When media mogul Byron Allen announced his offer of $14 billion for Paramount Global, skepticism was quick to arise. However, Allen firmly asserted that he possesses the necessary capital to finance the deal. In this article, we will explore Allen’s bid and the challenges he faces in securing the deal.
Allen acknowledges that the primary hurdle lies in the certainty of closing the deal, which largely depends on the Federal Communications Commission (FCC). While his media group already owns several television networks across the United States, previous attempts at major media buyouts have not materialized into successful acquisitions. The Wall Street Journal reported that Allen’s previous bid of $18.5 billion for Paramount was rejected. Furthermore, he has yet to receive a response to his latest offer.
The media landscape is undergoing a significant transformation as traditional television gives way to streaming services. Paramount itself recognized this shift in its third-quarter earnings report, highlighting the growth of its streaming platform, Paramount+, to 63 million subscribers. However, the company’s direct-to-consumer products have failed to generate profits comparable to streaming giant Netflix. Paramount’s streaming division reported adjusted losses of $238 million in the third quarter. Despite these challenges, Allen sees potential in the linear networks of Paramount, which he considers a crucial aspect of the company.
Allen’s ambitious bid for Paramount is just the latest in a series of deal attempts. In December, he sought to purchase Paramount-owned Black Entertainment Television and VH1 for a combined $3.5 billion. Prior to that, he was reportedly considering a bid to acquire television stations from E.W. Scripps. In 2022, Allen expressed interest in buying the NFL’s Washington Commanders, and in March 2020, he made an $8.5 billion offer to acquire Tegna’s television stations.
Allen, keen on defending his track record, drew parallels to baseball legend Babe Ruth. He pointed out that Ruth struck out 15% of the time but is still hailed as one of the greatest players of all time. Similarly, Allen defends his acquisition of The Weather Channel in 2018 for a reported $300 million as evidence of his success. However, critics argue that striking out on several deals is not an ideal track record for a media mogul seeking major acquisitions.
News of Allen’s offer has had a significant impact on Paramount’s stock, with shares rising nearly 7% and experiencing a 35% increase in the past three months. However, the stock is still more than 40% below its 52-week high. The uncertain outcome of the deal and the challenges associated with the changing media landscape have likely influenced investors’ cautious approach.
Byron Allen’s bid for Paramount Global is undoubtedly ambitious, but it remains to be seen whether he can overcome the challenges that lie ahead. With the FCC’s decision looming large and a history of unsuccessful deal attempts, the certainty of closing the deal remains uncertain. However, Allen’s determination and belief in the potential of Paramount’s linear networks may yet lead to a successful acquisition. The media industry eagerly awaits further developments in this high-stakes bid.
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