As media and telecom companies strive to become one-stop communications shops, they are relying on their banks for one-stop financing.
For most of the companies, to be the best often means to be the biggest within each industry niche, and that takes funding.
"The companies that are serving this industry are finding that size matters, so there's an awful lot of consolidation," said John Rudberg Jr., who heads BankBoston Corp.'s media and communications division.
To grow through acquisitions and also keep up with technology, these companies consume an enormous amount of capital -precisely what makes the industry ripe for one-stop funding.
Winning any of these relationships or even any of the individual deals is a highly competitive game, and there are different banking leaders in each sector.
Among the overall leaders are BankBoston, which did a $500 million senior secured credit facility for MS Broadcasting, and J.P. Morgan & Co., which advised MGM Inc. on the $1.3 billion management-led bid for the studio and co-managed the $3 billion Lucent Technologies initial public offering.
Media and telecommunications companies have long been heavy users of the bank markets. In earlier days, they found the bank loan market an inexpensive source for capital. Now that they are more mature, they are starting to look to the bond, equity, and high-yield markets for financing.
Dudley Mendenhall, managing director and industry manager of the media and entertainment group at BankAmerica, predicts more project financings and more of a lean toward capital markets.
BofA is one of the established forces, along with NationsBank, Chase Manhattan Corp., and Credit Suisse First Boston.
Over the past 10 years, banks have been working their way into the bond business and now, with the Glass-Steagall law relaxed, are also diving into equities.
"Banks, in response to those needs have been expanding their product lines," said Mr. Rudberg."These are companies that are relatively young and have tended to use banks very heavily up until now. As they transcend into other capital markets, it is perhaps more natural that they would continue with the financial institutions that they worked with all along."
In addition to keeping a banking relationship, bankers believe companies in the industry can benefit by getting financing faster. Especially in the media sector, any entity up for sale tends to sell quickly.
"The ability to win (an acquisition) is often a function of being able to pay and assure the seller they have the capability to close and close quickly," said James Ruthurfurd, managing director at the J.P. Morgan media group.