Private equity funds don’t have to file public reports on their investment values, but they do have to report on their performance to their investors. With public media companies taking big write-downs, you will not be surprised to hear that Bain Capital and Thomas H. Lee Partners are reported to have taken write-downs for some of their investments, including Univision, Clear Channel and Nielsen.
Someone supplied copies of the TH Lee and Bain investor letters for Q3 to Reuters. Bain noted that Clear Channel’s business had declined due to ad market softness and marked the value of its investment down 15% to $428 million. Bain also noted ad softness for The Weather Channel, but kept its investment there valued at the full $626 million price.
Unlike Bain, TH Lee did not take any write-down on its Clear Channel investment, holding it at $446 million as it told of potential cost savings to be implemented. (Clear Channel subsequently fired 1,850 employees.) It’s investment in Univision, the nation’s largest Spanish broadcaster, was dropped to $373 million in estimated value from $497 million.
TH Lee was also one of the investors in the $9 billion buyout of VNU, now called The Nielsen Company. It had previously increased the estimated value of that investment to 150% of the actual cost, but has now rolled that back to 125%, according to Reuters. The letter to investors said Nielsen was performing well.
Since new accounting rules took effect a little over a year ago, private equity firms have to value the companies they invest in as if they were to be sold now. That’s different from the impairment charges that public companies have been announcing with their quarterly reports, since the valuations for private equity investments can go up as well as down.