Wednesday, November 08, 2006

Private Equity Still Interested

Publishing is suddenly hot news in the financial markets. For an industry that is periodically characterized as a anachronism it is curious that so many PE firms seem to view publishing with excitement. Last Friday, CNBC had a segment on the activity and while they didn't hit on anything new they focused on the fact that many publishing companies, particularly newspaper companies retain very good margins and throw off a lot of cash. While their markets are seen to be declining, the PE firms can ride a decent wave for a few years and expect to hop off with a respectable return on investment. Several newspaper companies are or may be in play and even the NYT may face a proxy fight that may lead to changes in their ownership structure. It is well known that the Chandler family - prior owners of the LA Times - have pressured the Tribune Company to consider new ideas and options for recapitalizing that business.

In other publishing news, CNBC mentioned Moody's as a potential target given its strong and stable state. I haven't heard this company's name brought up before. Springer had its' bid rejected by Informa but I suspect they will be back with another bid in the short term. It was also revealed last week that Vivendi received an unsolicited bid from KKR - while not directly publishing this does reflect the interest in media generally. The bid while huge was rejected also.

We do however await the outcome of the Thomson and the Harcourt deals; they will represent the biggest publishing deals in a long time and will presage other deals in the early part of 2007 if not sooner. (Article on Pearson).

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