Movies

Jay Penske, owner of Rolling Stone magazine, has transformed from playboy to pragmatic media mogul

  • Jay Penske, the son of the billionaire automobile tycoon Roger Penske, has turned his company, PMC, into the country's second-most-visited digital publisher.
  • Despite trying to keep a low profile, Penske has faced criticism for accepting a $200 million investment from the Saudi Research and Marketing Group and planning to turn a historical Black church in Los Angeles into his family's megamansion.
  • Penske has clashed with the Rolling Stone old guard who think that decisions like launching a magazine-themed "Rock Room" on Holland America cruise ships are beneath the brand.
  • Visit Business Insider's homepage for more stories.

He has movie-star good looks, a former Victoria's Secret model wife, and a billionaire father.

Now Jay Penske can lay claim to the second-largest audience in digital publishing in the US.

On September 23, Penske Media Corporation, or PMC, which owns Rolling Stone, Variety, and Women's Wear Daily, announced it would take control of The Hollywood Reporter, Billboard, and Vibe as part of a joint venture with the entertainment company MRC. The new entity will be called PMRC. The move will create a near-monopoly on Hollywood industry news — and put PMC ahead of publishers like Meredith, Condé Nast, and BuzzFeed, with a Comscore ranking second only to Hearst's.

Over the past 16 years, Penske, 41, the youngest son of the automobile tycoon Roger Penske, has quietly built a media empire, amassing more than 20 titles. But the reformed playboy — who's said to have a personal friendship with Saudi Crown Prince Mohammed bin Salman — wasn't always destined to be a media hero.

In 2018, Penske faced criticism for accepting a $200 million investment from the Saudi Research and Marketing Group. This past June, Ben Affleck attended a Black Lives Matter march in Los Angeles toting a sign that condemned Penske for purchasing a historical Black church to convert into a megamansion for his family.

But while he made headlines, his company made money.

In an age when media companies are flailing and laying off staffers by the dozens, Penske has managed to transform PMC into a publishing powerhouse. PMC has occupied an overlooked segment of the media market, buying up flagging industry publications and flipping them into nimble digital-first brands with diverse revenue streams.

And those who work alongside Penske say they are willing to overlook his foibles if it means they stay employed during a time when other media companies are struggling to survive the collapse of traditional ad-based revenue models.

"When Jay came in, it was like the cavalry arriving," one editor who experienced PMC's 2012 Variety acquisition said.

Business Insider interviewed more than 30 of Penske's current and former executives, editorial staffers, and media industry peers about the press-shy CEO. Many requested to remain anonymous for fear of repercussions from the company. These conversations revealed an eccentric and dynamic entrepreneur determined to defy the odds in publishing and to prove himself outside of his family name.

"I think Jay and the senior PMC staff sincerely believe that they are part of a larger mission to save publishing," one former PMC director said. "They aren't looking for accolades or industry acceptance, but more the results and profits from evolving their brands into self-sustaining companies."

Another veteran media executive put it more bluntly: "He doesn't strive for greatness. He strives for good enough. But that's fine. You don't need glory to make money."

The 'benevolent billionaire'

In recent years, Penske has earned a reputation as an accessible and ebullient boss, mirroring his father's skill for getting to know even his lowest-level employees on a first-name basis.

One of Penske's signature policies is scheduling 15-minute meetings with each staff member of a newly acquired publication — "even the mailroom people," according to one former Rolling Stone employee.

In March, while other companies furloughed staffers, Penske promoted the company's so-called Angel Fund, a long-standing program built to assist employees with needs that arise from circumstances beyond their control. The fund has allocated over $250,000 in direct aid to employees who have been affected by the pandemic this year, a source close to the company said.

The PMC staff has come to expect this kind of magnanimity from Penske.

"Jay leads with his heart," said Michael Davis, PMC's former chief of video, adding that Penske has "great intentions" in the way "he takes care of his employees, business, and community."

The former PMC director said Penske was "oddly very compassionate for someone who grew up with so much privilege."

