Disney, Wenner form Us Weekly LLC

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In the ground floor of a building just off Times Square, the Walt Disney Company and Wenner Media on Tuesday announced the formation of Us Weekly LLC, a partnership in which the two companies will split ownership of the Wenner title that had a rocky transformation from monthly to weekly frequency.

On the Disney side, ABC Entertainment will broadcast an annual Us Weekly-branded entertainment awards show and Us-branded content and correspondents will appear on ABC properties ranging from its local news presentations to "Good Morning America" to its radio networks to its new cable station SoapNet. Wenner Media executives will continue to run the magazine.

The move surprised magazine industry observers, who'd thought a broader alliance between the two companies was pending--although the Word documents attached to e-mails that went out late Monday announcing the press conference were tellingly slugged USMedia1 and USMediaAlert1.

Michael Eisner, chairman and CEO of Disney, denied the deal had any provisions for any Disney relationship with other Wenner titles, including Rolling Stone and Men's Journal, like right of first refusal on film rights to magazine stories. "We could have asked for that, and maybe gotten it, but I didn't think it was necessary," he said.

Mr. Eisner sidestepped a question asking if the deal gave Disney first-look rights should Wenner's titles be put up for sale at a later date. "I doubt we would acquire a single-issue magazine if we did not think we could work together and create something unique," Mr. Eisner said.

The companies declined to discuss financial details of the deal, but Mr. Wenner said Us Weekly thus far had spent "less that $25 million" since its launch, out of a launch budget of $50 million. Though certain indicators such as the magazine's sell-through, or percentage of newsstand copies sold, have improved from poor beginnings, the title's launch has forced Wenner to reconsider its initial assumptions of the title. At launch, advertisers were guaranteed circulation of 1,000,000; that later was trimmed to 800,000 before rising in January to 850,000.

Last summer, Mr. Wenner told Ad Age of the challenges associated with a weekly relaunch. "The waiting game is extremely expensive" he said. "You're not putting out one monthly, you're putting out a couple million every week and paying for all those racks"--and thus the money "pours out."

Mr. Eisner said the two companies had discussed a partnership for the title even before it went weekly last March. Mr. Eisner added in jest that his company would gladly have looked at the prospect of acquiring a stake in Rolling Stone, but that he hadn't gotten the impression it was up for sale. (Perhaps, he mused, he'd misunderstood some of Mr. Wenner's body language during their meetings.)

At this juncture, Mr. Wenner said, the two companies had not yet addressed how they'd handle ad sales for joint efforts like the awards ceremony.

Copyright February 2001, Crain Communications Inc.

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