Private equities and the media industry

Lately, I have been discussing about the recent changes in the media industry and its effects on the whole industry. I came across an interview, who is involved in this industry for more than 30 years. Jonathan Nelson is the CEO of Providence Equity Partners, a premier private equity firm which has launched its first fund in 1989.
There are two peculiar points about this firm. First off, the firm is focused mainly on media and communications sector. Second, the firm neither hasn’t used nor currently uses lots of debt to fund buyout deals. In fact, Jonathan claimed that 8 out of 10 companies under his portfolio do not even have a single debt on their books. This is quite striking to me, as most of the private equity firms I have encountered so far aggressively utilized leverage for their funding. In respect of that issue, opposition to the common viewpoint, he presented a different viewpoint. He referred to some research outcomes conducted from management consulting firms, and insisted that those researches verified the fact that approximately 80% of the values came from enhancement of operations, and not from multiple expansions or amortization of debts.
As a matter of fact, he maintained that his firm’s mission objective is to grow the business with them, and the tools his firm can bring to the table are not only capital, but also expertise. If we track the investments the firm has made, we can see how much the company is focused on one sector. Although, this strategy exposes firms who are exploiting this strategy with another problem, which we call it as sector or concentration risk, it seems that this firm has managed this risk successfully thus far.
Then what are his views about the media industry today?
Well, he said that the whole media industry is in an early stage of transformation. He attributed this trend to some underlying factors that are changing the landscape fundamentally. Recently released products like Kindle, iPad, iPhone, and so on are all catalysts of these changes; iPod has nearly destroyed the music recording industry, and other devices that are newly available would make the printed newspapers disappear. He also argued that most of the online business could possibly maximize their profits by converting their business model into a combination of advertising and subscription based revenue-stream structure.
Anyway, this 35 minutes of interview has changed some of the negative views that I was holding on private equity business practices, and also provided me some fresh insights of the media industry.