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The media industry has always been one of the most highly leveraged, and so the
roiling of the credit markets promises to hit media buyouts especially hard.
With a credit crunch constricting new deals — i.e. Carlyle Group stopping
the
auction
of Insight Communications Co. — the accommodating credit markets that
allowed an LBO such as Univision Communications Inc. to sail through are gone,
replaced with
tremendous
pressure on the debt offerings of buyouts that were already in the works.
The banks selling the debt behind media deals like Clear Channel Communications
Inc.’s
$27
billion take private or Cumulus Media Inc.'s $1.3 billion
leveraged
buyout will have their hands full convincing buyers to buy it considering
the easy credit terms that prevailed when the deals were made.
On Sept. 17, the morning keynote address at Tech Confidential's
Convergence
2.0 conference will be given by media veteran Leo Hindery, a managing
partner of InterMedia Partners, a PE firm that specializes in buyouts of media
companies. He will speak on private equity's influence on the media industry,
technology and media
dealmaking,
strategies for buying content media companies, and how tight credit is
changing the short-term view of private equity. Hindrey has been active
in the debate over legislation that would raise the taxes on partnerships,
recently testifying before Congress
in
favor of raising the tax rate on carried interest. —
George White
See Leo Hindery's Politico.com post on carried interest See TheDeal.com's March 2005 story on InterMedia Partners See TheDeal.com's Sept. 12 story on Insight Communications See TheDeal.com's Sept. 7 story on debt markets See TheDeal.com's Aug. 28 story on Clear Channel See TheDeal.com's July 23 story on Cumulus Media See more on the Convergence 2.0 conference
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