Byron Allen’s Paramount Bid Proves He’s the Last Great Believer in Cable TV

Tony Maglio
·4 min read
1

Bryon Allen must want BET by any means necessary.

The standup comic-turned media mogul has submitted a bid to buy Paramount, IndieWire has confirmed — all of Paramount. His Allen Media Group, along with partners, have put up $30 billion to purchase all of Paramount Global’s outstanding shares. As first reported by Bloomberg, the offer is really for $14.3 billion, but it would include the assumption of $15-$16 billion in debt.

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“Mr. Byron Allen did submit a bid on behalf of Allen Media Group and its strategic partners to purchase all of Paramount Global’s outstanding shares,” Allen’s spokesperson said in a statement shared with IndieWire. “We believe this $30 billion offer, which includes debt and equity, is the best solution for all of the Paramount Global shareholders, and the bid should be taken seriously and pursued.”

A Paramount rep declined to comment on this story.

It is a generous offer, and not just by the eye test. As of Tuesday’s stock-market close, Paramount Global’s enterprise value (stock + cash + debt) was about $25 billion. Allen is prepared to shell out $28.58 for each voting share (77 percent of which are controlled by Shari Redstone through her National Amusements, Inc. company) and $21.53 for the non-voting shares. Ahead of the Bloomberg story, PARA’s non-voting shares closed at $13.65 apiece; Allen’s offer represents a near-58 percent premium, and pushed shares up 7 percent.

If the bid is accepted and passes regulatory (neither of those are slam dunks), Allen plans to sell the Paramount film studio — the company’s crown jewel. In a Wednesday note to clients (and obtained by IndieWire), the equity analysts at the bank Wells Fargo estimate a $13 billion value for the studio.

Price aside, Allen should have no shortage of takers; much of the reported interest in Paramount Global’s assets has only been about Paramount Pictures. The Redstone family has historically not been keen on the idea of pulling out the studio for sale. The Allen Group would also unload Paramount’s remaining real estate, including its iconic studio lot, which Wells Fargo estimates at a $2 billion value. Allen would also sell off some intellectual property.

Lining those sales up in advance are key to Allen’s financing, which is otherwise “unclear” in the mind of MoffettNathanson analyst Robert Fishman, “casting a shadow on the offer’s credibility,” he wrote his own Wednesday memo (shared with us).

Warning of the risks of assuming so much debt at “a company with increasingly challenged fundamentals, Fishman wrote: “We wish him the best of luck!” That feels like a very heavy exclamation point.

After stripping Paramount for parts, Allen’s group would keep Paramount+ and the company’s linear TV channels; yes, the stuff no one else wants. With the entertainment industry’s clear shift to streaming and a challenged advertising market, linear assets are no longer widely desired. And with profitability still out of sight for Paramount+, many other potential Paramount Global buyers would opt to shutter the streaming service.

But Allen knows linear television, and his offer places a $15 billion value on those assets and Paramount+. His plan is to operate CBS, BET, and all of those other Paramount cable channels more cost-efficiently than present management. Run shrewdly, Wells Fargo sees “upside” there.

HOLLYWOOD, CA - JULY 14: General view of the Paramount Pictures film studio lot amid the historic joint WGA & SAG-AFTRA writers and actors strike on July 14, 2023 in Hollywood, California. (Photo by AaronP/Bauer-Griffin/GC Images)
View of the Paramount Pictures film studio lotGC Images

Allen’s bid, which was sent to Paramount senior management and board members via text and email, follows highly reported plays by David Ellison’s Skydance (backed by RedBird Capital), and another by private-equity company Apollo Global Management. Warner Bros. Discovery and Comcast are also regularly discussed as potential suitors for Paramount.

Paramount has been preparing for a probable sale for a while now. There have been ongoing layoffs and other cost-cutting measures implemented. In November, the board approved new golden parachutes for President Bob Bakish and other senior management.

Allen has been collecting (and trying to collect) linear-TV (broadcast and cable) assets for years. He famously acquired the Weather Channel in 2018 for $300 million. Last year, Allen bid in the $3 billion-range for BET Media Group, though the offer was not accepted. He also tried to get Disney’s ABC, FX, and the Nat Geo cable channels for about $10 billion, but CEO Bob Iger elected to keep the assets.

And though Allen also failed to acquire station-owner Tegna (and the Denver Broncos, but that’s another story), Allen Media Group owns 36 local affiliate broadcast stations (ABCs, CBSs, NBCs, and Foxs) in 21 U.S. markets. It also houses several cable channels and streaming services (like Comedy.TV), a movie-distribution company, and The Grio. Honestly, we can’t list it all; just go here.

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