Goldman Sachs Fund to Take Loss on Media Investment

Tuesday, 03 Apr 2012 04:41 PM

 

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Goldman Sachs Group Inc. said one of its private equity funds agreed to exit a 12-year-old stake in Village Voice Media at a loss because the bank is uncomfortable with the company’s direction.

GS Capital Partners III, a $2.78 billion fund raised in 1998, invested $30 million in the alternative weekly newspaper publisher in 2000, according to Andrea Raphael, a spokeswoman for New York-based Goldman Sachs. New Times Media Plc bought Village Voice Media in 2006 and Goldman Sachs kept a 16 percent stake, Raphael said.

The fund will lose “most” of its original $30 million investment after signing an agreement on March 30 to sell the stake back to the company’s management, Raphael said. Goldman Sachs relinquished its seat on Village Voice Media’s board in 2010 “as a result of being uncomfortable with the direction of the company,” and the fund had sought to exit the investment “for a long time,” she said.

Goldman Sachs provided 18.5 percent of the capital in GS Capital Partners III, Raphael said. She declined to comment on the overall performance of the fund, which is in the process of “harvesting” its investments.

Backpage.com, a website owned by Village Voice Media, accounts for about 70 percent of prostitution advertising among five websites that carry such ads in the U.S., Nicholas D. Kristof, a New York Times columnist, reported on March 18, citing data from media research and consulting company AIM Group. It’s also a website used for human trafficking, he wrote, citing the National Association of Attorneys General.

‘Adult Classifieds’

Kristof, in a separate April 1 column, reported that Goldman Sachs sold its stake after he began inquiring about it.

Scott Tobias, president and chief operating officer of Village Voice Media, didn’t reply to a voicemail seeking comment.

Village Voice Media, in a March 21 blog post responding to the earlier Kristof column, said that Backpage “dedicates hundreds of staff to screen adult classifieds in order to keep juveniles off the site and to work proactively with law enforcement in their efforts to locate victims.” The firm said it shares records with law enforcement and that some research has shown Internet data is the best tool to combat trafficking.

U.S. Senator Richard Blumenthal, a Connecticut Democrat, is part of a bipartisan group of senators calling for Backpage.com to shut down its adult-services section.

© Copyright 2014 Bloomberg News. All rights reserved.

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