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Here’s the deal behind Jann Wenner’s deal to sell Rolling Stone, his iconic music magazine

It’s an “investment,” not a sale, for an important reason.

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Jann Wenner
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Peter Kafka covers media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.

Fifty years after founding Rolling Stone, the iconic music and pop culture magazine, Jann Wenner is handing it over to new owners.

Penske Media, the publisher that owns trade publications like Variety and WWD, is buying a majority stake in Wenner’s Wenner Media, which in turn gives it control of Wenner’s 51 percent stake of Rolling Stone.

The deal puts Rolling Stone’s enterprise value — which includes the cash on Rolling Stone’s books — at more than $100 million, according to a person familiar with the transaction — which means that Penske put in something in the $50 million range to buy the magazine. That price surprised some people who had looked at the deal earlier in the year, and valued the stake in the $30 million to $40 million range.

That convoluted structure of the deal — Wenner’s team describes it as an “investment,” not a sale — is important for two reasons:

  • BandLabs Technologies, the Singapore-based company that bought 49 percent of Rolling Stone last year, had a right of first refusal for any offer for the rest of the magazine, according to people familiar with the sale process. By structuring the transaction as an investment, this prevents BandLabs from buying the whole magazine.
  • The deal also allows Jann Wenner and his son Gus, who has been steering the business of Rolling Stone for a few years, to call themselves equity owners in the family business. Jann Wenner will become editorial director of the property, and Gus will stay on as president.

As Recode reported last month, Penske Media owner Jay Penkse was one of three bidders circling the property: Irving Azoff, a longtime Wenner friend/frenemy, was also looking at it, backed with money from New York Knicks owner Charles Dolan. So was Bryan Goldberg, the CEO of Bustle, a digital publication aimed at millennial women, who also co-founded Bleacher Report, a site acquired by Time Warner’s Turner in 2012.

But it was never clear that Azoff and Dolan, who have no publishing experience, wanted to actually own and operate Rolling Stone magazine. And while Goldberg has now founded two digital startups, he doesn’t have any experience with print, which accounts for the majority of Rolling Stone’s business today.

But Penske’s portfolio, which is primarily tilted toward trade publications, does include print titles, like Variety. The stretch for him will be running an iconic brand: While Penske owns some consumer-facing properties, like Robb Report and BGR, this is by far the best-known title he will have owned.

Penske’s main task will be helping Rolling Stone create a business on the internet, which Jann Wenner proudly ignored for years. Today, digital is a tiny fraction of Rolling Stone’s revenue, though Gus Wenner says he has a plan to fix that.

Note that in Rolling Stone’s absence, no one has really created a dominant digital destination for music-related content. Perhaps that’s because the internet allows music fans to seek out whatever niche they like instead of coming to a general-interest destination. Perhaps that’s also because in a YouTube + Spotify age, there’s no reason to read about a band when you can hear and see them with a single push of a button.

In any case, it’s no longer Jann Wenner’s problem. But he’ll still be able to keep a piece — presumably a small one — of the property that allowed him to become a media star himself.

You can read about Wenner’s amazing life story via “Sticky Fingers,” a new semi-authorized biography by Joe Hagan. I talked to Hagan earlier this fall for the Recode Media podcast: You can read a transcript of that conversation here or listen on Apple Podcasts or below.

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