A look into Byron Allen's offer to takeover Paramount
Byron Allen has reportedly offered US$14.3 billion to buy all shares of Paramount Global.
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The backstory: Paramount Global, known for blockbuster franchises like "Transformers" and "Mission Impossible," operates under the broader control of the Redstone family's global media empire. But it's currently dealing with challenges, as its operating income took a 30% hit last year, dropping to US$1.87 billion across nine months, and sales plateaued at US$22 billion.
Recent reports from Bloomberg said that David Ellison, the CEO of Skydance Media, made an early offer to buy National Amusements. This company, owned by the Redstone family, plays a big role in controlling Paramount Global. With 77% ownership of Paramount's voting shares, it oversees major networks like CBS, Nickelodeon and Comedy Central and around 1,500 movie theaters.
On another front, Byron Allen, once a stand-up comedian and now media mogul of Allen Media Group, is eyeing some entertainment giants, including Paramount. Allen's company owns a handful of TV stations, including The Weather Channel. Last year, he made a US$10 billion offer to Disney to buy its ABC TV network and cable networks FX and National Geographic, which Disney CEO Bob Iger turned down. He also offered to buy Paramount's BET media group for US$3.5 billion.
More recently: In December, there were talks about Warner Bros. Discovery and Paramount Global merging. If that happens, it will combine Warner Bros. Discovery's HBO and CNN with Paramount's franchises, CBS News network and other channels. This would unite two of the "Big Five" Hollywood studios, making them worth around US$38 billion together.
The development: Allen has now reportedly offered US$14.3 billion to buy all shares of Paramount Global. According to inside sources speaking with Bloomberg, he suggested US$28.58 per voting share, 50% more than the recent trading price, and US$21.53 per non-voting share. This makes the total deal around US$30 billion, counting existing debt. Allen Media Group also confirmed the offer in a statement to Bloomberg News. But, for now, Paramount hasn't commented.
Reports said that if this deal were to go through, Allen plans to sell the Paramount film studio, real estate and some intellectual property. He wants to keep its TV channels, including the Paramount+ streaming platform, to run them cost-efficiently and add some of his TV stations to the company. Inside info hints that Allen already has support from banks and investors for the offer.
Key comments:
"This US$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," said Byron Allen's company in the statement.
"Amid all this change, it's no surprise that Paramount remains a topic of speculation," said Paramount Global CEO Bob Bakish to company employees. "We're a storied public company in a closely followed industry. But I have always believed the best thing we can do is concentrate on what we can control – execution."
"I think we're going to see very serious distress in our industry," said Warner Bros. Discovery board member John Malone last year in an interview with CNBC. "There is an exemption to the antitrust laws on a failing business. At some point of distress, right, then some of the restrictions, they look the other way."
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