Media has long been a target for private equity investors. Although the sector has represented just less than five percent of the venture capital (VC) and private equity (PE) deals completed in Europe since 1990 – the aggregate amount invested in media businesses totals more than 75 billion (roughly the GDP of Azerbaijan) through that period. If you work in a sizeable media firm, the chances are that your company or one of your closest competitors has been, is, or will be backed by PE money.

As the PE investment market has grown, so has investment in the media. According to data from Incisive Media’s Private Equity Insight, the 900 million invested during 1990-94 had ballooned to 40 billion from 2005 to September 2010. Along with that change in scale, has come a change in focus, too. The control investments in printing, production and publishing businesses that constituted the majority of investment into the sector (some 60 percent of completed deals) in the early 1990s have been more than rivalled, in recent years, by investments into broadcasters and agencies, often at a much earlier stage in their development.

Early stage VC deals and growth capital deals (taking minority stakes to fund acquisition or other expansion) may have become more favourable in terms of the number of deals completed, but one trend I find worrying reveals itself when the actual amount of invested cash is investigated more closely: Private equity firms are not really investing in young, entrepreneurial media start-ups.

Whilst cash invested in media buyouts has grown nearly six-fold since the late nineties, investment in fast growing, maturing media businesses has less than doubled and, worst of all, venture-style investments in new, disruptive media technologies and service models has remained absolutely flat.

So far in 2010, the only significant venture capital deals in the European media sector to grab my attention have been, a Spanish online music and radio business, and pr2go, an innovative, online PR agency with a distinctive “pay as you go” pricing model. The two investments together total less than 2 million.

If financial sponsors can’t be found, who will step into the funding gap? Well, it ought to be Big Media, in my opinion. No one has more to gain from the integration of disruptive technology and services than those brands that are desperately trying to find the panacea for the woes caused by the downturn in display advertising revenue and audience drain to free news and user-generated content. In a different sector and in a very different continent, Intel Capital is a great example of what an industry giant can achieve through funding innovation in its own sector.

US retail giant BestBuy has its own venture investment programme, too, and so do many other large, forward-thinking US firms. Will European media giants follow suit? Most are trying, and it will be just those large media businesses that can find

and integrate these new models that will be most attractive, in the coming years, to the fat wallets of the big guns in the private equity industry. And, as everyone knows, that’s how media chiefs make the big bucks.

Matthew Craig-Greene is the Managing Principal of IE Consulting, a specialist private equity analysis and advisory team.