Media: Perspective - Media sector is still a tempting target for private equity

It really wasn't worth surfacing from the New Year's Day hangover. Bleary-eyed consumers everywhere were confronted with news of soaring energy bills, record divorce rates and a credit crunch so severe that their homes were bound to be besieged by bailiffs within a matter of days.

In the media world, though, there were a number of reasons for Bloody Marys all round, and plenty of wealthy individuals with no need to worry about a 17 per cent hike in utility bills. This came in spite of warnings that the credit crunch would hit the sector and the private equity companies circling their targets.

The break-up of Emap in December seemed to confirm fears that private equity had gone off the media sector (at least in terms of being willing to pay silly money for media stocks). The German publishing company H Bauer (also privately owned) reportedly fought off bids from private equity houses, including Candover and Cinven, for Emap's consumer arm. Emap failed to attract a sufficiently attractive private equity bid for its business-to-business division. It seemed investors no longer had the stomach for the fight.

This picture started to look a bit different when Emap decided to accept a bid from the private equity group Apax and Guardian Media Group for its business-to-business interests. Apax, which already owns the business- to-business publisher Incisive Media, was back as a significant player in the sector.

Apax's triumph was followed this week by news that Global Radio, essentially an investment vehicle led by the wealthy entrepreneur Michael Tabor (his son, Ashley, is the chief executive), had failed with a bid of more than £300 million for GCap. A bid which valued the company at a significant premium and was an indication that private investors are still interested in media, especially in a niche sector (radio) unsuited to the short-term whims of the City.

And there are some big hitters behind these vehicles. The former Telegraph Group boss Stephen Grabiner heads up the Apax media division, and Tim Schoonmaker, the former chief executive of Emap Performance, has been linked with bids for both GCap and Emap Radio.

Expect more big names to join the private equity and advisory ranks - it's where the serious money is. Just look at David Elstein, the former chief executive of five. He advised Providence Equity Partners and 3i on their 2005 acquisition of Hallmark's international channels and chaired the resultant private equity vehicle Sparrowhawk Media, which sold last summer to NBC Universal for around $350 million.

The credit crunch may have becalmed private equity interest in the sector in the short term, but there are signs there are still major acquisition targets out there, and plenty of senior industry figures who see value in bidding for them.