Byron Allen, founder, chairman and CEO of Entertainment Studios and Allen Media Group, speaks during the Milken Institute Global Conference on May 2, 2022 in Beverly Hills, California.
Patrick T. Fallon | Afp |
As CNBC has learned, the broadcast stations owned by Byron Allen – the media mogul who has publicly expressed interest in buying various media assets for billions of dollars – have been repeatedly late on their payments to the network owners, angering their allies in the media industry and creating distance between Allen and his potential contract partners.
Allen Media Group's broadcasters are up to 90 days late in paying networks such as ABC, CBS and NBC, according to people familiar with the matter. The payments amounted to tens of millions of dollars a year, and the arrears have grown over time, according to the people, who asked not to be identified because the financial transactions are confidential.
According to the Allen Media Group website, the ABC, CBS and NBC affiliates are present in over 20 markets.
ABC, CBS and NBC have all grown increasingly frustrated after seemingly endlessly chasing fees – even after agreeing to payment plans at Allen's request, the people familiar with the network said. Persistently late payments are unusual among local stations, which pay large sums to larger network owners to carry the brand and some content, particularly live sports such as the NFL and many postseason games of various leagues, the people said.
It is unclear why Allen Media Group has repeatedly fallen behind on payments.
After CNBC reached out to Allen Media for comment this week, the group made a payment for the outstanding fees, according to people familiar with the matter. The amount of the payment could not immediately be determined.
Depending on the contract, networks often collect fees from their local affiliates every one to three months. The funds to do so come largely from so-called retransmission fees that cable TV operators pay to broadcasters, which can result in money being spent before it comes in. Recently, broadcast executives have argued that this structure needs to change as cable TV providers cut back at an ever-increasing rate and broadcasters move more of their content to streaming platforms.
Layoffs have also reportedly occurred in various divisions of Allen's company in recent months, including at stations in the Midwest, Southeast, West Coast and Hawaii. Another wave of layoffs is expected in late August, one of the people familiar with the matter said.
Representatives for Allen Media Group declined to comment on the specifics of this story, but said in a statement: “Mr. Allen founded Allen Media Group at his dining room table 31 years ago. Today, Allen Media Group is one of the largest and fastest-growing private media companies in the world and is 100 percent black-owned.”
“Like most media companies and private equity firms, we evaluate numerous acquisition opportunities. In recent years, with the continued support of the capital markets, the company has successfully completed acquisitions valued well over $1 billion. Allen Media Group remains strong and we continue to prudently manage our partner relationships as we always have throughout our 31-year history,” the statement said.
Representatives for ABC, CBS and NBC declined to comment on the matter.
Allen's business
Allen's late payments of tens of millions of dollars stand in stark contrast to his frequent multibillion-dollar bids for media assets. In recent years, his pursuit of deals that didn't work out has caused investment bankers and financial institutions to lose faith in Allen as a serious buyer of major assets, say three investment bankers and a person familiar with the matter.
Allen's recent merger and acquisition interests include a $30 billion offer for Paramount Global earlier this year, a $10 billion offer for ABC and other Disney networks last year, and a reported $3.5 billion offer for Paramount's BET Media Group, which he resubmitted in December after the process concluded.
Additionally, there was a recent report that Allen is considering another offer for Paramount before the “go-shop” deadline with buyer Skydance expires later this month.
Allen has been open about his ambitions to expand his media holdings, defending his track record of failed takeover bids and telling CNBC in January that recent takeover attempts failed because some owners ultimately decided not to sell.
“We have a whole bunch of banks that are supporting us and standing by our side, and even private equity firms,” Allen told CNBC in September about the potential deal for ABC and other Disney assets. “I think other assets will become available and I think we'll get them eventually.”
Allen Media Group has begun reposting public media reports about its interest in bidding on media properties on its own website – even unconfirmed reports of such interest, such as a reported $8.5 billion offer for Tegna.
Allen previously worked as a comedian and founded Entertainment Studios, now known as Allen Media Group, in 1993. In 2019, Allen Media Group Broadcasting was formed and Allen has since built his broadcast media empire with a series of smaller deals.
In addition to The Weather Channel and other television networks, Allen Media also owns a group of small television networks such as Pets.tv and Comedy.tv, as well as the black news and entertainment network TheGrio.
And in April 2021, Allen Media paid $380 million to Gray TV for seven stations as part of the divestments required by Gray in connection with its acquisition of Quincy Media.
Allen's stations, like most other broadcasters, generate revenue through advertising revenue and retransmission fees – payments the stations receive from pay-TV providers for the right to broadcast their shows. But the broadcast groups have also suffered as millions of people have switched from traditional TV to streaming.
A record increase in political advertising is expected ahead of the presidential election, as some of the largest broadcasters, such as Nexstar Media Group And Sinclair documented in the latest earnings releases.
Disclosure: Comcast's NBCUniversal is the parent company of CNBC and the NBC broadcast network.
Correction: Allen Media Group paid $380 million to Gray Television for seven stations in April 2021. An earlier version of this article misstated the timing of the transaction.
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