsider. According to the Post, the other suitors for Variety are TheWrap and Penske Media -- owner of Variety competition Deadline and Hollywood Life.
PaidContent's Daniel Frankel spoke to someone with direct knowledge of Variety's operations. They say the cost of buying Variety goes well beyond the $40 million it would take to buy the centuries-old trade. Variety's problems run much deeper:
“That $40 million is a pretty considerable amount of money, but the problem is you’re not done at $40 million,” said one knowledgable individual, who spoke at length to us. “You’re buying a property that’s had a decade of deferred maintenance. Whoever underwrites this is going to have to do this with a plan of investing significantly post-purchase.”
Any potential employer, Frankel's source tells him, would need to invest serious money into repairing Variety to put it on a level to compete. The costs will range "from legal services to technology infrastructure," because so much of Variety's infrastructure is handled by Reed. Once they're taken away, those holes need to be filled. Variety's also painfully behind digitally, and it'll cost a pretty penny to get them caught up to their competition.
Frankel says the only way a potential buyer can properly handle Variety is by pumping it with lots and lots of cash. Not borrowed cash, real cash from your pockets. That rules out TheWrap, then. They don't have enough money behind them. "Penske has enough access to capital and credibility that he could persuade people he could run this thing, but if Ron is interested, it’s game over," Frankel's source said. "Burkle is the only one who can get this done without making any phone calls. Everyone else is going to have to finagle things."
If, at this point, you'd like a primer on the state of the different Hollywood trade publications and the vicious, insider-y wars they wage against each other, we would like to direct you to Hunter Walker's brilliant New York Observer piece "The Tussle for Tinsletown." Remember back in March when Nikki Finke took responsibility for Variety's sale? Yeah, it's always like that.