Private Equity Firms Becoming Big Players in Media

From New York Times, November 17, 2006:

Some of the largest broadcasters and publishers are being swept into the arms of private equity firms, which are drawn to the rich cash flows these businesses generate and are undaunted by their slowing growth. The trend could raise new regulatory concerns, however, as some of the big private equity firms start to weave a complex web of cross-ownerships in the industry.

The latest example is Clear Channel Communications, the nation’s No. 1 network of radio stations, including Z100 in New York and KIIS-FM in Los Angeles. Yesterday, the company agreed to be acquired for $18.7 billion by Thomas H. Lee Partners and Bain Capital in the largest buyout ever in the media and entertainment industry, according to Thomson Financial.

Just a few months ago, two private equity groups were locked in a bidding war for Univision Communications, the largest Spanish-language broadcaster in the United States. The winning consortium agreed to pay $12 billion for the company. And yesterday, the Reader’s Digest Association, publisher of Reader’s Digest magazine, agreed to be taken private for $1.6 billion by a buyout consortium led by Ripplewood Holdings.

This is an interesting trend. The potential for cross-ownership within these firms should be closely watched by the FCC.