Tronc (TRNC) , the third-largest U.S. newspaper company, is closing in on a deal to buy Us Weekly from Jann Wenner's Wenner Media. The purchase price likely would be in the $85 million to $95 million range, sources said, with Tronc chairman Michael Ferro believing the acquisition will move Tronc toward becoming a major player in the celebrity news business and add both to its digital earnings and its digital transformation credibility.
A Tronc representative refused comment on the sale, and a Wenner Media representative could not immediately be reached. Similarly, Methuselah Advisors' John Chachas, who has been brokering the Us Weekly sale after representing Gannett (GCI) in its failed effort to buy Tronc last year, was not immediately available for comment.
Tronc shares on Tuesday afternoon was down 1.8% to $13.45.
"It's a deal that makes some sense," one publishing dealmaker said. "There aren't many properties out there in this price range that are profitable and have some decent digital revenue."
Those profits could add another $15 million to $20 million or more a year to Tronc's bottom line. In addition, Tronc would be able to boost its reported digital revenue, a number that has been largely flat, by about $25 million annually.
While for Tronc and Ferro the deal is about both celebrity news and digital credibility, for Jann Wenner, it's about circling the wagons around his two remaining titles, Men's Journal and flagship Rolling Stone. The Wenner titles have suffered both circulation and ad losses, the latter exacerbated by the continuing impacts of its deeply flawed University of Virginia rape article of 2014. Last fall, Wenner sold 49% of Rolling Stone to Singapore-based BandLab in a financing and international syndication deal. The Us Weekly sale would allow him to pay down his company's debt, much of it generated when he paid Disney (DIS) about $300 million for its 50% stake in the magazine in 2006.
According to several sources, the parties have been in active negotiation and deep due diligence in recent weeks, ever since an American Media agreement to buy the magazine met an unexpected wall at the eleventh hour. Price was only one complication, as fit may have torpedoed the deal as well.
Jann Wenner's liberal politics and world view clashed with those of American Media CEO David Pecker, a close buddy and editorial endorser of President Donald Trump. Us Weekly's staff also chafed at the notion of being absorbed by AMI, publisher of the National Enquirer and Us Weekly celebrity competitor Star Magazine. On the celebrity press food chain, Us Weekly reigns above Star and Time's (TIME) People above both.
That same discomfort may soon be spreading at Tronc's Los Angeles Times, as the clash between lower-brow Us Weekly content ("Chrissy Teigen Reveals Her Secret Battle With Post-Partum Depression," "Stars--They're Just Like Us" and "Justin Bieber's 12 Hottest Shirtless Posts") and the cultural coverage long favored by the Times appears likely. Indeed, any evaluation of the acquisition would have to include the question, explored below, of brand fit, in addition to the shorter-term financial impact for Tronc.