Byron Allen, the renowned media mogul who is offering a staggering $14 billion to acquire Paramount Global, has faced skepticism about his ability to execute such a deal. In a recent interview with CNBC, Allen confidently asserted that he has more than enough capital to finance the acquisition. However, he acknowledged that the real challenge lies in the certainty of closing the deal, which largely hinges on the approval of the Federal Communications Commission (FCC). Allen, who is the founder and CEO of a prominent media group that owns numerous television networks across the United States, firmly believes that his offer is the best solution for all Paramount Global shareholders.
Byron Allen has a track record of making audacious offers for major media assets, although these bids have not always materialized into successful acquisitions. Last year, he proposed an $18.5 billion bid for Paramount, but his offer was rebuffed. Interestingly, Allen revealed that he has not yet received a response from Paramount regarding his most recent offer. This indicates that the outcome of his bid remains uncertain, especially given the involvement of Shari Redstone, who controls Paramount through her company National Amusements. Redstone has been open to deal-making in recent months, either through a merger or the sale of Paramount, which is home to esteemed brands such as CBS, Showtime, Nickelodeon, and its eponymous movie studio.
The media industry is experiencing a significant shift away from traditional television towards streaming platforms, with almost all major media companies venturing into this space to compete with industry leader Netflix. Paramount, in its third-quarter earnings report, revealed that its streaming platform, Paramount+, had increased its subscriber count to an impressive 63 million. However, unlike Netflix, Paramount’s direct-to-consumer products have not yielded profitable results, as the division reported adjusted losses of $238 million for the third quarter. Paramount’s upcoming fourth-quarter earnings, set to be released on February 28, will shed further light on the company’s financial performance.
Byron Allen’s interest in acquiring Paramount lies primarily in its linear networks, which he believes pose the most significant challenge for the company. Despite the growing dominance of streaming services, Allen asserts that these traditional television businesses can still thrive with proper management. In his interview with CNBC, Allen drew a parallel between his approach and baseball legend Babe Ruth, emphasizing that even great players experience failures. It is worth noting that Ruth had a 15% strikeout rate, striking out 1,300 times in 8,399 at-bats.
The bid for Paramount represents one of Byron Allen’s most ambitious endeavors to date. However, it is crucial to evaluate his previous attempts at acquisition to gain a comprehensive understanding of his track record. In recent years, Allen has made bids for various media assets, including Black Entertainment Television (BET) and VH1 for a combined $3.5 billion, television stations from E.W. Scripps, ABC and several other networks from Disney for $10 billion, the Washington Commanders of the National Football League, and television stations owned by Tegna for $8.5 billion. While some of these bids fell through due to changes in ownership’s willingness to sell, Allen highlights his successful acquisition of The Weather Channel in 2018 as evidence of his capabilities.
The market has responded positively to news of Byron Allen’s bid for Paramount. The company’s stock witnessed a surge of nearly 7% on the day of the announcement and has risen more than 35% in the last three months. However, Paramount’s stock currently sits over 40% below its 52-week high of $25.93 per share, reached in February 2023, indicating that investors still harbor concerns about the execution and outcome of the deal.
Byron Allen’s audacious bid for Paramount represents a pivotal moment in his career as a media mogul. While he continues to face skepticism regarding his deal-making abilities, Allen remains confident in his financial capacity to execute the acquisition. Paramount’s response to his offer and the subsequent approval from the FCC will ultimately determine the fate of this ambitious bid. As the media landscape continues to evolve, the success or failure of this potential deal will undoubtedly shape the future trajectories of both Byron Allen and Paramount.
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