Private Equity Media

Private Equity Investing in Media

Investing in the media can be both very profitable (as evident in the rise of internet media companies) and very risky (as is the case with private equity bids for major print-newspapers.) The incredible rise of the internet and mobile media has transformed the media industry and private equity firms are quickly recognizing the importance of the new media. Here is a great article, although a year or two dated, that considers private equity investment in media.

A recent example of media buyouts is the possible bid for Virgin Media by private equity firms the Blackstone Group, Cinven, KKR and Providence Equity. Estimates of the bid's value range from $6 billion to $7.5 billion. Venture capital funds invested significant capital into emerging technology and media firms, most notably during the dot-com bubble. The collapse of many of those venture capital-backed media and technology-based companies when the bubble burst reveals the risk to these private equity investors.

Internet and technology-based media is not the only form of media attracting private equity, there have also been numerous bids and executed buyout deals of major print newspapers. The evolution of internet and cable news has led to a general decline in print media, leaving many newspapers open to private equity acquisitions.

On October 13th 2008, Scott Sperling co-president of Boston private equity firm Thomas H. Lee Partners was asked about his firm's recently removed bid for the Knight Ridder newspaper chain. Sperling explained that newspapers were just too expensive and said of the major decline in print newspapers' revenue "I would have predicted a lesser decline than what we’ve seen… We were probably too kind in our assessment of the industry three years ago.” His most telling remark was his reply when asked if he reads the Wall Street Journal's hard copy, he admitted "Sometimes," to laughter from the crowd.

The major driving force behind private equity firms purchasing print-newspapers seems to be the potential for developing and implementing a more current news model that heavily incorporates video and internet resources. For example, the New York Times is adopting a format that is more techology-based, even adding several popular blogs, while still maintaining its journalistic reputation. Despite such turnaround efforts by the traditional newspapers, the new media sources have appear to have the upper-hand in attracting private equity.

Read full story on Thomas H. Lee and Knight Ridder

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Tags: Private Equity Media, Private Equity and the Media, Private Equity Media Investment, Media Takeovers, Media Mergers, Media Acquisitions, Mergers and Acquisitions of the Media, Media Buyouts, Media Buyout, Private Equity

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http://privateequityblogger.com/2008/10/private-equity-media.html