Mogul Memo to Byron Allen: Beware the Bidder Who Cried Wolf
Dear Byron,
I’ve always respected what you’ve built at Allen Media Group. To see someone like yourself make it as a TV personality, then cross over to the other side of the camera and erect a multibillion-dollar empire of TV and film assets brick by brick is really something else. That you are also a Black man in America succeeding in a field dominated by white men makes your achievement all the more remarkable.
Coming off the $300 million deal you snapped up for the Weather Channel in 2018 and then plunking down an additional $1 billion for a slew of TV stations in subsequent years, AMG now faces its next stage of growth, which looks to be a lot more difficult. Your latest bid for Paramount Global feels like a pivotal moment in your career. It’s either:
(a) the culmination of a multiyear strategy of preposterous persistence finally paying off or …
(b) time to confront the perception that you conduct business as if you have some kind of M&A addiction.
Your $14.3 billion offer for Paramount ($30 billion with debt) marks the second try for the company since last April, when you made an $18.5 billion offer, according to The Wall Street Journal, not including a separate bid just for the company’s BET Media Group ($3 billion).
Also in your sights over the past few years were Disney’s linear TV assets ($10 billion), TV station group Tegna — nearly bought for $8.6 billion by another company — and select TV stations from Scripps, not to mention NFL football teams in Washington, D.C., and Denver.
I don’t know if moguls stage interventions for one another, but I suspect you are not alone among transactional junkies jonesing for the next big score. So I’m going to take the liberty of starting a support group for you.
Just repeat after me: “My name is Byron, and I am a deal-a-holic.”
When I reached out to your reps to notify them I was writing about you, you jumped on the phone personally and disputed my characterization of your approach to dealmaking. “I can give you a list of 100 deals we didn’t pursue,” you told me. “You never heard my name around Lionsgate, for example.”
Maybe so, Byron, but perception is often more problematic than reality, and the reality here isn’t the full extent of the problem. What’s worse than bidding for every top-shelf media asset that hits the auction block is the financing component of every offer you make.
Your funding is always derived from some creatively but vaguely sourced wellspring such as the private debt markets. No wonder these bids are greeted with cocked eyebrows from bankers. It feels like every M&A flirtation in which you engage is some kind of pop-culture mashup of the seller screaming, “Show me the money!” like Jerry Maguire, to which you serenely croon in return, like Kelis, “Baby, I got your money!”
And then nothing.
You can’t let that happen again, or you become the bidder who cries wolf. As Aesop taught us, what seller is going to take you seriously if you’ve conditioned the market to expect that no sale ever results from your offer? The time will come when you’re actually poised to make a real acquisition and you’re turned away before you even get a chance to kick the tires.
But as you addressed over the phone, Wall Street has your back, and your track record with Weather Channel and TV station acquisitions speaks for itself. As you explained, “It’s easy to access capital. What’s not easy is to get regulatory approval. But I can get that approval, and that’s not something a lot of operators in this business can say.”
Byron, I agree that the Paramount deal lives or dies at the FCC should you get Shari Redstone to accept your offer. But what also worries me is that on top of the compulsive offers and fantastical financing, the Paramount offer is a bad look because you are proposing to value the assets some other buyers are deeming detritus. While one of your rival bidders, Skydance Media, is targeting the studio and the film library, you’ve got your eyes on the linear channel brands that conventional wisdom holds have minimal terminal value.
It’s not that your logic is hard to follow: As a station owner, you want to double down on your core competency. But in the long term, landing the Paramount deal could very well hobble Allen Media Group instead of scaling it — the equivalent of loading up on horse-and-buggies just in time for the electric-vehicle era.
Think hard about your next move, Byron. As a former stand-up comic, you’re used to having the last laugh. But if you’re not careful, the joke will end up being on you.
