For media acquisitions, the rise of the 'blank check'NEW YORK: It used to be that former U.S. media executives were offered consulting contracts, partnerships at private equity firms or book deals. Now, they are being offered a blank check.
Over the past several months, new shell companies led by former senior executives of companies like Time Warner, ABC, RCN, DirecTV and VNU have raised hundreds of millions of dollars on the stock market in low-profile deals using an obscure but growing financing technique called "special purpose acquisition corporations," or SPACs.
SPACs have been gathering steam over the past two years as an alternative to private equity as Wall Street firms like Deutsche Bank, Citigroup, Merrill Lynch and Lazard have begun underwriting them. The catch in these deals is that investors do not know what their money is going to be spent on when they buy shares - hence the "blank check" designation given by the Securities and Exchange Commission.
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