Quiver Quantitative - Byron Allen, the media entrepreneur and head of Allen Media Group, has made a bold move in the media industry with a $14.3 billion offer to acquire Paramount Global (PARA), a major player home to CBS and Paramount Hollywood studio. This is Allen's second attempt in less than a year to purchase the company, following an even higher bid of approximately $18.5 billion made in April. The offer includes a mix of voting and nonvoting shares, significantly above the 90-day average price of both classes of shares. This aggressive bid demonstrates Allen's commitment to expanding his media empire, which already includes a diverse portfolio of cable networks and TV stations.
Allen's offer comes amidst interest from other major players in the media landscape. David Ellison’s Skydance Media and Warner Bros. Discovery (NASDAQ:WBD) have also shown interest in owning Paramount. National Amusements, the privately held movie-theater company controlling Paramount, has been considering a sale of the company. Allen, who transformed from a comedian to a formidable media entrepreneur, has actively pursued large media properties, including making bids for Disney’s (DIS) ABC and Paramount’s BET Media Group.
Market Overview: -Media entrepreneur Byron Allen returns to the plate, offering $14.3 billion to acquire entertainment giant Paramount Global (PARA), marking his second attempt in less than a year. -The renewed bid raises the stakes in the ongoing drama surrounding Paramount's future, with multiple players, including Skydance Media and Warner Bros. Discovery, also expressing interest.
Key Points: -Allen's latest offer, made directly to Paramount's board and controlling shareholder Shari Redstone, is 50% higher than the 90-day average, including debt, valuing the deal at around $30 billion. -This follows an earlier $18.5 billion offer in April 2023, which was reportedly rejected due to optimism about the stock price. -While Paramount itself and National Amusements remain silent, Allen's offer letter reveals discussions with potential partners for financing and hints at plans to retain Paramount's cable networks and CBS while potentially selling the studio and lot.
Looking Ahead: -Paramount's struggles with profitability in its streaming service and a shrinking traditional TV business fuel speculation about a potential sale. -Allen's bid, alongside competing interest from established players like Skydance and Warner Bros. Discovery, opens up a race for ownership and a potential reshuffle in the media landscape. -Investors anticipate further developments and potential negotiations, with Paramount's stock price already reacting positively to the renewed bid.
The proposal from Allen Media Group has significant implications for the media industry. The offer letter specifies financing through a combination of senior secured debt, senior unsecured notes, and equity, revealing Allen's strategic approach to funding this massive acquisition. Additionally, Allen has been vocal about urging U.S. corporations to allocate more advertising dollars to Black-owned media companies, showcasing his broader influence in the industry.
The potential acquisition of Paramount by Allen Media Group would represent a monumental shift in the media landscape. Allen's portfolio already includes the Weather Channel, HBCU GO, theGrio streaming app, and several network-affiliate television stations. A successful bid for Paramount would not only expand his media footprint but also significantly alter the dynamics of media ownership in the U.S. The potential deal, if it goes through, would mark an end to Shari Redstone's control of her family's media empire and open a new chapter in the history of Paramount Global.
This article was originally published on Quiver Quantitative