Paramount Global has renewed its interest in selling its Black-centric media venture BET Media, according to a report published Wednesday by Bloomberg.
The company is in discussions with two executives — former BET CEO Scott Mills and ex-Blackstone executive Chinh Chu — about a possible deal that would see Paramount get slightly under $2 billion for BET Media, according to Bloomberg, which cited unnamed sources.
The discussions are being revealed about three months after the Wall Street Journal said Paramount had abandoned a short-term quest to unload a majority stake in BET Media after failing to get at least $3 billion for the subsidiary, which includes the BET and VH1 cable channels and streaming service BET+.
The original plan to offload BET Media drew interest from a consortium of celebrities, media moguls and Wall Street firms, including actor-comedian Tyler Perry, rapper Sean "Diddy" Combs and comedian and local TV station owner Byron Allen.
This week, after learning about Paramount's renewed interest in selling BET Media, Allen reportedly emailed the company's board renewing his interest in acquiring the brand. He offered $3.5 billion for BET and VH1, according to a copy of the email cited by Bloomberg, which was significantly higher than the original $2.7 billion bid he made several months ago when BET Media was last on the market.
It wasn't exactly clear how Allen was able to come up with around $800 million more for BET Media between the two offer periods. A spokesperson for Allen Media Group has not yet returned an email seeking comment.
Allen's renewed bid for BET Media is his latest attempt to buy his way into a larger position within the traditional television landscape. Since the start of the year, Allen has made headlines for sending unsolicited offers to buy broadcasters TEGNA, the E. W. Scripps Company and ABC television, none of which have materialized into anything substantial.
This time around, Allen is being a bit more aggressive, telling the board of Paramount that they were "pursuing an inside sale at a below-market price with management that will not yield the highest price for the stockholders," according to Bloomberg.
In his earlier bid, four banks and two private equity firms were reportedly on board to help Allen secure BET Media. Paramount would have retained one-fifth of the venture, according to Bloomberg. It isn't known whether those same banks were on board this time around, or whether Paramount would still hold a minority share of BET Media, should Allen actually acquire it.
BET Media was started by entrepreneur Robert L. Johnson in the early 1980s. It began as a single cable channel, backed by a $500,000 loan issued by former cable executive John Malone, who distributed it on his TCI Cable system, and grew into a powerhouse television channel representing Black culture that was sold two decades later to Viacom for $2.3 billion.
At its peak, BET was viewed in more than 90 million cable television households. Its prominence eroded as the trend of cord-cutting accelerated, with Viacom, now Paramount, filling BET's schedule with re-runs and reality shows, though some original series developed in partnership with Tyler Perry have been showcased on the channel in recent years.
Perry and Paramount are also joint partners in BET+, a $10 per month streaming service that offers more than 1,000 hours of Black-strong television content. When Paramount first started exploring the sale of BET Media, its stake in BET+ was considered on the table. It isn't clear if that is still the case, or if Paramount will retain some ownership of BET+ once the dust settles on a deal.
Analysts say Paramount is not financially strong enough on its own to fully capitalize on its streaming businesses — which include cornerstone entertainment service Paramount+ and the free, ad-supported Pluto TV — and have urged owners the Redstone family to sell or merge some or all of the company with another player in the space.
Appearing on CNBC earlier this month, Needham's Senior Media and Internet Analyst Laura Martin said Paramount faces the prospect of bankruptcy if it is not sold at some point next year.
"They have a $10 billion market cap, and a $15 billion debt, of which $2 billion is due in 2024 — it is completely unclear if they can refund that, especially with rising interest rates," Martin said. "They really need to be sold. They're too small, there's nothing that's getting better about their strategic position."
Despite Paramount's heavy investments in streaming, the company still reported a loss of $250 million on its streaming products last quarter, Martin noted. One way to reverse its bad fortunes might be to sell off certain parts of the company to unlock better value and returns on the rest of its businesses, she offered.
"You absolutely could get an activist or professional disassembler here that wins — that's a great idea, if you just want to sell the parts," Martin said.