MediaFile

Xerox, which said early Monday morning it will buy Affiliated Computer Services for $6.4 billion, has had its eye on the IT services company for at least two years, but talks only began toward the end of the first quarter of 2009, several people familiar with the matter told Dealzone. Blackstone, which advised Xerox, worked with the company on this over the past 18 months, in addition to making the introductions earlier this year, according to one source.

Talks grew hot and heavy over the summer, especially as the credit market conditions improved, a second source said. Xerox has committed financing of $3 billion for this deal, which is being arranged by JPMorgan, so the deal only began to look like a real possibility once the financing side was sorted out.

ACS, which competes with other technology services providers such as Computer Sciences Corp and Accenture, is an attractive company because of its recurring revenue business model. It's been an especially alluring target for private equity buyers, with Cerberus having offered to buy it for $62 a share in 2007. Cerberus withdrew its offer citing the credit crunch and ACS management's refusal to engage with them. TPG was also interested in ACS about five years ago, the second source added.

Buyout firms didn't lose the opportunity to sniff around at ACS this time around either, the sources said, although it's not clear if the ACS management asked its bankers to run a formal sale auction.

"Every PE firm in the world that could raise the debt was kicking the tires on this one because of the cash," said the third source.

Ailing ad sales? Restive workers? Colossal costs? If your media company is experiencing one or more of the above symptoms, try outsourcing. While the long-term side effects are not yet known, outsourcing is proving to be an increasingly popular remedy for media companies looking to buff up their balance sheets.

The latest one — and potentially a harbinger for others in U.S. media companies — is MediaNews Group, the privately held, Colorado-based newspaper publisher run by “Lean” Dean Singleton.

Here is his latest comment on outsourcing, as covered by The Associated Press:

Singleton, who also serves as chairman of the board of The Associated Press, told the Southern Newspaper Publishers Association that his company was exploring outsourcing in nearly every aspect of their operations.