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-old entertainment trade newspaper once considered the bible of the movie industry, has been sold to online publisher Jay Penske and private equity firm Third Point LLC, the companies said on Tuesday.

Penske Media Corp and Third Point paid about $25 million to buy the money-losing, 107-year-old newspaper from medical and technical publisher Reed Elsevier , according to two sources with knowledge of the deal. Variety was put up for sale in March.

Penske, 33, the youngest son of racing legend and businessman Roger Penske, built an online entertainment empire buying sites including MovieLine.com and the celebrity site HollywoodLife.com. The most visible property of his Penske Media Corp is DeadlineHollywood.com, bought in 2009 and run by founder Nikki Finke, considered Hollywood's most influential blogger.

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

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

In a statement, Penske said his company planned to "rapidly build upon Variety's foundation, while extending this invaluable brand's presence across web, broadcast, mobile and international markets."

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

Billionaire Ron Burkle and New York hedge fund Avenue Capital, owner of the National Enquirer newspaper, were early bidders for Variety with offers around $25 million, said two sources with knowledge of the earlier process.

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