Nelson Anderson, the senior vice president of creative at PMC, recalled an instance when he and Penske were on the same work flight from Los Angeles to New York. When Penske, who had a first-class ticket, discovered that Anderson had an undesirable seat in the middle of the back row of the plane, he insisted on trading places. Anderson said the incident was "emblematic" of Penske's character.

But some lower-tier employees, past and present, have found Penske's generosity less convincing.

"There's a performative sheen to everything he does," a writer at one of PMC's major publications said, referring to his effusive town halls and staffwide emails.

Another writer explained: "He has this vibe of the 'benevolent billionaire' guy, [but] there are people who are skeptical. It's pretty well established that he is anti-union."

When it came to Halloween, however, everyone was a VIP in Penske's world.

For last year's annual holiday bash, Penske, an apparent Halloween fanatic, spared no expense. An Elmo-costumed Questlove deejayed, professional hair and makeup services were provided at the office day of, and a free day off was given to anyone who attended, sources said. Penske, dressed as Willy Wonka, even emceed a costume contest, doling out thousands of dollars in cash to the winners.

"It was very elaborate," one Rolling Stone writer said. "It was like, 'Wow, the business must be doing well.'"

Others found the costume contest, which will be virtual this year, somewhat uncomfortable.

"It's weird to dance for your boss on a stage while he is not dancing and is judging you," a source who competed for last year's prize said. "It's degrading."

Others who have worked more closely with Penske said that despite his friendly public image, he could be "intense," as one source said, and occasionally susceptible to sudden bouts of rage.

"He would have temper tantrums," one former executive said. "Jay didn't have a lot of experience in life not getting what he wanted."

One such event played out in public this summer when Sharon Waxman, the founder of The Wrap, published a furious email she'd received from Penske.

Waxman had written a piece about a "staff revolt" against Variety's editor-in-chief, Claudia Eller. Eller was placed on leave after calling the journalist Piya Sinha-Roy "bitter" for criticizing Variety's lack of diversity on Twitter.

"It's BULLSHIT," Penske wrote to Waxman about her story, "and you should really be embarrassed." 

In 2016, PMC debuted an office at 475 Fifth Ave. that Penske helped design. Several current and former employees noted Penske's meticulous attention to detail in the new space.

One former graphic designer at Women's Wear Daily recalled seeing Penske get down on the floor to examine something with measuring tape. Other PMC staffers said they were instructed to clear their desks of any unsightly objects, like coffee mugs or boxes, anytime Penske came to town.

"There was a rumor," said another former Women's Wear Daily employee, "that he would come around at night and Post-it items he didn't like." The source close to the company explained that "PMC's facilities team has a Clean Desk Policy so that they are able to wipe down and disinfect all employees' work surfaces once a month — as part of this policy, employees are asked to remove as much as possible from their desks so the cleaners complete the work."

The office's new design featured entrances outfitted floor to ceiling with expensive, pale Belgian wood. Shortly after the grand opening, employees trudged in from a rainstorm with dirty boots and umbrellas, muddying the pristine floors.

"Jay had a freak-out that the new oak was being dirtied," the former WWD employee said. "He's a neat freak."

The source close to the company said this was "entirely false."

"There was a concern about the danger of employees slipping on wet floors, and Jay saw this as a serious issue," the source close to the company said.

For Penske, no detail is too small for a CEO. Sources said he regularly greets employees in the hallways by asking for updates on projects they're surprised he's even aware of.

Isaac Lee, who worked with Penske on a partnership between PMC and Univision, recalled his team's surprise when Penske jumped into the conversation speaking perfect Spanish.

"He knew the nuances of the Latino community [and] had very specific questions on how to reach those markets," Lee said, adding that "it was very clear" that he was "going to be very successful."

'He was very keen to go around saying he owned Rolling Stone'

In 2009, Gawker wrote about Penske's "quest for elegance," quoting an associate as saying Penske "wants to be a modern day Si Newhouse; he wants to have a glamorous publishing company."

To this day, observers inside and outside the company say that Penske has a penchant for collecting what one former employee called "brands that help build his persona."

