DOJ in antitrust probe of Penske Media’s deal to buy The Hollywood Reporter

0
35
https://nypost.com/wp-content/uploads/sites/2/2020/11/penske-thr-deal-eyed-e1605826155480.jpg?quality=90&strip=all

The Department of Justice is investigating antitrust concerns surrounding Penske Media’s deal to buy The Hollywood Reporter, The Post has learned.

Sources close to the situation said the DOJ has begun a formal and “active investigation” of the merger, concerned that it would put three of the four major trade publications that cover Hollywood under a single roof, sources close to the situation said.

In late September, PMC CEO Jay Penske, son of auto-racing kingpin Roger Penske, inked a $225 million deal to acquire 80 percent of The Hollywood Reporter’s parent MRC — a merger that would also give PMC control of the influential music trade magazines Billboard and Vibe. The deal is slated to close by the end of the year.

Sources said DOJ officials have been reaching out to third parties — including ad agencies that work with digital media companies and in-the-know Hollywood talent agencies that rep actors and musicians — to determine whether the merger could hurt advertisers who want to reach a professional media audience.

The DOJ is likewise concerned whether the merger could create barriers to entry for potential competitors, a source familiar with the situation said.

The DOJ declined to comment. A spokesperson for PMC also declined to comment.

PMC already owns the entertainment trade magazines Variety and Deadline, as well as Rolling Stone and the trade publication Music Business Worldwide.

Its acquisitive boss Penske has long coveted The Hollywood Reporter, known for breaking salacious stories on Hollywood insiders, despite concerns that it has been losing millions. Condé Nast was said to have tried to buy THR in 2016, and Jimmy Finkelstein, owner of The Hill, reportedly circled it two years later with a $100 million offer.

A source said the DOJ’s investigation will likely take at least a few months. It isn’t yet clear whether the DOJ will sue to block the deal.

But there has been precedent of the DOJ blocking smaller media deals, an insider said, noting that the PMC deal appears similar to a case six years ago when the feds sued to block the $375 million merger between CineMedia, the top seller of movie theater ads, and its scrappy rival, National Screenvision.

In that case, the DOJ didn’t like the idea of a single player controlling 88 percent of movie-theater ads. Five months later, CineMedia abandoned its proposed acquisition.

PMC came into the merger flush with cash thanks to a controversial $225 million infusion in 2018 from the Saudi Research and Marketing Group, a publicly traded company with close ties to the ­Saudi royal family, which took a passive 20 percent stake in PMC.

MRC, formerly known as Valence Media, is comprised of a film and TV studio, as well as editorial properties. In addition to its trade magazines, it owns Dick Clark Productions, the studio behind shows like “American Music Awards,” “So You Think You Can Dance?” and the “Billboard Music Awards.”

The proposed merger between PMC and MRC is already upending business and editorial operations. MRC’s non-editorial staff got hit with layoffs, as about 50 back-office workers, or 15 percent of the roughly 325 people who do accounting, human resources and other administrative work, were cut in the merger.

A Global Asset Management Seoul Korea Magazine

This post was originally published on this site