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David Poland

By David Poland

The Variety Thing

It was interesting to read Anne Thompson ‘s take on the increasingly likely – though not sure – purchase of Variety by Jay Penske. But I think Anne is a little confused.

None of these businesses are what would be considered Good Businesses. Not Variety. Not The Hollywood Reporter. Not Deadline.

And buying Variety makes less sense for Penske Media than pretty much any buyer. While Nikki Finke has exposed proven with Deadline that you can acquire pretty much all the “news” out there with, literally, a handful of professionals, how does one value Variety moving forward? Penske can eliminate one competitor for ad dollars… but that’s not how things actually work in the Oscar and Emmy games (aka, the dominant revenue driver of all of these businesses). Those ad dollars will be, at first, redirected, and within a season, eliminated from budgets.

A number of the major players have already decided that the $50k – $125k trade covers that made both trades so profitable for years are just not worth the money. Sales for Deadline’s Oscar Specials, which have the editorial value of 8x10s and one purpose alone – selling ads – continue… but not because they are any more effective as Direct Mail to Oscar voters than the trades are, but because controlling Nikki continues to be a priority for studios. but every indication is that Nikki’s peceived power and ability to manipulate The Bosses is sliding, not growing. To all things, there is a red line. And the notion that Penske can take a second bite of the same apple by buying Variety is not realistic… especially when the sales he has are not based on a straight purchase by the buyers, but one pushed heavily by one person.

Nikki will, to be fair, scream endlessly about how she maintains church and state. Acknowledged. But if you ask anyone who actually deals with her… Nikki is the horn of Jericho, not the wall.

And what of the actual operation of Variety? Penske has other online operations that Nikki does not control. But again, talk to the people working in that circle and you will find that Finke overreaches, as dramtically at in-house editors as with studio folks, often. She is a turf monster. But she’s never in front of any of her writers. So, who runs Variety if Nikki doesn’t try to do so? Who is willing to be put in that position? I don’t know that anyone can turn down a paycheck these days… but many people have either left Deadline or refused to take lucrative offers from Deadline for one reason only. Nikki Finke.

There is a clear class system built into Nikki’s style of management. If you are named Mike or Nellie or Pete, you get incredibly well paid and Nikki licks your ass like you were a studio president. If you are not, you are a fucking peon. If you actually clash with Nikki in a real way, you are Lynne Segall, roasted in public on your way out after you created the structure that kept the organization from going bankrupt.

There is an interesting phenomenon that has occurred, which is that long-standing relationships, especially with Mike Fleming, give executives cover in choosing to go our first on stories with Deadline, in spite of a lot of bitterness towards Nikki. “Why penalize Mike (or Pete or Nellie)?” is something one hears more and more. This suggests that Deadline/Variety could operate successfully without Nikki spraying her scent over the whole thing. But you wouldn’t try to lock a rabid, angry cat alone in a room of drapes and upholstered furniture and not expect some serious damage.

But back to the bigger picture… there isn’t room for Oscar spending as it is lovingly remembered for both The Hollywood Reporter, Variety, LA Times, Deadline, and the rest of us RIGHT NOW… and that is with Variety operating on relative fumes. What would make anyone think that the cutbacks on spending in this industry are going to be reinstated?

The Recession may be coming to an end. But the film business has a New Normal and there is no revenue driver in sight that will change that. This is an industry that operates out of habit and any change in habit is agonizing for people… I mean, bloody, ugly, rageful pain. And nowhere is this more true than in the Oscar business… which again, is the primary revenue model for all of these trade-focused businesses.

Oscar marketers are looking for voters eyeballs. Period. They need to be pushed to see the movies, inspired to vote for the movies and performances and achievements, and in the top categories, given a good feeling about ticking off that box. How does media fit into this?

I honestly don’t think that any of the buyers really know. Because of the age of The Academy membership, newer tools are not as attractive as they are for, say, marketing to 20soemthings and 30 somethings. Academy members have become more online savvy, no doubt, and The Academy is banking on that with this year’s experiment with online voting, but the comfort zone remains, first, personal contact (no media needed) and then a physical presence… that means print.

