Seems only yesterday that financiers of distinct stripes sat around the media table. Venture capitalists? You betcha! Private equity? Couldn't live without them. The public markets? No better place for fattened PE investments. What a civilized feast these financiers had, too, with one complementing and complimenting another as shared investments moved up the food chain:

• VC would hang with new media, incubating the next killer app until divesting it upstream for a return frequently characterized as exponential.
  
• PE would take over, sometimes nurturing cash cows past their growth phase and pairing them with other media units of the same or similar species.
  
• Then, five to seven years out, they would sell these bolted-together collections for healthy returns even after paying off what less bold investors consider unhealthy amounts of debt. These exits would often come through initial public offerings, the public trading of previously private investments being the logical conclusion to growth stories well told. In fact, during the Internet bubble, new media was synonymous with IPOs.

The bursting of the Internet bubble definitely slowed media M&A. In retrospect, the delay provided a salubrious pause, a necessary break between increasingly rich courses of media assets. Besides, dealmaking resumed soon enough, bringing two new types of financiers.

One was the sovereign wealth fund, a government-­controlled investment pool representing a capital exporter like Brunei, China or Saudi Arabia. Initially quiet, SWFs quickly demonstrated an appetite for risk-taking that promises to place them center stage.

The other was the creditor -- bank lender or bondholder -- who let equity players backed by his credit do his bidding for him. But that all changed after the covenant-lite era ended and the credit crunch commenced.

Take GE Commercial Finance. A private equity player remembers the General Electric Co. unit as "the most benign and supporting lender the publishing industry ever had." But try telling that to Abry Partners LLC, the private equity firm from which GE Commercial Finance is negotiating the takeover of Cygnus Business Media Inc.

Abry, which acquired Cygnus in 2000 for $275 million, was set to sell the B2B operator for some $220 million. But the prospective buyer kept seeking a lower price as economic conditions worsened and operating results deteriorated.

Finally, rather than accept a price for all of Cygnus that was 10% less than the $220 million debt facility that GE Commercial Finance arranged for the company in 2004, Cygnus' lead underwriter drew a line. "It decided to take the company over and manage it with a view toward increasing its value over the next few years," says a source familiar with GE's transformation from debt provider to equity holder.

Abry, meanwhile, has undergone its own transformation by raising a distressed-debt fund. So have enough other financial sponsors for one to remark, "There's a real blending of debt and equity these days."

There's also a teasing out of conflicts where uniform fronts used to prevail. Over at American Media Inc., with equity holders already out of the fray, bank lenders and bondholders continue to squabble over revised terms. "They're like two kids fighting on the playground after the recess bell has rung," an observer says of impediments to AMI's bankruptcy-aversion efforts.

The credit crisis has even forced VC, once the nurturer of startups, to change. "Triage is being performed after some early and harsh assessments," says Dennis Miller, a general partner at Spark Capital. "Now it's feed the winner, kill the losers, recoup your investment on the one in the middle."

Although SWFs have yet to infiltrate U.S. media, the New York Times Co. stake by Carlos Slim serves as a proxy. The $250 million in notes with warrants that the Mexican billionaire is injecting will not only return 14% in annual interest but, on exercising the warrants, deliver 17% of its equity.

These developments overwhelm the old cozy order where each class of capital had distinct but noncompeting agendas. Before convergence, providers of capital to one medium didn't need all others to fail. With convergence, the objective is to finance the one medium that will thrive as others are forced into coalescence if not obsolescence. It's necessity over consistency, opportunity over conformity. And, with a credit crunch thrown in, it's live another day.

Richard Morgan covers media for The Deal.