In Media, It's About the Brand

One recurring theme in these private equity media deals is that almost all of the properties changing hands are facing continued secular declines in their core businesses.

From the incredibly overcovered Tribune (TRB - commentary - Cramer's Take) deals that don't really exist to today's Clear Channel (CCU - commentary - Cramer's Take) buyout, these companies have seen their business models erode from the very Revolution that I write so much about.

The newspaper as a vehicle of delivery will, of course, never see growth again. And, seriously, when was the last time you happily listened to the radio? I can't stand the radio.

If I were a private equity investor, the most important thing I'd look for in these properties that are being hurt by the Internet is the brand equity in the assets.

For example, the Los Angeles Times is a very valuable property because it is a respected authority on Hollywood and media news, and it obviously breaks other important stories, too. That LA Times name will become increasingly valuable as end users' ability to consume content from the LA Times explodes. As distributions channels grow in number, it can focus on building its brand over all kinds of new mediums, from cell phones to cheap computers over WiMax.

The gravy is the fact that the LA Times' addressable audience is exploding from the few million it used to get in front of to billions of people who can now type in www.latimes.com. (Has that site eliminated the registration requirement to read it yet? It should.)

That's a great asset to buy when the world thinks newspapers are dying. Only the print part of the paper is in secular decline.

Of course, the same cannot be said for radio station assets. KROC? Is that even a brand? I suppose it is, if only because we've heard the name before. The brand doesn't have much value or affinity, though. Q104.3? Whatever. Even if it is the best station in New York City, it's still unlistenable.

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Cody Willard is the manager of a hedge fund and a contributor to the Financial Times and VON Magazine. He is also a regular guest on CNBC's Kudlow & Company and an adjunct professor at Seton Hall.

He earned a bachelor's degree in economics at the University of New Mexico. Willard appreciates your feedback -- click here to send him an email.