UPDATE: Variety announced today that it needs no fewer than 3 editors-in-chief to try to save the beleaguered Daily Variety Endingtrade which is moving to a once-a-week print edition instead of a daily. Two of the newly named chiefs are from inside, Cynthia Littleton and Andrew Wallenstein, and one is from outside, Claudia Eller from the Los Angeles Times who used to work at Variety. They’ll oversee coverage of television, digital content, and film respectively. Tim Gray wasn’t fired as expected (and should have been) but instead was demoted to overseeing international coverage and unspecified “other special projects” after presiding over Variety‘s humiliating loss of readership and influence and advertising. (2ND UPDATE: The new owner, Variety Media‘s Chairman/CEO Jay Penske whose Penske Media Corp also owns my Deadline Hollywood, says he’s trying to hire 5 to 6 other editors for Variety to expand its editorial staff.) Additionally, Variety announced that its disastrous paywall is coming down March 1st when a very generic redesign debuts. “Internally, we’ve been referring to the paywall dropping as ‘the end of an error,’” Penske said in Variety‘s announcement. The new print edition of Variety debuts March 26 to be published every Tuesday throughout the year. There also will be an expanded schedule of special editions. The daily print edition of Variety will limp to its final appearance on March 18.

Rumors that Eller was heading to Variety began surfacing in January. As recently as February 9th, I asked Penske and Eller to respond to them as soon as Eller began telling Hollywood openly that she was ”seriously considering” Penske’s job offer. (2ND UPDATE: Penske says he didn’t know if she would take the job. Eller declined to comment.) This is a return ‘home’ of sorts for Eller since she worked as a columnist for Daily Variety until jumping to the LA Times in 1993. But it also is a major humiliation for LAT Assistant Managing Editor and entertainment biz czar John Corrigan who just this December promoted Eller to entertainment news editor and praised in the inhouse memo that “few people care as much about breaking news as Claudia Eller”. In fact, Eller quickly became disenchanted with Corrigan as her boss because he knows very little about Hollywood and never misses a chance to demonstrate it to the staff or the entertainment community at large. That said, Eller had been under pressure by the newspaper for years to write full-time. Many of the LA Times‘ long list of present and former top editors felt Eller did not have the personality to be an editor, and it’s been well known that her relationships with much of her staff have been strained over the years and especially now. In the past, Eller successfully used various job offers to move up the LAT masthead. But the prospect of continuing under Corrigan and watching the newspaper’s sale finally propelled her to make a move.

Today’s Variety moves come as the editorial firings are set to begin in March. (When I broke the news, Penske had to hastily cancel a retreat for top editors that weekend.)  A few reporters/editors already have left or were canned this month. Needless to say, editorial morale at the entertainment trade is at its lowest ebb and anxiety is running sky high. As a source told me earlier, “There is complete editorial disorganization from the top down.” Even worse, advertising is nonexistant and readers few and far between. Penske’s idea is to transform Variety into a thumb-sucking weekly about the entertainment business, leaving breaking news coverage to Deadline Hollywood. But both media already do and still will feature commentary and analysis. Penske announced on October 9th that he bought the once $200 million-valued trade, reportedly for the fire-sale price of $25 million after my Deadline Hollywood pretty much put it out of business. Financing for the Variety deal was provided by Third Point, a hedge fund founded by mega-investor Daniel S. Loeb. Variety is being maintained as a separate profit center outside PMC. Penske now spends most of his time in his office at Variety’s headquarters at 5900 Wilshire Blvd instead of at PMC’s Inglewood headquarters. He does have plans to bring all his media properties together under one roof in Los Angeles and New York respectively. (First report posted at 7:11 AM.)

Editor-in-Chief Nikki Finke - tip her here.