Goldman Offloads Media Co. Stake - Analyst Blog

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According to Reuters , on Friday, Goldman Sachs Capital Partners, a private equity unit of The Goldman Sachs Group Inc. ( GS ) agreed to sell-off its 16% stake in Arizona-based Village Voice Media, as this privately held media corporation is likely running a sex trafficking platform. The company owns weekly alternative newspapers, including The Village Voice , which gets published in the New York City.

The Village Voice Media also operates an online advertising website named Backpage.com, which is recognized for prostitution-related ads. Moreover, the company earns most of its revenue from online advertising of adult services.

According to the source, during 2000, Goldman made investments worth $30 million in the Village Voice. Moreover, the investment was converted into a 16% minority stake after the merger of the Village Voice with New Times Inc. in 2006.


Goldman's decision of selling stake in Village Voice was followed by the rising controversy over online adult advertising, which has rutted celebrities, law enforcement executives, members of Congress and a New York Times correspondent against this media house.

However, Elizabeth McDougall, general counsel for Village Voice Media, announced that the company is not at all planning to close down the adult advertising section of Backpage.com.

In 2010, Goldman Sachs Capital Partners had some doubts about the direction in which Village Voice Media was heading and it was unable to influence the media company's operations. Therefore, Goldman was negotiating with Village Voice Media regarding the sale of its stake since March.

Goldman is the first owner to divest stake in Village Voice Media as the media company was challenged on ethical grounds. Other stake owners are also expected to follow Goldman on this issue in the near term.

Goldman currently retains a Zacks #3 Rank, which translates into a short-term 'Hold' rating. However, among its peers, Wells Fargo & Company ( WFC ) retains a Zacks #2 Rank (a short-term Buy rating).


 
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This article appears in: Investing , Business , Stocks

Referenced Stocks: GS , WFC

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