To say that it's been a rough couple of years for Old Media would be a gross understatement.
Not only are consumers continuing to desert local radio and traditional television for newer treats like XM, Sirius, and YouTube, but Brian Tierney, a former PR pro and now one of the owners of the Philadelphia Inquirer, also says US newspapers just finished one of the worst 90-day stretches in the industry's history.
But amid all this gloom, media properties are finding some much needed love from an unlikely source: private-equity firms. From high-profile properties such as Clear Channel Communications, Univision, and Reader's Digest to smaller targets like Prism Business Media, private-equity companies have spent tens of billions of dollars taking public media companies private. And the past year has seen an especially high level of activity.
It's tempting to portray this as some kind of media trend, and many in the press are doing just that. "The media always thinks it's all about them," notes Ed Atorino, media analyst and MD of The Benchmark Company.
But save for a few exceptions - such as Jack Welch's interest in The Boston Globe or the West Coast moguls looking to take the Los Angeles Times off the Tribune's hands - this has little to do with the quality of the press and everything to do with hard-core capitalism.
Indeed, insiders suggest private-equity firms are taking media companies private because the public market value of such entities, given the uncertain time in the industry, is low.
These firms and their shareholders are not seeking Pulitzer Prizes. Instead, they're hoping for spectacular returns like the more than $1 billion in fees and returns several firms, including The Carlyle Group, Merrill Lynch Global Private Equity, and Clayton, Dubilier & Rice, netted by taking rental-car giant Hertz private and then public again within a few short months.
This type of flipping isn't necessarily bad for a company, though Atorino suggests it's unlikely to lead to a situation where owners decide to pour resources back into it. A far more likely scenario is the private-equity firm installing management at the top of these properties who are even more focused on cutting costs.
But after years of being beaten down by Wall Street, while new media stocks like Google soar to $500 a share, some old media outlets could benefit from a few years in private hands.
For one thing, this trend shows that somebody thinks these properties have some untapped value. Indeed, the one thing many of these properties have going for them is that they tend to be solid brands which are well-positioned to take advantage of the massive information shift online.
Atorino adds that going private can also give these media outlets some much needed breathing room. "It gets them out of the spotlight of quarterly reports and analysts like me getting on them for not making a number," he says.
Peter Duda, Weber Shandwick EVP, agrees that going private could help a lot of these companies prepare for what promises to be a rapid evolution in how consumers access news and information.
"Private equity [firms] also have a longer view and don't suffer from 'short-term-itis,'" he adds.
It will be interesting to see how private ownership impacts traditional media relations, but for now, Duda is holding out hope that the end result could bring US media on firmer financial footing.
"I don't think things like cost-cutting are ever off the table," he says. "But, on the other hand, having the ability to put in place a plan and then patiently execute it could be just what the doctor orders for some of these companies."