Sorry to go a bit OT, but as the CFO of a private equity backed business, I feel compelled to correct inaccurate characterizations.
In the article in the OP, Emily Pike recommends filing an FCC complaint that says “Allen Media’s Private Equity scheme is trying to ‘rob Peter (profits from the channel) to pay Paul (taking the money to pay their other debts at their other businesses), which is essentially STEALING local advertising dollars to send them to L.A…”
That is NOT how private equity works. Earnings from the companies that private equity owns do NOT get swept out and used to pay the debts of other companies that the private equity firm also owns. The earnings are used to pay the company’s own debt, or are left in the business for other investments. If the earnings do get distributed, they flow to the investors in the private equity firm, which can include pension funds and other institutions. The earnings do not accumulate inside the private equity firm, and they do not get used to pay the debts of other companies. I think people confuse the private equity model with the old-school conglomerate model, where a large corporation has multiple business units or divisions and aggregates the earnings from each.
I’m not denying that private equity loads businesses up with debt when it buys them, and seeks to maximize earnings and cash flow to pay down the debt and increase value. There can be reasonable debate about the unintended consequences of such a model. But private equity firms only make money when they sell businesses that have grown in size, profitability and hence value, no different than a real estate investor flipping houses that appreciate in value.
Just taking the opportunity to dispel inaccuracies where I can and so that no incorrect context is assumed after reading the article. Another example of how often people don’t know what they don’t know, and the need for intellectual humility, particularly outside of one’s own area of expertise.