"I do think that Jay likes being at the center of these industries in a way that gives him the appearance of power," one Hollywood industry source who knows Penske told Business Insider. "He likes that these studio heads whose kids go to school with his kind of have to care about him."

But others insist that his knowledge and appreciation of new brands he brings on is too extensive to be superficial.

An employee at The Hollywood Reporter said that Penske "really did his homework" before the PMRC deal went through.

"He seems to actually value what we do and be familiar with our work," the Hollywood Reporter employee added.

"Jay's always had a deep, rich love of history," Davis said. "Things that have meaning. And I think [you see that in] the brands that Jay's acquired."

PMC has gone sector by sector, from Hollywood to fashion to art, scooping up industry and luxury trade publications to build a portfolio that includes titles like WWD, Rolling Stone, Deadline, ArtNews, IndieWire, Variety, and Robb Report. Today PMC's brands reach a monthly audience of almost 120 million readers nationwide, and it is expected to add another 40 million monthly readers from The Hollywood Reporter, Billboard, and Vibe.

But multiple sources said that despite the growing roster, Rolling Stone remained Penske's crown jewel.

The mood at Rolling Stone was dire when Penske started circling the publication in 2017. The UVA reporting scandal had cost the publication $4.65 million in damages and an incalculable reputational blow. Rolling Stone founder Jann Wenner's infamous email tirades laid bare his mounting fear that his once top-shelf publication, which had been slow to adapt to digital, would make its way into the bargain bin.

When Penske stepped in to bid on a controlling stake in Rolling Stone for a reported $51 million, there was little left for the staff to feel but relief. His bid was accepted. PMC bought the remaining 49% of the company in 2019.

"He was very keen to go around saying he owned Rolling Stone," one current Rolling Stone writer said. "It gave him clout." The veteran media executive called the purchase "a validation of his self-worth." Penske even chose to put his New York office right in the middle of Rolling Stone's editorial department.

But his fondness for the publication led to real results. When PMC took over, it introduced 20 new editorial positions and an $8 million to $10 million redesign. At an all-staff meeting at the beginning of 2019, it was announced that the magazine finally broke even.

Though Wenner was officially kept on as editorial director, multiple Rolling Stone sources told Business Insider that he was all but excommunicated and given an office on a separate floor in the new building.

Nonetheless, Wenner has continued to influence editorial policy through a close relationship with Rolling Stone's editor-in-chief, Jason Fine. But Fine, who heads up an old guard of print loyalists, is far less friendly with Penske, according to several current and former staffers.

"Jason openly disparages Jay in the office," one former Rolling Stone editor said. "He talks about his daddy issues and his love of Halloween."

The real tension abounds in their different visions for the brand.

"Penske wants [Rolling Stone] to be digital-first," another former editor said. Meanwhile, "Jason doesn't read the website. He still has emails printed out for him."

Neither Wenner nor Fine responded to requests for comment.

Some suggested that Penske had focused his attention on mentoring Wenner's 30-year-old son, Gus Wenner, Rolling Stone's president and chief operating officer. The younger Wenner has been more enthusiastic about the push for digital content and diversification.

PMC's purchase entailed a three-year runway for the Wenners to stay at the publication that expires this winter, according to several sources. It is unclear what role each Wenner will play after that.

For now, under Gus Wenner's supervision, the brand is ramping up its multimedia content with audiobook, film, and TV partnerships, as well as licensing deals — some things that his father scoffed at years ago.

A former Wenner Media executive said that Jann Wenner fiercely rejected a proposal to launch Rolling Stone-branded hotels in Las Vegas and Miami in 2004, grumbling that Rolling Stone was "too valuable of a brand."

But in Penske's world, value is cash-based.

In 2018, PMC launched a Rolling Stone-themed "Rock Room" on Holland America Line cruise ships. This past summer, the publication signed a deal with Bulldog, a European licensing company, offering services from branded puzzles and games to "location-based experiences." This spring, readers will be able to purchase Rolling Stone-branded beer.

'He fancies himself a man of letters'

Penske's vision of success has always been defined on his own terms.

