In a counterclaim filed on Tuesday, former Variety owner Reed Elsevier accused Jay Penske, the trade paper's new owner, of defaulting on $1.3 million of the trade's purchase price.
"Using this suit as an apparent pretense, Variety Media defaulted on its obligation to pay $1,300,000, plus interest, of the purchase price for Variety that it owes to Reed under the APA" (asset purchase agreement), the counterclaim filed in New York State Supreme Court reads. "Variety Media agreed to pay this sum as recently as March 15, 2013, long after its disputes with BHMG and California Offset Printers arose."
Read the full lawsuit here.
The counterclaim is in response to Jay Penske's complaint against former Variety owner Reed Elsevier. Penske's Variety Media is suing Reed Elsevier for $10 million, alleging that the company did not disclose existing contracts with the marketing firm BHMG and a printer when Penske purchased the trade.
Reed Elsevier denied Penske's allegations in the response, then claimed that Penske has withheld the "remainder of the purchase price." Reed Elsevier is asking for a minimum of $1.3 million in damages plus interest.
Penske bought Variety from Reed Elsevier for a reported $25 million last October.
According to the counterclaim, the actual "closing working capital" that Reed Elsevier and Variety Media agreed upon exceeded the "estimated working capital" by $1.3 million. It states that Variety and Reed agreed on the amount on March 9 and finalized the settlement on March 15.
Reed Elsevier claims it sent Variety at least seven letters requesting the amount plus the accruing interest, but "Variety Media failed to respond to these communications." The last letter was sent on May 2. Six days later, on May 8, Penske sued Reed Elsevier for $10 million.
Pamela Chelin contributed to this report.