By Jeremy Harrell
Lots of LBO pros these days like to think of themselves as would-be Mario Andrettis. Leo Hindery raced cars before it was cool.
And despite two near-fatal collisions, he kept getting back behind the wheel, winning the 24-hour race in Le Mans, France, in 2005 on his fourth try.
Hindery, a former cable company executive, clearly knows something about being an enthusiast. And he’s putting that knowledge to work with
Last year, InterMedia spent $170 million on the outdoor magazines belonging to Primedia Inc., a portfolio company of
Also last year, Intermedia spent $473 million to take private Thomas Nelson Inc., a Nashville-based company that’s the biggest publisher of Christian books in America and reputed to be the nation’s ninth-largest publisher overall.
So what do In-Fisherman Walleye Guide and the New King James Version of the Bible have in common, aside from being sold by companies owned by InterMedia?
They both serve pockets of devoted followers, said Hindery, whose firm includes nine professionals, including co-founder Peter Kern, and counts former Senate Majority Leader Tom Daschle as an advisor. InterMedia’s 2006 acquisitions, which also included the $130 million purchase of a group of Puerto Rican TV stations, underscore its strategy of tapping what Hindery calls “communities of interests.” (Hindery dislikes the term “niche.”)
Hunters will always be hunters, and Methodists will always be Methodists, Hindery said last month at a Capital Roundtable symposium on private equity and the media held in New York City. Such enthusiasts crave media outlets that cater to deeply embedded parts of their personalities.
One more thing: It turns out that enthusiasts are enthusiastic consumers. Americans spend $500 million annually on Bibles, for instance, while hunters and fishers spend about $70 billion on outdoor goods and services, according to InterMedia.
Hindery has honed his investment approach over decades in the media business, and across a Dickensian personal and professional life. A former farm hand and merchant marine who grew up in a place he once called “Nowhereland” (it’s near Seattle), Hindery worked his way through Stanford University’s business school. After getting his MBA, he studied at the right hand of Edmund Littlefield, the chairman and CEO of Utah International, the world’s largest mining company when Hindery joined it in 1971.
In the 1980s, following a few stops in banking and publishing, Hindery befriended cable industry titan John Malone, CEO of Tele-Communications Inc., which at the time was the nation’s largest cable TV company. Hindery once told a Stanford alumni magazine reporter that he and Malone hit it off instantly, hatching fantastically hypothetical deals that included buying out IBM.
Back on Earth, Malone encouraged Hindery to start his own cable company, the original InterMedia Partners, for which Hindery raised $200 million. It proved successful, and InterMedia bought up cable companies across the country. When, in 1997, Malone needed someone to run Tele-Communications Inc., he tapped Hindery to be president. Hindery cleaned up a messy, customer-neglecting mess, positioning TCI for a $50 billion sale two years later to AT&T. Following the buyout, Hindery briefly became president and CEO of AT&T Broadband before a clash with superiors prompted him to leave.
After an enormously lucrative stop at Global Crossing (he netted some $250 million through the sale of one of the company’s units), Hindery in 2001 founded the YES Network, the in-house cable station of the New York Yankees. Now worth more than the team itself, YES Network has become a much-imitated revenue generator for other sports franchises, including cross-town rival New York Mets.
The popularity of the network supports Hindery’s belief in communities of interest. After all, Yankees fans wake up every morning Yankees fans, which keeps them coming back to the network with little or no promotion necessary, he told the Capital Roundtable audience in January.
A prolific Democratic fundraiser, Hindery also holds strong beliefs about compassionate leadership (many of which he expressed in his book, It Takes a CEO). He is also concerned about where the private equity industry is headed. At the Capital Roundtable symposium, he warned his listeners about the danger of buyout firms driving up leverage multiples by doing deals for deals’ sakes and about the need to treat employees of portfolio companies well.