Industry Insider: The Potential Success of Allen Media Group’s $10 Billion Bid on ABC
Byron Allen - Allen Media Group
Byron Allen is the founder and CEO of Allen Media Group (AMG). Allen began his rise in the entertainment industry as a comedian, but it wasn’t until 1993 that he began creating the foundation of what would now be the home to numerous traditionally televised networks. Among these would include the most high profiled media station in their portfolio, The Weather Channel. The company holds prominent space in the independent distribution advertising space, being responsible for running adverts for 73 television programs. The AMG: Motion Pictures sector also adds to the iconography of the company, for their film production on the 47 meters down duology.
Allen was covered in a previous Hot Set regarding the competition for BET’s rights. The BET dispute was resolved by Paramount retaining the rights, leaving many of the suitors empty handed. However, Allen’s proposal this time will be much harder to ignore. So far, Allen Media Group has presented a $10 billion bid to the Walt Disney Company for the acquisition of ABC.
The package within ABC’s linear channels includes significant networks such as FX and National Geographic. Allen’s offer reflects his current estimation of ABC’s value, however these numbers will be subject to change once negotiations begin. Currently, Disney has yet to make a decision as there is a conflict within the corporation. Many of the executives are finding it hard to release the linear stations as each are a stable of the over brand of the company. Disney’s CEO, Bob Iger, made it apparent during their third quarter call that the company will be focusing on much more financially captivating assets. These will include the profits in their film, streaming, and parks sectors.
Nexstar, the company that owns the CW, has shown interest in the deal as well. However, it has been reported that Nexstar has prioritized their interest in ESPN, and have yet to make any tentative offers. There is a minority stake being offered within ESPN, so it will be interesting to follow the development of this specific detail. While Nexstar has already had a preliminary meeting with Disney, the stalemate persists.
According to Allen it may be difficult for Nexstar to remain a contender in the race regardless of the ESPN stipulation. As this concerns the federal limitations on station ownership percentages. The upper limit falls at 39 percent of households in terms of traditional based television distribution. AMG has yet to reach this capacity, but Nexstar has.
In 2023, it is common knowledge that broadcasting is slowly becoming obsolete in terms of media impact. It is often understood by many corporations that traditional television depreciates the company’s value over time. For reference, ABC's original sale cost amounted to $19 billion in 1995 when it merged with Disney. So, with the current metrics of inflation that amount would be the equivalent to nearly $38 billion. Here indicates a drastic shift in linear television value as the ABC asset is calculated to be worth $4.5 billion according to Steven Cahall, a financial analyst at Wells Fargo. Since a small stake in ESPN is on the table the value for that is predicted to be much greater. However it isn’t certain as differing analysts have submitted varying reports between $20 billion and $30 billion.
The death of traditional television distribution may assist Allen in his quest toward the industry’s major leagues. The $10 billion could be in the ballpark of the price that Disney may set on if the deal is made solely based on the depreciated and current value. So, there is a fair chance that Allen may close this deal if his claims against Nexstar prove to be an issue for Disney. However, Disney could also hold the stake for a few more years when the market has greater advertisement power and re-sale at a potentially higher value.
Many companies have made significant shifts within recent years of the streaming model transition. Such as the WB and AMC merger that has cautiously made their changes as undetectable as possible. ABC could find itself to be the first largely unscripted network in AMG’s catalog. Finding its permit home may take some time but will eventually leave significant ripples in the entertainment industry when it does.
