by Venus Sanders
The anticipated auction of Black Entertainment Group (BET) by Paramount Global has been abruptly halted, according to sources familiar with the matter, who revealed to The Post that prospective buyers, including media mogul Tyler Perry, presented disappointing bids. Commenced earlier this summer, the BET auction encountered obstacles as Tyler Perry, the creative force behind the "Madea" franchise, declined to raise his $2 billion bid to meet Paramount's asking price of $3 billion, as previously reported.
Pictured Above: Left, Byron Allen came in with a $3 billion offer but sources close to Paramount questioned his financing. Right, Tyler Perry bid roughly $2 billion for the BET Group but declined to raise his offer to the $3 billion asking price.
Paramount Global, the parent company of BET, reportedly informed potential bidders of the cancellation late on a Wednesday, taking the market by surprise. A source in close proximity to Paramount mentioned that the decision was influenced by the realization that retaining a majority stake in BET Media Group could generate more value for Paramount than the offers received. Paramount's intention was to find a deal that would return the asset to Black ownership and align with a partner who could responsibly manage the assets and uphold the mission. Despite these goals, the source acknowledged the lack of a suitable proposal.
Although the bids fell short of expectations, the source emphasized the significant synergies between BET and other Paramount holdings, particularly in terms of distribution to local TV affiliates, advertising, and streaming.
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The decision to cancel the auction coincided with Paramount's second-quarter earnings report, revealing a loss of $424 million for the quarter ending on June 30, attributed to losses in its streaming division. Second-quarter revenue amounted to $7.62 billion.
Paramount's aspiration for the BET auction was to facilitate meaningful de-leveraging of its balance sheet. JPMorgan, Paramount's sell-side bank, was expected to provide financing options for potential buyers but reportedly failed to do so, raising concerns about the financial robustness of BET Group. Paramount also failed to meet its projected earnings forecast for BET during the auction process, prompting further uncertainty.
Byron Allen, the comedian-turned-media mogul with an expansive broadcasting empire, emerged as a contender in the late stages of the auction with an offer valued at around $3 billion. However, Paramount did not engage in substantive discussions with Allen following his bid, reportedly due to concerns about his lack of committed financing.
Image Credit: Byron Allen, Kevork Djansezian / Stringer / Getty Images
While Allen received letters from banks expressing confidence in financing his bid, Paramount seemed reluctant to sell BET to him. Instead, the company had been urging Tyler Perry, who already held a 25% stake in BET's streaming service, to increase his offer. Representatives for Tyler Perry and Byron Allen did not provide comments.
With Paramount facing inquiries about its asset valuation, including properties like MTV, CBS, Paramount Pictures, and Nickelodeon, the company recently sold Simon & Schuster to private equity firm KKR for $1.62 billion. Paramount's attempt to sell Simon & Schuster to Penguin Random House for $2.2 billion was blocked by a federal judge on antitrust grounds. Sources anticipate that the proceeds from the sale of Simon & Schuster, along with any potential sale of BET, will be utilized to reduce debt. Paramount is expected to reconsider a future sale of BET when the advertising market improves.
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In conclusion, Paramount's decision to halt the BET auction has raised questions about the company's strategic priorities, financial stability, and future plans for its assets. The unpredictable twists in this narrative underscore the complexities and challenges inherent in major corporate transactions within the entertainment industry.