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Private equity is emerging as a growing player in media and entertainment through a merger and acquisition boom, UNI General Secretary Philip Jennings told the opening session of UNI MEI’s World Assembly in Madrid.

Media and entertainment is growing at 6.4% a year and is expected to be $2 trillion big by 2011 as technology creates new platforms and stimulates new demand for content.

“The landscape is changing - there are new owners on the block and they are increasingly private equity,” Philip told delegates.

In 2006 PE was involved in a quarter of all mergers and acquisitions in media and entertainment - but “the world of labour, collective bargaining, decent work and social responsibility is an alien concept to private equity.”

Global unions launched an initiative 15 months ago to confront the PE world and last month Philip with a global union group met top private equity funds in New York. There have been similar meetings in the UK and France.

“We have started to drive private equity out of the shadows. We have started to wake up tax systems around the world to the activities of these PE groups.”

The global union aim is to sign up PE groups to global agreements that introduce transparency and recognise labour rights - “if we can get some basic rules agreed we are doing everybody a favour”.



“Private equity ownership can increase risks for jobs and conditions,” warned a background report to the Assembly. “With its heavy emphasis on cost-cutting and advertising, PE ownership may jeopardise expensive news gathering and dissemination, critical comment and minority views.

“Normal laws and regulations may not apply to private equity and the companies it holds. This may concern concentration of media ownership, taxation, transparency, financing and accounting, and labour and social law.”



Short term management techniques to maximize profits - “five years is long term for these guys,” said Philip - takeover debt loaded on to victim companies and a lack of transparency and regulation, were among some of the problems identified in the debate.

PE buys individual companies, as their portfolio builds up they can create new conglomerates by putting together purchases and increasingly they and hedge funds are bankrolling Hollywood movies by investing in slates of films. Companies can be passed on from PE group to PE group to fatten portfolios.

“Bought up companies get loaded with debt and - with interest rates going up worldwide - that is going to be very expensive for companies to carry,” said Philip. Too often the response is to cut jobs working conditions and pensions.

Private equity can also change the directions of public companies simply through a significant shareholding. At Deutsche Telekom a 3% shareholding won Blackstone a seat on the board and prompted attacks on the conditions of 50,000 workers and led to the company’s first ever strikes.



In the UK BECTU’s Tony Lennon said PE had bought up the cinema networks, were poised to take over the biggest cable company and had tried - but failed - to buy the biggest commercial TV channel.

“We have to make these mergers more difficult because they are very aggressive and, as trade unionists, we have to do everything we can to save jobs when mergers do take place,” said Heinrich Bleicher-Nagelsmann of ver.di Germany.

In Germany hedge funds have been accused of being “locusts” and privately owned media giant Bertelsmann now has a strategic partnership with two PE groups to find new acquisitions.