Jun 16, 2019

Private equity's less-than-stellar track record in the legacy media industry

Illustration: Aïda Amer/Axios

The legacy media business hasn't seen an IPO for a very long time. Instead the big trend is the other way around: public companies being taken private.

The big success story is the Washington Post, which traded under the ticker symbol WPO before it was bought by Jeff Bezos for $250 million. Under his aegis, investments no longer need to generate an immediate improvement in the bottom line. The result is a revitalized property that's almost certainly worth much more than Bezos paid for it — were he to want to sell it, which he doesn't.

Private equity has a less-than-stellar track record in the industry. In 2011, KKR exited a previous media acquisition vehicle, Primedia; the New York Times called it "the firm’s longest investment ever — and one of its least successful." After iHeartMedia was taken private by Bain Capital and Thomas H. Lee in a $17.9 billion deal in 2008, it ended up filing for bankruptcy protection in 2018. And Univision's private-equity owners are still struggling with their albatross after buying the broadcaster for $12.3 billion in 2006.

KKR is returning to the industry with an agreed bid to take German publisher Axel Springer private at a valuation of $7.7 billion. The news came after hedge fund Elliott Associates agreed to buy Barnes & Noble for $683 million.

  • Springer's acquisition announcement coincided with a profit warning. CEO Mathias Döpfner said that as a public company, such bad news would normally be met with cuts, even though "over the long term this is not the right thing to do."

Between the lines: Under private equity ownership, journalism is rarely valued as an end in itself. If it can't drive reach or revenues, it tends to get cut.

  • Springer is merging its U.S. business intelligence unit, eMarketer, with its Business Insider journalism brand, putting them both under the helm of Business Insider founder Henry Blodget. Terry Chabrowe, eMarketer's founder, is joining the board of Insider Inc., the U.S. subsidiary.
  • Blackstone, controlled by "China whisperer" Stephen Schwarzman, bought control of the Thomson Reuters information business unit in October. The business, now known as Refinitiv, is blockingReuters news stories about Tiananmen Square from appearing on its terminals. (Reuters is independent of Refinitiv, but gets mosts of its revenue from its sister company.)
  • Univision's struggles have resulted in massive cuts to its news division.

Our thought bubble, from Axios' Sara Fischer: Most private equity firms understand a lot about execution, finance and markets, but are less steeped in technology trends. As a result, some firms have struggled to deal with the outcome of market trends they didn't anticipate in industries that have been completely upended by technology.

Go deeper

Gilead expands access to experimental coronavirus drug in emergency cases

Photo: Olivier Douliery/AFP via Getty Images

Gilead Sciences CEO Daniel O’Day said in an open letter Saturday the company is expanding access to its experimental anti-coronavirus drug remdesivir to include severely ill COVID-19 patients.

The big pig picture: President Trump has called the antiviral drug "promising," but the results of six clinical trials on this investigational medicine are still being conducted, so its effectiveness in COVID-19 the treatment has yet to be proved. The World Health Organization is involved in the tests.

Go deeperArrow22 mins ago - Health

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 1 a.m. ET: 664,695 — Total deaths: 30,847 — Total recoveries: 140,156.
  2. U.S.: Leads the world in cases. Total confirmed cases as of 1 a.m. ET: 124,464 — Total deaths: 2,191 — Total recoveries: 1,095.
  3. Federal government latest: President Trump announces new travel advisories for New York, New Jersey and Connecticut, but rules out quarantine enforcement. Per the CDC, residents of those states must now "refrain from non-essential domestic travel for 14 days," with the exception of critical infrastructure industry workers.
  4. State updates: Alaska is latest state to issue a stay-at-home order — New York is trying to nearly triple its hospital capacity in less than a month and has moved its presidential primary to June 23. Some Midwestern swing voters who backed Trump's handling of the virus less than two weeks ago are balking at his call for the U.S. to be "opened up" by Easter.
  5. World updates: In Spain, over 1,400 people were confirmed dead between Thursday to Saturday.
  6. 🚀 Space updates: OneWeb filed for bankruptcy amid the novel coronavirus pandemic.
  7. Hollywood: Tom Hanks and Rita Wilson have returned to U.S. after being treated for coronavirus.
  8. What should I do? Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk
  9. Other resources: CDC on how to avoid the virus, what to do if you get it.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Coronavirus updates: Global death toll tops 30,000

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens and confirmed plus presumptive cases from the CDC

The novel coronavirus has now killed more than 30,000 people around the world — with Italy reporting over 10,000 deaths, per Johns Hopkins data.

The big picture: The number of deaths from COVID-19 in the U.S. surpassed 2,000 on Saturday. The United States leads the world in confirmed coronavirus infections — more than 124,000 by late Saturday. The number of those recovered from the virus in the U.S. passed the 1,000-mark on Saturday evening.

Go deeperArrowUpdated 3 hours ago - Health