August 11, 2005
Former F.C.C. Chief to Join Providence Equity
By ANDREW ROSS SORKIN
NY Times
http://www.nytimes.com/2005/08/11/business/media/11deal.html?pagewanted=print
Michael K. Powell, who was the nation's chief regulator of communications
at a time when deregulation and new technologies fueled a frenzy of deals
in cable, telecommunications and media, is now becoming a deal maker himself.
Mr. Powell, who stepped down as chairman of the Federal Communications
Commission in January, is joining Providence Equity Partners, a private
equity firm that has in recent years built a $9 billion empire of holdings
in media and telecommunications companies.
The hiring of Mr. Powell, who will hold the title of senior adviser, puts a
spotlight on the rapidly growing buyout firm, which operates from
Providence, R.I. The firm, which was a founding investor in what is now
T-Mobile USA, owns stakes in Metro-Goldwyn-Mayer, Warner Music, PanAmSat
and the YES Network, the Yankees' cable channel, among others. And
Providence is increasingly taking on bigger targets, joining Cablevision
and Kohlberg Kravis Roberts & Company to make a run at Adelphia
Communications earlier this year in what would have been the largest
leveraged buyout since the RJR Nabisco deal in 1989.
Mr. Powell, 41, a lawyer, is following a familiar path for some Washington
officials. His predecessor, William E. Kennard, joined the Carlyle Group,
another big private equity firm, after leaving the commission. And Mr.
Powell's father, Colin L. Powell, the former secretary of state, last month
joined Kleiner Perkins Caufield & Byers, Silicon Valley's most famous
venture firm, as a part-time partner.
But Mr. Powell said his role at Providence would be focused on trying to
generate new ideas for deals and mentoring Providence's roster of companies.
"One of the things that most excited me about the firm is its concentrated
focus on the areas which I know and can bring value to as opposed to being
associated with a firm where which my expertise is one component of a bunch
of things they do," he said in an interview yesterday. "I didn't want to be
a lobbyist. I didn't want to be a classic former government official that
does nothing but sell access back to the corridors of D.C."
While Mr. Powell said that he might pursue other outside projects in the
future, he said he planned to "devote a significant amount of my time to
the firm."
"This is my main event."
Jonathan M. Nelson, a co-founder of Providence and its chief executive,
said that he was immediately drawn to Mr. Powell because of his experience
dealing with a multitude of issues in the field that the firm invests in.
"For us, we see in Michael a unique and valuable perspective on the issues
that occupy us, whether it be new technologies, services, strategies of the
principal players, or new entrants and regulatory perspective," he said.
"All the key issues that frankly we think about every day."
Providence declined to disclose Mr. Powell's compensation.
During his tenure in office, Mr. Powell successfully pushed to eliminate
scores of regulations - from those restricting the size of media companies
to those setting wholesale phone rates. He also pushed for policies to
deploy broadband Internet service around the nation. Those positions earned
him significant support among the largest telephone and broadcasting companies.
"Michael helped put broadband in this country," said Brian L. Roberts,
chairman of Comcast, which is a partner with Providence and Sony in its
investment in MGM.
Yet Mr. Powell also caused consternation among some executives of the
biggest media companies for his enforcement of stringent decency standards,
imposing hefty fines on CBS when Janet Jackson's nipple was exposed during
the Super Bowl halftime show, for example. He also annoyed some in the
telecommunications industry by pushing legislation that permitted mobile
phone customers to retain their phone numbers when changing providers.
Mr. Powell is not worried about now doing business with some of the same
people he once regulated and perhaps frustrated. "These are folks who play
in a business in which things go your way and don't go your way and I don't
think that you personalize or emotionalize policy," he said, citing what he
called "a very strong relationship" with Mel Karmazin, the former president
of Viacom, the owner of CBS and Infinity Broadcasting, with whom he feuded
over everything from Howard Stern's on-air antics to the Janet Jackson
episode.
Sir Howard Stringer, the chairman and chief executive of Sony, who counts
himself as a fan of Mr. Powell, said there would not be any backlash.
"Freed from the restraints of Washington, he's a dazzling intellect," Sir
Howard said. "He really understands technology. He plays with technology.
"It's a very difficult market right now for media. One minute we think
scale is important. The next minute we think something else. All this gives
Michael an opportunity to bring a fresh insight."
The move may help cement Providence's reputation as a new member of the top
tier of the buyout world, putting it the same league with Kohlberg Kravis,
Blackstone Group, Thomas H. Lee Partners and Carlyle.
"Michael brings them recognition," said John Stanton, the former founder
and chief executive of T-Mobile USA. "There is virtually no telecom or
business leader in the world that won't take his call."
================================
George Antunes, Political Science Dept
University of Houston; Houston, TX 77204
Voice: 713-743-3923 Fax: 713-743-3927
antunes at uh dot edu
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