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Opinion: Cui Bono – Who Benefits from the Variety/THR Takeover?

September 30, 2020 | By

Penske MediaCui Bono is Latin for “Who Benefits?”

It’s a question that needs to be asked whenever there is a major business deal, whether it’s in Hollywood or anywhere else.

Who benefits when someone writes a multi-million or even billion dollar check to take over a potential competitor?  Who benefits from Walt Disney Pictures buying a good chunk of Fox’s television and movie ventures? Over the past year and a half we’ve been seeing how that’s gone, both positively and negatively, but in an industry full of these kinds of mergers, we’ve often seen how these things often lead to more problems for everyone involved down the line.

The recent merger between the parent companies of Variety with The Hollywood Reporter, on the other hand, has been severely underreported, especially by the two veteran Hollywood trades who will either benefit or lose the most from this merger.

We first have to look at a few things, the first being that Penske Media Company (PMC) probably didn’t pay $225 million for THR, as reported sans source by The New York Post and others. Penske did receive a large cash infusion from the Saudi Research and Marketing Group (SRMG) in 2018, which gave the company with close ties to the Saudi royal family a passive 20 percent stake in PMC.

To really find out who benefits in this game, we’ll need to do a quick game of connect the dots:

  • Jay Penske, sire of oil and racing mogul Roger Penske, bought the heavily distressed Variety in 2012 for roughly $25M with hedge fund Third Point.
  • in 2018, Penske Media received a $200 million investment from SRMG.
  • SRMG is controlled by Ah Ahli Capital Fund.
  • Ah Ali Capital Fund is controlled by the House of Saud, and who is sitting on the literal throne of the House of Saud? None other than Saudi Crown Prince, Mohammed bin Salman (commonly referred to as “MBS”).

Here’s a funny thing. Our government and most of the world has reported that same Mohammed bin Salman ordered the ambush, killing and dismembering of Washington Post reporter Jamal Khashoggi, who went missing on Oct 10th, 2018. Chop chop, gone gone. Around that same time — (this guy has mad scheduling skills, on top of his other skill set) — SRMG invests $400M into the Endeavor talent agency.

Sometime around March of 2019, Endeavor boss Ariel Emanuel gave it all back. That’s right. An agency in the entertainment business gave back money — that alone should have been the story of the decade. Who among you has ever heard of an agency ever giving money back outside of a long fought court settlement? None, right?

Continuing the connecting the dots game we began earlier:

  • In 2012, Penske buys the remnants of Variety for around $25 million with Third Point from Reed Business Information, part of Dutch giant Reed Elsevier.
  • In 2018, not only does MBS have Khashoggi murdered and chopped up, but also invests $200 million in Variety owner Penske Media, but also invests $400 million into Endeavor Content.
  • Three things happen in 2019: Endeavor returns the entire $400 million in order to distance themselves and their clients from MBS, Penske Media KEEPS all their cash and refuses to comment on it, despite owning a majority of the media outlets. Khashoggi remains dead.

Sharon Waxman of The Wrap pointed this out and saw the obvious hypocrisy of the leading industry trade taking money from a known killer of journalists, but nobody else said a word.

That brings us back to “Cui Bono.” Who benefits?  No deal can possibly be done without answering this question.

The answer is obvious:  Penske and the House of Saud are now the single loud voice reporting on entertainment industry trade news.

Once you buy into the logic of Cui Bono, you must know that for every winner, there must be a loser.  So who is high on that list?

  • Every studio, new and legacy, are now at the mercy of a single powerhouse trade.
  • Every agent representing every bit of above-and-below-the-line talent for the same reason.
  • Every industry ad agency for the same reason. Can someone say, “No discount rate card,” please?
  • Every distributor for the same damn reason.
  • Any person in our industry that has the vaguest notion about “conflict of interest” or monopolistic practices.

Just to make sure the dead, flogged horse is indeed and truly dead, can I just say: What world are we living in where an agency gives back money, but a 100+ year-old publication keeps it in light of all the public and horrific crimes it’s lead investor has committed directly or indirectly?!? Please.

Are you kidding — a talent agency was disgusted by that behavior by one of its investor but not a newspaper? What?

Side note: Did you know that Endeavor doesn’t employ journalists?  Guess who does – I know, I know – the incredibly silent talent pool over at Variety — a whole bunch of them.

Contrary to public belief, our industry is crazy tiny.  No more than 125,000 people can claim they draw the bulk of their annual pay from the industry, if even that. At any given time, outside of India and China and the pandemic, there are only about 27,000 cast and crew making films and television shows – no more. Yet our final product is the single most powerful message delivery system ever invented. What we make, the world sees and hears.

With this merger / take over / last man standing – that already tiny group is now firmly in the reporting hands of Penske and his investors.

A note on the defining silence in reporting on this: the best industry business reporters in the world write for Variety and The Hollywood Reporter – ’nuff said?

If there’s any doubt or you need further reading or reasonable background context, go to any browser and search the words: “Kashoggi,” “Mohammed” and “Penske.”

You can read Below the Line Publisher Patrick Graham‘s earlier thoughts on the merger here.

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