Variety, the magazine that has tracked the business of show business since 1905, is up for sale for the second time in four years, a test of bidders’ appetites for a trophy print brand in an increasingly competitive and digitally driven market.
Reed Elsevier, the scientific and legal information group that bought Variety in 1987, told its staff of more than 100 on Friday that a sale process had begun. Variety had formed part of an auction of its Reed Business Information division in 2008. Reed stopped the sale that November as markets shook after the collapse of Lehman Brothers.
Reed declined to disclose financial details but one person who studied the business in 2008 estimated that Variety had revenues of about $30m and remained modestly profitable thanks to cost-cutting and expansion into events and online databases.
Industry members were unsure of Variety’s possible value, noting that McGraw-Hill had sold BusinessWeek to Bloomberg for less than $5m in 2009 but that Variety was not suffering the same losses. A sale could value it at $10m-$25m, one investor estimated.
The 2008 RBI auction won interest from private equity groups such as Bain Capital and Apollo but Variety alone may be too small to attract the same bidders.
“The appetite for this kind of asset has got to be from someone with a plan to reinvent it or from somebody interested in its trophy value,” said Ken Sonenclar of media investment bank DeSilva + Phillips. “Running Variety has a sexy aspect to it. You’re right in the middle of the Hollywood community.”
Tim Nollen, a Macquarie analyst who has called for Reed to make larger disposals such as LexisNexis or its exhibitions business, said the Variety sale fit Reed’s strategy of getting out of cyclical print titles while keeping more data-based assets.
“If they’ve started an auction, they must have a good idea that there is a buyer,” he said. “It’s a brand name but it’s a small asset.”
Pluribus Capital Management and Guggenheim Partners have repositioned the rival Hollywood Reporter since buying it with other Nielsen magazines in 2009, redesigning its print edition as a glossy weekly magazine while keeping its website free.
Variety, which makes most of its revenue from advertising, charges for online access and has seen competition from online brands led by Deadline Hollywood and The Wrap.
Mark Kelsey, chief executive of RBI, said: “Variety is an iconic title serving the film and entertainment industry for more than 100 years. With RBI’s increasing focus on data services and the sale of our other US print magazines, it now makes sense for us to sell the business.”
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