The old and the new world may seem competitive

Have the new Kings of world finance lost their bearings At a time when equity investors are turning their backs on traditional media values and enthusiasm for the Internet companies, groups of "private equity" these funds that take total control of businesses to remove them from the stock market are passionate about them to newspapers, radios, televisions, displays and other music publishers believed promised may slow but nevertheless certain death. In the eyes of Wall Street, which has multiplied by five the value of Google in a little over two years for making the first market capitalization of the media world, the Net worth of gold. More classic "private equity" made her gentle eyes to other targets: Clear Channel (number one of the display and radio), Univision (first channel television in Spanish), Reader's Digest but also of the groups of daily newspapers as publishers of the "Boston Globe", the "Los Angeles Times" or the "Chicago Tribune".

Since last summer, active funds in the non-coté have thus invested nothing that in the United States more than 35 billion dollars in "dinosaurs of the media" and if the "deals" in the process of negotiation to conclude quickly, they are almost $ 50 billion that could be left in the second half of 2006 of the pocket of groups such as Bain CapitalThomas h. Lee, Texas Pacific or Blackstone to enter those shareholders of old media groups tired of the breakdown of the stock market. These investors with more accustomed to earn billions of capital gains than to invest bleeds out their Chequebooks, if that's worth the candle. Certainly, nobody will dare deny that the Internet has attracted the general public as advertisers and erode the traditional players. For newspaper publishers, for record labels, the technological breakdown is threatening. The radio very stable deemed media is weakened by the emergence of new forms of competition such as the iPod or subscription, and satellite radios that have already attracted more than 12 million Americans their format without advertising. All of this, groups of "private equity" know but it does appears to hardly inhibit them. Why

"Because that this win big, simply", explains a business banker. If the non-coté experts resumed their traditional groups, it is first because it is profitable. Very short term, before even to account for future profits that could yield a restructured press company, revived and then resold, merely to find a "deal" and thus invest the money that investors have entrusted allows groups of "private equity" to receive their first commissions (generally 1.5 of the money invested and between 20 and 30 of the identified term capital gains). Once the prey is conquered, the "private equity" does not hesitate, and more, is payable on the "beast" by charging different services provided and coyly called "management fees". For the "private equity", "play" money, it is already starting to win.

We should look further. At the time where the non-coté sector goes beyond money and targets are missing, "private equity" known to keep feet on Earth. Pick up a few million today and risk losing future implementation would be suicidal. The bulk of the profits made on the length and the output: select its prey remains paramount. At this level, media groups offer many advantages. First of all, media values little interest the stock market. At the time where Wall Street flirts with its historic peaks, redeem groups that the caps were melted from 30 to 50 since the beginning of the century represents a first attraction. Dear step in part because they offer prima facie little growth prospects, the traditional media are still attractive. "They generate risk-taking which have the merit of being predictable." "It is very important to be able to repay the debt incurred," says Jim Rutherfurd, executive Vice President"at Veronis Suhler Stevenson, a fund specializing in investments in the media. Financially adapted leveraged buy-outs, old media are also "historically, a very good business." "The barriers to entry in the local press are for example high enough", said Jim Rutherfurd, who adds that, "even if the growth is not extraordinary, these media can suffer, but rarely die". In addition, even if they stagnate or see their hearing crumble slowly, newspapers and other TV stations remain both colossal (their advertising revenues reached last year's $ 150 billion 16 billion for advertising on the Internet) and finally very profitable. US households are now more television stations than people and the American press that affects close to an American on two every day, still has margin of 15 to 25. Rare are the sectors in full shape to be able to say as much.

For groups of "private equity" more and more large and to multiply the risks by playing on a growing number of tables, the media provide a route combining predictability, profitability, risk minimal... and prospects. If the "private equity" is passionate about the "dinosaurs", is indeed not only by prudence. After seeing their image tarnished by the emergence of new technologies, the major media groups realize that innovation can be good. On the expenditure front, digitization can thus lower costs of production or broadcast as well for the press to the radio or television. "Private equity", master in the art of reducing costs, will play of this weapon. On the front of the application, the groups to which the hearing was aging have also understood that new media forms attractive for a young audience were not only the monopoly of the start-up. The "old" are maybe slow and do not necessarily have yet understood how economically getting the best out of the growth of the Internet, but they have hard skin, funds, brands and content. "New York Times," "on line" will not compete with Google, but the growth of the latter finally especially did harm to Yahoo!, which was already considered "old" by some, ex-start-up more than the traditional players.

Finally, that it does to lure not, if the "private equity" on these groups, it is not by taste suddenly for the press. It also knows that an "exit" by a return in stock market, sales by apartments, or a total resale remain possible. Current November, Google as Yahoo! have thus tended hand written press to collaborate on the classifieds market. The "old" and the "new" world may seem competitive. Tomorrow they may marry more formally, and in this case, the "private equity" is positioned to pocket the dowry to the bride.