Oaktree Capital IPO fizzles

http://www.reuters.com/article/2012/04/12/us-oaktree-ipo-idUSBRE83B02Z20120412

This is confusing and you’ll want to understand what this is and isn’t.   Oaktree Capital is a “Private Equity” firm.   What that means is they round up money from other parties and use that money to buy things and hopefully earn money for their clients.   In exchange for doing that, the PE firm earns a fee and typically a portion of the profits they eventually make.

The private equity firm itself doesn’t own the investments – it’s a little like a mutual fund except it doesn’t buy up stocks of companies, it buys up companies, and the investors are looking for long term rewards, typically only having an option once a year to pull their money out, and even then with restrictions since the PE firms are not investing the money in liquid investments.   The assets are owned by the individual funds (Oaktree calls them strategies), not Oaktree itself.

Oaktree Capital has become a major player in the U.S. radio business – they have quietly been buying up large numbers of radio stations from failed radio owners under the name Townsquare Media – based on # of stations, they’re now the 3rd largest commercial radio owner (but that’s misleading since the stations are almost all tiny ones in small towns).    A couple days ago, a 64 station deal was announced between Cumulus and Townsquare with Cumulus dumping a large number of small market stations it doesn’t see as viable, even after Cumulus cuts costs (that’s my view of the deal, not what anyone has said in public).

Oaktree also has acquired Triton Media that runs StreamTheWorld and businesses related to streaming – measuring the audience and selling advertising to the digital listeners of radio.   They also own Dial Global (which now owns Westwood One and NBC Radio).  However if you go on their web site and look, you won’t find any mention of their radio related assets.

Oaktree manages a pool of money of about $75 billion – their radio investments are only a small part of the overall portfolio.   The IPO is not Oaktree selling off their $75 billion in “stuff”, it is them selling the rights to the revenue stream they earn from managing the investments.

The Reuters story reports little interest in the IPO which launched on Wednesday (under the symbol OAK) and the price people are interested in paying is at the bottom of the range the company had hoped for and went down following the IPO.   It’s also worth noting that only a small portion of Oaktree is being sold to the public.   In the pattern of IPOs the past 20 years, you’re not actually buying a portion of the company, you’re buying your belief that you are buying a portion of the company.

http://www.oaktreecapital.com/

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2 Responses to Oaktree Capital IPO fizzles

  1. Art Stone says:

    If you want to get a sense of what Townsquare media owns, here is the list as I have it:

    http://streamingradioguide.com/radio-parent-list.php?parentid=167

    Here is the top 20 (note that I’ve lumped some things together that aren’t really a single entity, but more a way to show their influence on radio:

    +----------------------------+--------+
    | parentname                 | ocount |
    +----------------------------+--------+
    | Small owners               |   9096 |
    | Clear Channel              |    865 |
    | Cumulus                    |    554 |
    | State College / University |    381 |
    | EMF (K-Love/Air1)          |    300 |
    | Public TV/Radio Networks   |    227 |
    | Private College            |    211 |
    | Townsquare Media           |    201 |
    | American Family            |    161 |
    | CBS                        |    127 |
    | Entercom                   |    109 |
    | Salem                      |     92 |
    | Community College          |     86 |
    | Cox Radio                  |     83 |
    | Saga                       |     82 |
    | Alt/Confer Trusts          |     70 |
    | Univision                  |     64 |
    | Family Stations            |     64 |
    | Cherry Creek               |     63 |
    | Radio One                  |     51 |
    +----------------------------+--------+
    
    
  2. I had a chance to pop in at a Townsquare Media station recently. Their local AM WADB had been off the air for at least 45 minutes in afternoon drive and I happened to be passing by their building. A receptionist told me she would get someone to look into it. After another 30 minutes or so of silence, the station came back on the air.

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