In 2019, his father, who made his fortune in truck leasing, car dealerships, and NASCAR and IndyCar racing, announced a succession plan that would pass the torch to Penske's older half-brothers, Roger Jr. and Greg.

But except for his own Formula E team, Dragon Racing, Penske's tastes never did have much in common with his father's.

Penske was born in New York City and spent his childhood hopping among elite boarding schools, from Lawrenceville in New Jersey to St. Mary's Preparatory in Michigan, where he broke records as an All-American lacrosse player. After completing his undergrad at Wharton, he left behind the Jay Penske Rare Book Fund to support the acquisition of rare scholarly materials.

One of Penske's early business ventures was Dragon Books, an antiquarian bookstore he opened in Bel Air, where one could pick up an original copy of Newton's "Principia" for a cool $300,000. Penske designed the shop after the library at Trinity College in Dublin and was known to man the counter from time to time, even once he was running PMC. To this day, "he fancies himself a man of letters," the veteran media executive said.

After a failed enterprise marketing cellphones to children, a 24-year-old Penske relaunched the dot-com-era email portal Mail.com as Mail.com Media Corporation in 2004.

Eventually, Penske evolved the company into Penske Media Corporation, making a full pivot to publishing in 2010 with the sale of Mail.com.

The former executive recalled the early days of PMC when he opted to use the full name, Penske Media Corporation, in his email signature for the name recognition.

Penske, whose father has said he has never invested in his son's businesses, personally reached out to the former executive to ask him to remove the Penske surname and simply use PMC. (Roger Penske declined to comment for this article.)

"In his mind, he did it all on his own," the former executive said. "He sees himself as a self-made man."

Sources suggested that one of Penske's shrewdest moves was predicting the decline of print before others caught on. Among PMC's first purchases were fast-posting, personality-driven blogs, like Bonnie Fuller's HollywoodLife.com, Nikki Finke's Deadline, and Jonathan Geller's Boy Genius Report, which the company helped develop into more formal operations.

It was around this time, according to PMC Vice Chairman Gerry Byrne, that Penske "literally became one of the godfathers of how to organize and execute a digital media company."

But outside the company, Penske was building a different kind of reputation. In those early days, he was known to many as a slick and handsome jet-setter with a wardrobe and a head of hair to rival Patrick Bateman. He dated models and actresses like Devon Aoki and Lara Flynn Boyle and partied in high-society circles.

"I did not get the sense that I was sitting down with the absolute genius of media," a reporter who was friendly with Penske said. "He struck me as this playboy."

The former executive said that PMC leadership tried to hire an executive coach for Penske, who would oscillate between micromanaging and disappearing for weeks at time, but "he completely rejected it."

"At that point I thought, 'He fundamentally doesn't understand media. He's childlike,'" the veteran media executive said. "But he's grown up."

A foe in Ben Affleck and a friend in Mohammed bin Salman

That perceived immaturity is perhaps epitomized by a 2012 incident that ended in Penske's arrest.

That summer, on the tony island of Nantucket, two women spotted a 33-year-old Penske and his 35-year-old brother, Mark, a wealth manager, urinating on a car in the parking lot of the Nantucket Yacht Club.

The police report said a small scuffle broke out when one of the women attempted to take a photo and Jay Penske "continued to urinate on her boots." As The Inquirer and Mirror reported, the brothers escaped into the club's private building (they were not members), and Jay Penske was heard shouting at the woman, "You're not white enough!" (The woman was, indeed, white.)

After spending the night in jail on charges of breaking and entering with intent to commit a misdemeanor, Penske walked away with one year of pretrial probation and 50 hours of community service. The charges were later dismissed in court.

The event would mark a turning point in Penske's life and career. A few months later, PMC picked up its first major legacy brand, Variety, for a reported $25 million. And in 2013, he settled down and had a daughter with Elaine Irwin, a former supermodel and ex-wife of John Mellencamp. Penske's name appeared less in the tabloids and more in the pages of business journals.

