Mail.com picks up Deadline Hollywood

The scion of one of America’s biggest automobile families has bought one of Hollywood’s most followed news websites.

Mail.com Media Group, an Internet company controlled by Jay Penske, has acquired Nikki Finke’s insider showbiz news blog Deadline Hollywood Daily in a deal worth several million dollars.

According to a person familiar with the terms, Finke, the site’s sole owner and writer-editor, will get a low seven-figure sum to sell Deadline Hollywood Daily plus millions of dollars over the life of a five-year-plus employment contract. The deal also grants her a portion of the site’s ad revenue.

The acquisition is part of a larger strategy by the 30-year-old Penske to build an online media business that will span numerous areas, starting with entertainment. Last year, Mail.com, which provides free e-mail and Associated Press news on its home page, bought the assets of the defunct Movieline’s Hollywood Life magazine.

Hollywood Life became a celebrity news website soon after. In April, Movieline was re-launched as a snarky show business blog run by the former editors of Defamer, a similar site that was folded into sister site Gawker by parent Gawker Media in February.

“Unlike other portals that are all about aggregation, we’re looking to build through unique content,” Penske told The Times. “This is part of a larger strategy that will be playing out over the next 30 to 45 days.”

Turning a profit by running advertising against original online content has proved exceedingly difficult for many companies, as evidenced by Gawker’s decision to cut several of its blogs in the last year. Deadline Hollywood garners relatively little traffic -- it averaged 119,000 visitors per month in the last year, according to traffic monitoring company ComScore Inc. -- but wields a lot of influence because it is closely read by entertainment industry insiders.

Mail.com is looking to build a small online content empire with numerous websites spanning multiple coverage areas. It already has an auto video website, OnCars.com, and is planning to soon launch a sports site called Fan.com.

One person familiar with the Deadline Hollywood deal said numerous partnerships and expansion plans were already in the works.

Finke, who has run the site on her own since she launched it in March 2006, said she would soon hire a journalist in New York to work with her.

“I really want it to be a 24-hour site,” said Finke, who has been known to update Deadline Hollywood after 11 p.m. on Friday nights.

Penske is the son of Roger Penske, who this year fell off Forbes magazine’s list of billionaires. Roger Penske is the owner of numerous transportation-related businesses, including Penske Automotive Group Inc., which recently agreed to acquire the Saturn brand from General Motors Corp.

Jay Penske, who also co-owns an IndyCar racing team and founded a mobile phone company for children called Firefly, raised $35 million for Mail.com in 2008 from investors including Quadrangle Group, founded by investment banker Steven Rattner.

Although Deadline Hollywood Daily has been affiliated with LA Weekly since its launch, the alternative weekly had no ownership stake in the site. It sold ads and paid Finke, a columnist for the paper since 2002, a stipend for her services.

Finke is expected to continue writing her column, which often uses material originally reported on the blog.

LA Weekly Publisher Beth Sestanovich said the paper planned to hire a new entertainment blogger with more of a pop-culture focus after Deadline Hollywood Daily officially moves to Mail.com, which is expected to happen next month.

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