Forbes -- which was formerly known as The Capitalist Tool -- is reportedly on the verge of being sold to a Russian Oligarch by the name of Mikhail Prokhorov. It turns out that the Russian idea of capitalism is a bit different than the Western one. But that doesn't stop Forbes from taking Russia's cash.
As I posted, Russia is happy to accept Western money. But once Russia has the Western money, it gets rid of the Westerners who brought in the loot. In the U.S., we have our own special brand of capitalism which rewards the richest of the rich with eight figure bonuses by borrowing $30 for every $1 of capital to close huge deals, while the taxpayers cover the deals' losses.
The Forbes sale -- if it goes through for an estimated $625 million to $750 million -- would be tinged with a sad irony. That's because its former Russian bureau chief, Paul Klebnikov, was gunned down in July 2004 after his investigative reporting into oligarchs like Prokhorov made them nervous. The biggest beneficiary of this sale will be Elevation Partners -- which includes U2's Bono -- based on the 40% stake it bought in Forbes for $250 million.
It's a beautiful day for Bono, but a strange one for Forbes and Capitalism.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.
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Reader Comments (Page 1 of 1)
11-24-2008 @ 1:16PM
EYEDOC said...
BUMMER. HOPE THIS DEAL DOESN'T GO THROUGH. I THINK FORBES IS GREAT AS IS. I ESPECIALLY LIKE COMMENTARIES BY STEVE FORBES AND RICH KARLGAARD. WITH THOSE TWO I WILL HAVE NO REASON TO CONTINUE MY SUBSCRIPTION.
11-24-2008 @ 1:25PM
Vilag said...
I do not at this time think it is a good idea to permit Russia to buy at such a scale large institutions that could cause havoc and chaos in global American financial markets. Buying Forbes would be just so. It would be much harder to prevent China but I don't see why the government couldn't stop the transaction, or other buyers?
11-24-2008 @ 2:31PM
Pete Duquense said...
Actually I think this is just the Russia magazine, not the whole operation in the US.
The Russia magazine is actually rather successful and it makes sense for a Russian oligarch to invest in Russian-language media properties. It is how things are done over there.
I would be more uneasy about this if this character was buying Forbes, Inc. in New York. THAT would be a tragedy and mean the end of the publication, for sure.