InterMedia Stops Short Of Target; Plots New Fund

Firm: InterMedia Advisors
InterMedia Advisors VII LP
$1 billion
Amount Raised: $700 million
Placement Agent: Credit Suisse

Media-focused shop InterMedia Advisors has decided to close the fundraising window for its seventh pool, but already plans to come back next year to raise a larger vehicle.

The New York-based firm held a first close on slightly less than $700 million earlier this year for InterMedia Advisors VII LP, getting it most of the way towards its $1 billion target. But with the money already more than 50 percent invested, the principals decided to concentrate on spending the rest of the equity rather than fundraising.

Expect the firm to hit the road again in 2008 with the aim of raising a $1 billion successor, said Peter Kern, a managing partner who co-founded the firm along with cable and media guru Leo Hindery. “We had done so much in this fund that it was time to close and invest it,” Kern said. “Assuming our velocity continues, and the market remains strong, we’ll come back next year.”

InterMedia Advisors invests in companies that bring together “communities of interest”—groups of sports fans, for instance, or devotees dedicated to particular pastimes, hobbies and faiths. Hindery hit on his investment strategy after building the highly successful YES Network, a cable station that broadcasts every regular season New York Yankees baseball game. The station has become a much-copied model and is now worth more than the team itself.

Among its investments, InterMedia Advisors late last year spent $170 million to buy the outdoor enthusiast magazines from Primedia Inc., a portfolio company of Kohlberg Kravis Roberts & Co. The deal gave the firm control of titles such as Guns & Ammo and Bowhunter.

The firm’s biggest deal to date was the $473 million take-private last year of Thomas Nelson Inc., the nation’s biggest publisher of Bibles and other religious books. InterMedia Advisors has also bought TV stations in Puerto Rico, and a controlling interest in an HBO-like cable station based in Mexico. “So far, we’ve found plenty to do,” Kern said.

Hindery has controlled InterMedia Advisors for two decades, deploying the first six funds principally to buy and sell cable TV assets. The firm’s current incarnation dates to 2005 with the launch of InterMedia Advisors VII.—J.H.