MISSING THE FOREST FOR THE TREES
The mainstream media, when focusing on business/Wall Street stories, is simply too fixated on the next biggest, record-breaking transaction by private equity firms. Both the print and broadcast business media seem to be caught up in the private equity "record" frenzy.
Even the Wall Street Journal and the New York Times aren't immune from this predilection. Case in point?
Here's how the WSJ and the NYT headline the $45 billion plus buyout of Texas Utilities (TXU) by KKR and Texas Pacific group, two of the largest private equity firms, on their web sites. First up, the WSJ:
"TXU'S PROSPECTIVE BUYERS have vowed to cancel plans to build most of the company's 11 coal-fired plants under development. A successful deal may signal a broader remaking of private equity's image. 11:39 p.m.
The New York Times is equally gushy on the "Green-ness" and Huge-ness of the transaction:
"A Buyout Deal That Has Many Shades of Green
A confluence of business decisions and environmental concerns drove the TXU buyout."
Ironically, the best, non-mainstream, and deeper analysis of this transaction comes not from a mainstream news source, but from a blog post by Tom Evslin on his Fractals of Change blog.
Here's the perspective I'm talking about:
"Details of this proposal are not available yet except for the unusual announcement about the plants that won’t be built. However, this is clearly leveraged buyout heaven .
Not only do they get out of having to invest the money they’d rather harvest; without the planned new capacity, the price of the electricity TXU generates from its existing plants is bound to go up. More cash flow. Talk about green!
Quite reasonably, there had been environmental opposition to the plans for these new C02 emitting plants although there was no responsible claim that the energy isn’t needed...."
"What TXU does has a huge effect on the price of electricity in its market which it dominates. The to-be-canceled plants would have added 3.7% to the entire country’s coal-fired capacity."
Read the full post. It clarifies how shrewdly the private equity firms are executing here.
Whether you agree with it or not, it provides a perspective not found in the mainstream press, at least while they're mesmerized with tracking "record" buyouts by the private equity "Barbarians".
It is to the business press what the sad passing of Anna Nicole Smith has been for the mainstream broadcast and print news organizations.
Thank you
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