Rolling Stone Might Cancel Its Sale — Thanks to One Article from 2014

Stack of Rolling Stone Magazines.

photo: Rodrigo Galindez ( CC 2.0)

America’s most legendary music magazine has a huge skeleton in its closet.  Now, Rolling Stone may be forced to suspend its sale.

For those just tuning in…

Rolling Stone magazine announced this week that it’s up for sale.  Legendary founder Jann Wenner said he doesn’t want to rely on advertising going forward.  Which is basically the reality for Rolling Stone if it refuses to innovate into other brand extensions and services.

As a publisher myself, I’d argue that Rolling Stone is taking the easy way out.  Especially since advertising is become more sophisticated and targeted than ever.  Blend that with an established brand that carries lots of weight, plus heavy online traffic, and Rolling Stone has an optimistic future.

Or, maybe not.

At least for someone who built a magazine in a now-foreign past (with lots of legacy debt).  Accordingly, Wenner further stated that he’s seeking a buyer ‘with lots of money’.  He wants out.

The only problem is that Rolling Stone may owe ‘lots of money’ thanks to a refreshed defamation lawsuit.

And the timing couldn’t be worse.

Just moments after announcing its intended sale, the skeleton re-emerged from the closet.  Just one day after the sale announcement, two frat guys from the University of Virginia had their defamation lawsuit against the magazine revived.  The individuals were part of a damning — but utterly false — article about a gang rape at UVa’s Phi Kappa Psi fraternity in 2014.

Rolling Stone fired Sabrina Rubin Erdely, who wrote the work of fiction.  Rolling Stone also apologized and retracted the story.  But that hasn’t stopped a barrage lawsuits that are costing millions.

Actually, make that tens of millions.

+ Monday, Sept. 18th: Rolling Stone Could Fetch an $80 Million Price Tag

The reason is that any prospective buyer is likely to hold off given the revived lawsuit.  Or, the lawsuit itself could give tremendous leverage to the prospective buyer, which ultimately results in a lowered price tag.

Another possibility is that the buyer separates the lawsuit from the core assets of the publication.  But the longer this suit continues, the lower the price goes.  Which means — at the very least — this complicates Wenner Media’s plans to sell.

Earlier this year, Rolling Stone settled its first defamation lawsuit involving university dean Nicole Eramo.  Erdely’s article blamed Eramo for actively muzzling the rape victim (who wasn’t raped).  The fabricated tale painted Eramo as a villain, hell-bent on silencing ‘Jackie’ despite a brutal gang rape (which again, never occurred).

The Eramo case settled for $1.65 million, which is actually a bargain given a $3 million jury verdict.

The two fraternity brothers in question weren’t actually named in that article.  But Erderly offered a number of details that made the pair identifiable.  And in the hysteria and outrage that followed the article publication, that’s exactly what happened.

Initially, those claims were denied by a New York federal court judge.  But in a ‘close call,’  the United States Court of Appeals for the Second Circuit allowed the case to proceed.

More as this develops…

4 Responses

  1. Avatar
    Anonymous

    “As a publisher myself, I’d argue that Rolling Stone is taking the easy way out. Especially since advertising is become more sophisticated and targeted than ever. Blend that with an established brand that carries lots of weight, plus heavy online traffic, and Rolling Stone has an optimistic future.”

    aka let me justify these shitty autoplay and clickbait ads all over my site

    • Avatar
      Rock It

      they sold 49% of the company to some to an asian start up that got dupped by the mag name…..RS should have stuck with the music and not all the political, global warming BS, that nobody with any sense believes in. As Steve Miller said “Go on take the Money and Run”

  2. Avatar
    Billy Tuchscher

    Nah, …Not at all accurate, and way too much speculation in this article. And, I know a little something about RollingStone. ~Billy

  3. Avatar
    Nancy

    The publication is not even remotely worth $80 million and the advertising targeting that the writer mentioned is a competitor to Rolling Stone’s advertising efforts.

    Does it have value? Perhaps… but unless it owns hard assets (real estate, printing facilities, etc.) then its value is based solely on subscriptions, website traffic, and is the place running in the black. They have roughly 200,000 subscribers and most likely falling like most pubs.

    If someone got really hot and heavy for the brand and had a large vision for the future, maybe it’s worth $15 million but $80?? Nah… Plus, since they already sold 49%, they are selling the remaining 51% so if the pub is worth even $20 million, the final sale will be $10 million and then it’s over.

    It’s a NYC media icon led by a NYC media icon but highly unlikely anyone gives them a lot of blue sky for that brand. It really hasn’t been relevant for quite a long time.