UPDATE 1-Hollywood newspaper Variety sold to Penske, Third Point

(Updates with announcement of sale)

By Ronald Grover

LOS ANGELES, Oct 9 (Reuters) - Variety, the century-oldentertainment trade newspaper once considered the bible of themovie industry, has been sold to online publisher Jay Penske andprivate equity firm Third Point LLC, the companies said onTuesday.

Penske Media Corp and Third Point paid about $25 million tobuy the money-losing, 107-year-old newspaper from medical andtechnical publisher Reed Elsevier , according to twosources with knowledge of the deal. Variety was put up for salein March.

Penske, 33, the youngest son of racing legend andbusinessman Roger Penske, built an online entertainment empirebuying sites including MovieLine.com and the celebrity siteHollywoodLife.com. The most visible property of his Penske MediaCorp is DeadlineHollywood.com, bought in 2009 and run by founderNikki Finke, considered Hollywood's most influential blogger.

Finke is expected to advise Penske on the remaking ofVariety, which loses an estimated $10 million a year, accordingto one of the sources.

One option being considered is trimming Variety's staff,making it a daily rather than a weekly, and running longer trendpieces, the sources said. Variety could be twinned withDeadlineHollywood.com under Finke, whose site has built areputation for breaking industry news, they said.

In a statement, Penske said his company planned to "rapidlybuild upon Variety's foundation, while extending this invaluablebrand's presence across web, broadcast, mobile and internationalmarkets."

Variety President Neil Stiles said Penske Media was"uniquely positioned to preserve and build the market presenceof Variety."

Billionaire Ron Burkle and New York hedge fund AvenueCapital, owner of the National Enquirer newspaper, were earlybidders for Variety with offers around $25 million, said twosources with knowledge of the earlier process.

(Additional reporting by Lisa Richwine; Editing by John Wallaceand Leslie Adler)