An interesting article over at TheStreet.com reports that commercial real estate investment firm, Blumberg Capital Partners, is readying to launch an investment firm, backed by Middle Eastern investors, to invest in U.S. media companies.
TheStreet.com reports that "the fund would target newspapers, as well as Hollywood movie studios, online media outfits, broadcast news, and possibly radio businesses." According to CEO Philip Blumberg, it appears that the fund would raise about $500 million and with the use of leverage, have purchasing power of three times that amount.
I've noticed recently that even indefatigable Jim Cramer has wondered out loud (as he frequently does) why foreign investors haven't stepped up to the plate to start picking up cheap U.S. companies propelled by high oil prices, a weak dollar, and U.S. companies trading at relatively multi-year cheapness.
We've seen Abu Dhabi recently inject $7.5 billion of capital into Citigroup (NYSE: C), make a 5% investment into Sony (NYSE: SNE), and make a similarly-large investment in the Carlyle Group.
While some in Congress have started to fret about large foreign investors putting money into the U.S. (in fact, there are restrictions on certain types of purchases by foreigners), I think this is just an efficient flow of capital going to where it can be put well to work. Certain U.S. companies have been down (particularly media stocks) and this provides an opportunity for foreigners.
I think a good question to be asked is whether there is significant value to be found at these levels in companies like The New York Times Co. (NYSE: NYT) or radio stocks or other broadcast media. In times of economic struggle, advertising dependent broadcasters are not where you'd want to have your money for the short term. P2P file sharing and Apple's (NASDAQ: AAPL) iTunes have made huge dents in the music industry. It's this author's opinion that Google (NASDAQ: GOOG) is poised to manage all things advertising and is a major threat (and eventual partner) to any business that runs an advertising sales team.
Do I think that the media industry has changed? I certainly do, and radio stocks are not coming back, at least not in their current iteration. Victor Miller, Bear Stearn's (NYSE: BSC) Hank Aaron of radio stocks, had a recent research report out on the state of the radio industry for 2008, and it was as bleak as I've ever read him.
That said, the industry is not going away and there are some great brands and history in some of these institutions that in the right hands, could be very lucrative. Question is why a real estate investor like Blumberg is the guy to make this happen.
Where are our own value investors, like Blackstone (NYSE: BX) or the Carlyle Group? It seems that they're waiting for things to get cheaper and buying things overseas. Kinda ironic.
Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. Author owns a long-term position in GOOG stock.
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Reader Comments (Page 1 of 1)
12-02-2007 @ 11:33PM
mark said...
At 52 and have seen more and studied more every year. 2008 will go down in history a the largest bust year in American History. The housing market can't be bailed out as there was too much artificially inflated values criminally placed on existing home values while mortgages were given to unqualified and qualified borrowers way over the real values of their properties. This makes the past events of Savings and Loans of the late 80's a joke when comparing the dollar amounts that's needed for the US Taxpayer (as always) to pay out over time. No more tax increases? Think again about the reality of what's happening. Not only does the average US taxpayer need to pay for the overpriced energy (speculation values) but we'll need to pay out of pocket (raising taxes once again) for all the fraud related to the lenders and property appraisers associated crooked dealings. How long does the middle class the largest class in the US need to bail out the crooks? Why can't our congress (as week and inefficient as ever) do their jobs to protect those of us that are middle class. This never effects the super rich and even the rich have more ways to escape most bailouts through available private client relationships with private equity firms, creative accounting and private client bankers who still find ways to manipulate their clients wealth and avoid large taxation. It's time for all of us to focus as best we can on who to vote for looking at unknown but creditable politicians and gamble on them, because at this point it can't be much worse. Our children and grandchildren's future is at stake. Look at the large medical insurance companies scams especially from the largest providers! Your lucky to get a claim paid out without a huge negotiation with constantly calling with resubmitting of doctor's billings! They hold money for as long as they can. When doctors prescribe scans they now have third party groups as in Med-Solutions (& others) to deny doctors requests and it's always a fight to get what you pay for. When will this all stop? Never, unless the citizens of this country vote for a