And then, of course, the rest of the stuff is out there… and anyone who grabs a piece of turf tries desperately to hold on to it and build on it… for instance, insistence on talent exclusivity when talent exclusivity seems absurd.

It’s not as though The Hollywood Reporter, which has been revived as a brand, is making a lot of money. Some will tell you that they are losing money. Some will tell you that they are losing a lot of money. I don’t know. I am not running their books. Janice Min has taken that trade almost exactly where I thought they should go – down to specific hires – since before they hired her. But they are still stuck between two worlds, not quite a consumer glossy with special Hollywood access and not quite a trade. If they don’t pick, I think they eventually go away again… and the trade choice is not the logical one.

And I am not counting Jay Penske’s money. If he wants to throw $30 million at owning a brand that he has no idea how to leverage profitably, God bless him. I hope that some good people get to keep their jobs for another year or five. But the only potentially good financial outcome would come from cutting way back on the operation of Variety and leveraging the brand as best possible. You can’t spend like a daily newspaper and survive 12 months a year in this game. Just can’t. And the trend line is severely against success.

Some Variety staffers have created a “Scoops Scoreboard” and it tells you everything you need to know about this business of covering this business. They determined, “CRITERIA: Movie-related exclusives only (no agency signings, no “first” box-office numbers, etc.).” Okay. I would cut deeper. in the week of 9/24, they list 20 scoops between the three trades. If you choose to, as I do, remove all the announcements of project or hires of talent for projects, there are just 5 scoops. And if you remove things that would be announced by press release, but went to one of the trades first by choice, there is just one story that is really (my feeling) reported… and that’s on a potential legal fight over people parking on future movie title URLs.

I know that my friends and not-friends at the trades work hard. I know that there is real sweat and effort and follow-up and writing involved with these “scoops.” But come on, this is a press release driven business. Period. Those press releases may not be press releases. But if you look at any of these outlets, 95%-plus of what runs is there because someone has a vested interest in that information being publicized. This is not brain surgery and I am not exposing the Wizard. The standard for success has been being the place and/or person who gets this promotional information first. That is a “scoop” in the film business. Personal relationships and the value attached to where you will place this promotional information leads to more (or less) information coming your way. It’s that simple and that complex.

It sounds horrible, but the truth is that the tabloids function much more seriously as places of journalism than Hollywood’s trades. Even if they are breaking lies, they have to be much more aggressive about shaping and sourcing their stories. There are some very smart and very thoughtful people writing for the trades and major papers and even for Deadline. There are also a bunch of complete hacks who coast based on working for a brand that few people will choose to challenge in public.

Can anyone change this when they buy Variety? Is there an answer to what it has been and what it hopes to be?

People talk a lot about Variety (and others) mocking the internet before being taken down by the internet. But I am one of those who had hands on contact with Variety when they were quite serious about figuring out the web. And my experience was that the math simply didn’t work for them… though this was when they still aspired to maintaining the old-school newsroom-driven business they had been in for so long. but the only math that does work is to bring the cost of infrastructure down. That means people. That means the amount of print. That’s not a happy answer. That’s just math.

Why would Craigslist buy Village Voice Media? They wouldn’t. It’s not good business. It makes no sense.

So what would Jay Penske do with Variety if he got it? Long view… he and his $30m would get sucked into the quicksand, same as anyone else. Thing is, he has enough money that there is a beautiful world with plenty of room to play and cocktails and not much pain to his ego underneath that bog. Happy days.

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9 Responses to “The Variety Thing”

  1. Krillian says:

    K. Now I’m waiting for that one guy to explain why you’re way off about the scoop business.

  2. David Poland says:

    The answer is because he works his ass off to get pieces together… and I really do understand that… and yes, it is easier for some… but in the end, who is about to get hired for a movie is – no matter how it gets to the page – press release journalism in my book.

    I know it’s hard work. I used to do it. And the thrill of the chase and the landing of something is enormous. But… you gotta know what you actually are and not lose track of the bottom line.

