Penske and Third Point have struck a deal to buy the money-losing, 107-year-old newspaper from medical and technical publisher Reed Elsevier, which put it up for sale in March, the sources said. The sources requested anonymity because the deal has not been announced.

The 33-year-old Penske, 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.

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.

Reed Elsevier spokesman Tom Reller did not respond to phone and email messages. Penske confirmed a deal was in the works but did not divulge details.

(Reporting by Ronald Grover; editing by John Wallace)

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