Image is everything, especially for the financial elite. Kurt Anderson wrote in The Atlantic in his take down of Bill Ackman and his attempts to run the world like a marionette:
(Henry) Kravis’s appearance as a character in this particular role is ironic, and in a work of fiction would prompt a quick flashback—in which, irony upon irony, I turn up as a minor character. I knew Henry Kravis, not well, nearly 30 years ago, when KKR controlled the media company that owned New York magazine. In the mid-’90s I was New York’s editor in chief. One day Kravis invited me for breakfast in his 26-room Park Avenue triplex to tell me that the magazine’s coverage of Wall Street displeased him and his friends and associates, and that I should end it. I didn’t, and six months later I was fired. In other words, I had a significant but not good relationship with him.
Ackman approached Henry Kravis and KKR with his concerns regarding Business Insider's applying the Ackman plagiarism standard to his wife. KKR's affiliate Axel Springer owns and operates Business Insider.
In 2011 financial reporters knew to tread lightly around the greed and leverage boys.
There are very few people out there who will talk and write honestly about private equity. I know from personal experience that the financial press is so eager to break news on "deals" that reporters (who are increasingly compensated on the number of "market moving stories" they write) can't afford to be critical of Carlyle, KKR and Blackstone, and risk losing access to people at those firms.
Storied newspapers continue imploding, leaving fewer and fewer journalists to uncover the kajillion ways private equity underwriters (PEU) tilt the world, already obscenely oriented to their advantage.
CNN Business reported on the unraveling at the Los Angeles Times:
“We have a billionaire who doesn’t understand media and thinks he can cut his way to success,” another staffer told me, likening the drama playing out in the editorial leadership to the reality television show “Survivor.”
My wise friend wrote:
I think the billionaire class has finally arrived at what it has always wanted: Controlling the Fourth Estate. Poor Upton Sinclair. He always pushed for an independent bank to fund news organizations throughout the land. But he was a socialist, so I guess that was bad and this is good (sarcasm).Enough Americans have worked for a PEU owned affiliate to know the carnage involved in freeing up funds previously used for staff in order to service sponsor management fees, grossly higher interest expenses and PEU cash siphoning. Wealthy founders and investors come first.
I expect Henry Kravis will slowly turn Axel Springer and Business Insider to his PEU will. It may not happen within Ackman's tantrum time frame, but it should happen just the same.
Update 1-24-24: Institutional Investor has a piece on an economist who long ago called out the PEU boys for fudging returns. It states:
conferences have canceled his speaking engagements at the request of well-heeled sponsorsThe economist uses KKR as an example of spurious IRR claims:
“This year, I put a LinkedIn post congratulating KKR for the 25th year in a row having a 26.3 percent return,” quips Phalippou, saying the number is that high because KKR’s early investments were highly profitable. “But logically, it makes no sense. Most people would understand that it means that if I had given $1 to KKR when they started in 1976, every year I would have accumulated 26 percent,” he explains. “That would mean a $1 million investment in 1980 would be worth about $100 billion. It’s not the case, by miles.”