Still, he hasn't totally lost his ability to stir up gossip. In 2017, Penske bought a 100-year-old Black church in Los Angeles' Oakwood neighborhood for $6.3 million, where he plans to erect an 11,760-square-foot mansion for his family, The Real Deal reported. Residents protested Penske's purchase, but the media tycoon never backed down.

This January, the community's appeal to stop construction was denied. Anger over the purchase flared up again this summer. At a Black Lives Matter protest on June 2, Ben Affleck, whose children attend the same private school as Penske's, marched while toting a big poster that said "Save First Baptist Church of Venice."

Perhaps Penske's most controversial move was his decision in 2018 to accept a $200 million investment from the Saudi Research and Marketing Group, a company with complex financial ties to the Saudi government. Other media companies like Vice and Endeavor had declined or even returned such funding in the wake of the murder of the journalist Jamal Khashoggi and the detention of other prominent critics by Saudi operatives.

But Penske — who, according to two high-level sources for this story, has a personal relationship with Prince Mohammed, a fellow racing fan, that predates the investment — has never offered any statement on the deal. PMC announced the investment in WWD in February 2018 but specified the identity of the investor in an edit only after The Wrap requested comment almost 17 months later.

In October 2019, one year after Khashoggi's death, PMC's luxury lifestyle magazine Robb Report hosted a secretive five-day party on an abandoned Egyptian island off the coast of Saudi Arabia. The event overlapped with Prince Mohammed's massive initiative to turn the Red Sea into the next luxury playground for global elites.

The so-called Red Sea Week welcomed 75 of the world's 100 largest superyachts. Guests including Penske were treated to performances by John Legend and Norah Jones and meals by Michelin-starred chefs. There was kitesurfing on turquoise waters and test-driving $300,000 McLarens in the desert. There was a strict no-photo policy.

Many of PMC's journalists — some of whom had been outspoken critics of the Saudi government — have found the whole affair, from the initial investment to the secretive yacht party, unsettling.

One employee at The Hollywood Reporter said some staffers felt ill at ease following the PMRC announcement.

"[The question of] 'are we being paid with blood money?' definitely was part of the group chats," the source said.

But that Hollywood Reporter employee also said that in today's media landscape, it's all relative.

"I have significantly fewer concerns about attempts at editorial control with regard to Jay Penske than I did" before PMC leadership, the Hollywood Reporter employee said.

Many of those interviewed suggested that any concerns about Penske or his plans for their business were dampened by the simple promise of job security.

Penske 'will buy anything at the right price'

After all, not only has it avoided cutbacks, but PMC has continued to expand as other media companies have relied on layoffs and budget cuts to survive the pandemic.

In a recent town-hall speech, Penske announced that PMC would move to a $25 minimum wage or $52,000 minimum salary for all employees across the company.

This spring, PMC continued to diversify, adding the events company LDJ Productions to its portfolio and launching Sportico, PMC'S first venture into the sports world. In May, it created a C-suite position to manage advertising and partnerships. Some have speculated that Penske will concentrate on international expansion. Jenny Connelly, PMC's senior vice president of product and technology, said the purchase of Rolling Stone marked a major shift for PMC, which previously focused on business-to-business brands.

Read more:Inside the launch of Sportico, Penske Media's new sports-business brand that fast-tracked its debut as live sports shut down

"Rolling Stone was when [Penske] was like, 'OK, I did it … Now we can start moving into consumer,'" Connelly said, adding that it "was our first big consumer play to diversify our portfolio."

And sources say the acquisition spree is unlikely to stop anytime soon.

Lee, the former Univision chief content officer, predicted that Penske would "create the next iteration of what Condé Nast used to be."

"I think he's only halfway there," Lee said.

Just don't expect him to snap up floundering legacy titles unless there's a way to make a profit.

"The way media makes money is with eyeballs. It's either quality eyeballs or mass. It's the difference between Bergdorf's and Walmart," the former executive said.

"When it became very apparent that the [Bergdorf] strategy is not really going to work … Jay started shifting [to]: I need volume and scale. I need low-cost content," he said.

Penske, he said, "will buy anything at the right price."

Source: Read Full Article