    When people bitch about things I don’t do, I don’t take it personally… because I have made choices. I don’t pretend that I haven’t or convince myself that I am doing everything and even if I wanted to do everything, that I do it all well. I could never be Michael Fleming… or Nikki for that matter. I don’t want to. Never have. That doesn’t make them valueless. But I own my choices… including when people want more talk about big movies and fewer interviews with filmmakers. I get it. I hear it. I am making choices to make myself happy. And I am very lucky to have that freedom. Very. Very. Lucky.

  3. Jason says:

    David – I liked your last line. It made me happy. I am glad you are making choices for yourself that make you and your family happy. We all should do more of that. Because having kids changes us, and I wish everyone the freedom to be able to make their own life — while making a living. So I’m really glad you wrote that.

  4. Chris A. says:

    David P, you seem to forget something very critical, Penske and Deadline have already beat the competition(THR, Variety, TheWrap, LAT) they are profitable and growing…and unlike you, actually have a business, not just a blogging hobby. And furthermore, I think changes at Variety would be a good thing, it’s time for that brand to reign again.

  5. David Poland says:

    With due respect, ChrisA, what you think I forgot, you think you know.

    Deadline has beat others at what, exactly? What makes you think they are profitable… and against what set of numbers? And how are they growing? If you think that Penske kicking in another $30m is growth in and of itself, you don’t have much business sense.

    I’m not saying that Deadline has not become an important trade website. But scale is not meaningless. It’s all a bit more complex than you seem to want to think.

    I don’t know what the “blogging hobby” comment is meant to mean, but I have run this business for a decade now, haven’t tried to expand it because I don’t wish to, and do quite well, thanks. I am forever surprised and amused by people who don’t understand that everyone doesn’t have the same narrow goals in life.

  6. Chris A. says:

    Respectfully David, since you’re a ‘decade long business guy” not hobby blogger, let me explain….

    Here is my assumption: Penske media bought DHD originally for a song, it had no ads, no staff, just Nikki sporadically blogging away. Today is a leader, more digital ads than Variety and THR combined (just ask my browser when i visit the homepage), easily gets more industry readers online (when is the last time someone said to you “did you just read what THR wrote?), and has arguably the leading/best editorial team. Those assets coupled with a small but mighty staff = profits.

    Let me go further–you seem to have missed something even a rookie journo could’ve read from the LATimes article. It’s not Penske’s money–it is a Private Equity firm called Shamrock Advisors (who manage a portion of the Disney’s family money). And maybe you haven’t heard but Private equity firms don’t invest in unprofitable businesses, then invest in profit and growth.

    So here’s my hunch, the partners at Shamrock are better investors than you (as someone who doesn’t want to grow his blog because of his broad “life goals”) and Shamrock has recognized that Penske & Deadline have built a profitable digital “business” when THR, Variety, and LATimes were floundering with print losses–and by adding scale (yep, Variety) it gets even more interesting…for Deadline, Penske, and Variety.

    Let’s stay tuned, and please keep the “heat” on.

  7. David Poland says:

    Okay, Chris… lots of false assumptions.

    1. Penske wildly overpaid for Nikki… even at the lower estimations of the acquisition cost and annual salary.

    2. Not only are you making assumptions based n personal experience about the number of digital ads, but you don’t see to know that they are not a high paying revenue source. And lots of slots doesn’t necessarily mean a lot of paid ads.

    3. They pay more than anyone else for those few writers whose names you recognize.

    4, They went into the print mags because online couldn’t possibly pay for the expense of the site.

    5. Yes, I know Penske is sharing the fare. Note also that other equity companies place the price on Variety at about half what Penske is reportedly in the range of paying and are out of the bidding at anything like this number. There is a reason for that. Getting one company – that likely has a lot of other Penske business – to participate in such a deal is not a sign of sure success on any level.

    I’m sure you think that adding scale is a win. And who knows? Maybe you’ll be right. My magic 8-ball, which seems a lot better informed on these numbers than you are, suggests otherwise.

    And so it goes…

  8. storymark says:

    “They went into the print mags because online couldn’t possibly pay for the expense of the site.”

    Has this strategy made sense any time in the last decade?

  9. matthew says:

    “literally a handful of professionals”

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