seriously and radical change or our representatives. What's with all of the ear-marks for airports and other ridiculous special interests>? Can anyone add up the entire Taxpayers costs for those? Not even reports as in CNN's Anderson Cooper's investigation could turn up the details as only few would even talk to him. What are the hiding who's reponsible for the accountability of all this recklous spending? I'm small business owner. I will clearly represent that we have jobs to offer but in certain areas the labor pool is weak and those that apply can't do what it expected of them nor do they wish to work hard. The applicants we've seen either don't have the skills or they feel that the current employees we have work to hard! What's that all about? China graduates 600,000 engineers last year and the US 60,000? Is something wrong with education? I guess we all know that answer. Our reputation as a country has never been worse then it is today. I'm still amongst the proudest of American's but we've lost the respect of most of the world free or not. How low will we need to drop before we as Americans have the guts to change the way our politicians represent us? The next elections will be the most important one of our times. When I was growing up we lived in a united country that is now more divided then ever! What does my 6 year old boy have to look forward to? His parents generation of disregard and negligence of their government. We desperately need to wake up! I have a strong sell on all markets for 2008, cash will be king.
12-02-2007 @ 1:15PM
mark said...
At 52 and have seen more and studied more every year. 2008 will go down in history a the largest bust year in American History. The housing market can't be bailed out as there was too much artificially inflated values criminally placed on existing home values while mortgages were given to unqualified and qualified borrowers way over the real values of their properties. This makes the past events of Savings and Loans of the late 80's a joke when comparing the dollar amounts that's needed for the US Taxpayer (as always) to pay out over time. No more tax increases? Think again about the reality of what's happening. Not only does the average US taxpayer need to pay for the overpriced energy (speculation values) but we'll need to pay out of pocket (raising taxes once again) for all the fraud related to the lenders and property appraisers associated crooked dealings. How long does the middle class the largest class in the US need to bail out the crooks? Why can't our congress (as week and inefficient as ever) do their jobs to protect those of us that are middle class. This never effects the super rich and even the rich have more ways to escape most bailouts through available private client relationships with private equity firms, creative accounting and private client bankers who still find ways to manipulate their clients wealth and avoid large taxation. It's time for all of us to focus as best we can on who to vote for looking at unknown but creditable politicians and gamble on them, because at this point it can't be much worse. Our children and grandchildren's future is at stake. Look at the large medical insurance companies scams especially from the largest providers! Your lucky to get a claim paid out without a huge negotiation with constantly calling with resubmitting of doctor's billings! They hold money for as long as they can. When doctors prescribe scans they now have third party groups as in Med-Solutions (& others) to deny doctors requests and it's always a fight to get what you pay for. When will this all stop? Never, unless the citizens of this country vote for a seriously and radical change or our representatives. What's with all of the ear-marks for airports and other ridiculous special interests>? Can anyone add up the entire Taxpayers costs for those? Not even reports as in CNN's Anderson Cooper's investigation could turn up the details as only few would even talk to him. What are the hiding who's reponsible for the accountability of all this recklous spending? I'm small business owner. I will clearly represent that we have jobs to offer but in certain areas the labor pool is weak and those that apply can't do what it expected of them nor do they wish to work hard. The applicants we've seen either don't have the skills or they feel that the current employees we have work to hard! What's that all about? China graduates 600,000 engineers last year and the US 60,000? Is something wrong with education? I guess we all know that answer. Our reputation as a country has never been worse then it is today. I'm still amongst the proudest of American's but we've lost the respect of most of the world free or not. How low will we need to drop before we as Americans have the guts to change the way our politicians represent us? The next elections will be the most important one of our times. When I was growing up we lived in a united country that is now more divided then ever! What does my 6 year old boy have to look forward to? His parents generation of disregard and negligence of their government. We desperately need to wake up!