Capcities/ABC’s investing

Capital Cities/ABC has created a unit to invest in emerging companies and named George Cain as its president.

The new wing, Capital Cities Capital, will trade advertising space within the company’s media properties for equity within those firms involved. The company hopes that through the advertising exposure, the companies will grow to where Capital Cities will be able to cash out two to five years down the road.

Valuable deal

According to Cain, the company is looking to “render value for value received.”

As such, Capital Cities will offer advertising units in either its print or television properties for a stake in companies that possibly couldn’t afford it before.

Cain said the company is currently talking to food and beverage concerns, toy companies and firms in the consumer electronics area as possible partners.

Deal in principle set

A deal in principle has been reached with one firm, although Cain declined to discuss the venture specifically until everything has been settled.

Capital Cities Capital is looking to invest in companies with strong growth potential. Those deals will involve investments of between $ 5 million and $ 20 million.

Capital Cities deals will not be long-term, according to Cain. The company intends to cash out within two to five years after the initial investment, operating in a manner not unlike venture capitalists.

Cain said the company can benefit from the deals in several ways. For one, the company develops some secondary business and new advertising customers. Ideally, once the companies are up and running, Capital Cities would like them to become regular, paying advertisers.

Excess inventory

Cain said the deals also would help absorb some of the company’s current inventory supply. The company is hoping to put together a portfolio of investments in new, developed and mature companies.

“There’s a lot of $ 200 million companies that would like to be billion-dollar companies,” Cain said.

Cain brings to the venture 14 years of sales experience at Capital Cities/ABC. Before that he spent 11 years at the Colgate-Palmolive Co. in finance, advertising and product management.