Many prefer private placement to avoid selling stock and diluting ownership. Media companies rely on more than one single method to finance large acquisitions, says Robert G. Picard, a former California State University communications professor who manages a media-research center in Turku, Finland. Aside from financing debt through banks or other capital sources, common trends include issuing new shares and selling shares that the company had withheld previously. And some acquisitions come through mergers that typically involve stock swaps rather than cash. Only a few media giants raise capital by floating bonds, and rates vary between 8 and 12 percent depending upon the size, assets and existing debts of the company.
Most corporate bonds provide fixed interest rates until maturity.
The price of bonds themselves varies with investor confidence. In recent years, a number of newspaper corporations have planned initial public offerings to spin off their new-media arms and raise cash. This followed the market trend of raising capital by separating the new media unit from the parent firm, says Picard. And while tech stock prices were soaring, employees enjoyed being rewarded with ownership shares. With tech stocks sliding, however, those plans appear to be on hold.