Movie industry trade papers Variety and Hollywood Reporter have played a crucial role in chronicling Hollywood’s past. But suddenly, it seems, the future of the two storied publications is more in doubt than ever.
The fate of the two papers, which have been covering Hollywood since the first half of the last century, has become an open question as they continue to cope with declining advertising and circulation. Industry watchers speculate that one paper could go out of business in the coming years, or perhaps they will merge.
“You have to wonder: Is there enough business to go around for two of them?” said Jonathan Taylor, executive editor of Variety from 1996 to 2001 and now vice president of public relations at Starz Media LLC, a television production and distribution company. “I can’t think of another business that has two daily trade publications covering it. How do they both survive?”
The publications are facing increasing challenges as the movie studios that are their main sponsors have themselves been hit with falling revenue, leading them to cut back on ad budgets. Meanwhile, the papers face sharper competition from smaller Hollywood news Web sites such as Deadline Hollywood and TheWrap.com, which have drawn away the papers’ readers and influence along with some of their ads.
In a cost-cutting announcement that shocked insiders earlier this month, Variety said it had laid off its chief film critic and chief theater critic.
“The decision to fire Todd McCarthy and David Rooney is a profoundly significant move for a paper like Variety, considering that reviews were such a core function of what they did,” said Sharon Waxman, a former New York Times reporter who runs TheWrap. “It’s almost bewildering in a way that they would do this.”
“History may record the dismissals as a seminal moment,” said Hollywood publicist Michael Levine of Levine Communications. However, he believes Peter Bart’s decision to step aside as Variety’s editor in chief a year ago was more important.
“Many people working at the Hollywood trade papers are as anxious as a hemophiliac in a razor blade factory,” Levine said
Variety’s owner, Reed Business Information, put the paper up for sale in 2008 along with dozens of other trade publications as the company sought to get out of the print business. But a buyer never materialized and Reed said in July that Variety was no longer on the block.
At the same time, Hollywood Reporter has been plagued by rumors that it would kill its print edition and go Web only. In December, the paper, along with seven other sister publications, was sold by Nielsen Business Media to e5 Global Media LLC, a company chaired by New York media figure Jimmy Finkelstein, for an estimated $70 million.
Neil Stiles, the president of Variety, declined to comment. Richard Beckman, chief executive of Hollywood Reporter’s parent e5 Global Media, could not be reached for comment. In recent interviews, both Stiles and Beckman said their publications were coping with a changing industry, and they had plans to boost readership and revenue.
Hard times
Variety and Hollywood Reporter were once must-reads in the entertainment industry. The two trade publications covered the ins and outs of Hollywood, daily deal-making and industry trends. Film executives and talent agents fought to get mentions of their movies and stars on the front pages of both.
Studios also blanketed the two papers with advertisements, especially around Oscar season when they placed “For Your Consideration” ads to attract Academy voters. But both publications have lost some of their relevance as upstart Web sites, such as Deadline Hollywood, run by media journalist Nikki Finke, and TheWrap compete for scoops and post information about backroom dealings as they happen.
Those Web sites and the widespread availability of show biz-related news on the Internet have eaten into the trades’ readership, leading to declines in circulation. Daily Variety, which publishes Monday through Friday, saw the number of its paid subscribers drop from almost 39,000 in September 2007 to about 27,300 in September 2009, according to the Audit Bureau of Circulations. Subscriptions to the weekly edition fell from 32,700 to about 25,450 during that same period. The audit organization does not track numbers for Hollywood Reporter.
Movie studios, seeing the trends, have started to buy advertising on various Web sites and cut back on the amount spent on trades.
“If studios are doing a $10 million ad campaign, they might have once spent most or all of that on the trades,” said David Poland, editor of the Web site MovieCityNews.com. “Now, they’re spreading it out to as many places as they can find. And there are so many hungry Web sites out there that will sell ad space for almost nothing.”
In addition, while Variety and Hollywood Reporter have laid people off, their Internet competitors are growing. In June, Finke sold her Web site to L.A.-based Mail.com Media Corp. and hired three additional reporters, including Variety veteran reporter Mike Fleming. The sale price of Deadline Hollwyood was not disclosed, but it was rumored to be several million dollars.
Two weeks ago, TheWrap hired a reporter to bring its editorial staff up to about a dozen. The site’s readership has been growing and during the recent Oscar season, every major movie studio bought ads on the site, Waxman told the Business Journal. Meanwhile, Paramount Pictures did not buy any ads in Variety for best picture nominee “Up in the Air.”
“We are taking market share away from them, for sure,” Waxman said. “It’s been their burden to adapt to the changing media landscape, and I think it’s been widely perceived that they haven’t. You have to earn your relevance every single day when another media option is one click away.”
Reaching for revenue
Variety and Hollywood Reporter have struggled to find ways to reap more revenue from a declining audience. In September, Variety announced it would make its Internet content available only to paid subscribers. Many analysts saw it as a risky move because very few newspapers have been able to retain readers when they charge for access to their sites.
During this year’s Oscar season, Variety also hiked the price of advertising for its cover wrap – theoretically some of the paper’s most valuable real estate – by 15 percent to 20 percent, a hike of about $10,000, said Poland of MovieCityNews. Studios balked at paying the asking price, he noted, forcing Variety to pare it down. And inventory still went unsold.
After the awards season, Variety made some headlines of its own. The producers of “Iron Cross,” a Holocaust-themed revenge drama, filed suit, alleging that Variety promised them support for their film’s Oscar campaign if they bought a $400,000 advertising package, but then torpedoed the film’s prospects by publishing a negative review.
As for the future, industry watchers agreed that Variety and Hollywood Reporter have assets that other publications and Web sites don’t have, including archives and institutional knowledge of Hollywood and connections that date back decades.
The question is whether they’ll find ways to capitalize on those assets before it’s too late.
“They’re both trying to find different ways to generate revenue that can supplement their advertising,” said Taylor, the former executive editor. Until then, “they’re just struggling along.”
