It is no secret that consolidation is gripping the media industry. The U.S. government’s relaxation of media ownership rules only added fuel to the fire as mergers and buyouts create gargantuan media empires. While it’s easy to see a universe of Darth Vaders tightening its grip on media ownership, buyout and private equity investors see plenty of assets still available and ready to be rescued from joining the dark side of the force.
Veronis Suhler Stevenson (VSS) is betting on a need for equity capital in the media industry. The New York-based media merchant bank is raising a million-plus mezzanine fund with a goal of $350 million, Buyouts has learned. The fund, VSS Mezzanine Partners, is the firm’s first mezzanine fund. The firm had a first close on the fund in January for approximately $100 million. Credit Suisse First Boston is acting as a strategic advisor for the fund.
VSS plans to invest in a wide variety of media companies such as advertising, cable television, consumer magazines, newspapers and radio broadcasting enterprises. Like its buyout portfolio companies, mezzanine investments will go into middle market companies with less than $50 million in sales. The firm has two deals in the pipeline, one in the newspaper industry and the other in radio, and sources familiar with the deal say that VSS will likely close on a deal by the end of the second quarter. The fund will have a five-year investment cycle and invest primarily in U.S. companies.
According to Thomson Venture Economics (publisher of Buyouts) limited partners in VSS funds have included the Bank of New York, Gannett, H.J. Heinz Co., Mutual of Omaha and the University of Texas Investment Management Co. The firm has raised three buyout funds since its founding in 1987 and is looking toward its fourth. Its most recent buyout fund, VS&A Communications Partners III, closed in 1998 with more than $1 billion.
VSS invests heavily in European media companies and recently merged its threeEuropean yellow pages business, 3i, to create Yellow Brick Road, a holding company controlling yellow pages throughout Europe. Veronis Suhler Stevenson also provides research and advisory services and publishes a widely distributed communications industry forecast and report.