Byron Allen puts broadcast TV stations up for sale

Allen Media Group is exploring the sale of its 28 broadcast TV stations affiliated with major networks across 21 U.S. markets, citing numerous inquiries after investing over $1 billion in acquisitions over six years. The move, facilitated by Moelis & Co., aims to significantly reduce the company's debt load, which faces junk ratings and payment concerns, as Allen Media Group has reportedly been late on payments to network owners. This sale follows similar moves by Sinclair and Apollo Global Management in the broadcast TV sector, amidst Allen's history of pursuing media acquisitions, including bids for Paramount Global, ABC, and BET Media Group.

Analysis

Allen Media Group's decision to explore the sale of its 28 broadcast TV stations, acquired for over $1 billion in the past six years and affiliated with major networks like ABC, NBC, CBS, and Fox across 21 U.S. markets, represents a significant strategic shift. While the company cites "numerous inquiries and written offers" as the impetus, the primary stated goal is to substantially reduce its debt load. This financial imperative is underscored by S&P Global Ratings' assessment, which, despite expecting sufficient liquidity for Allen Media Group over the next 12 months, highlighted its junk credit rating and future debt risks. Further complicating the financial picture are reports of Allen Media Group's consistent delinquency in payments to network owners, sometimes by as much as 90 days and totaling tens of millions of dollars, alongside reported layoffs at the stations. This move, facilitated by investment bank Moelis & Co., is not isolated within the industry; Sinclair has reportedly explored selling over 30% of its stations, and Apollo Global Management is said to be considering a sale of its Cox Media Group portfolio. This context suggests broader consolidation trends or financial pressures within the broadcast TV sector, contrasting with Byron Allen's previous high-profile (though unsuccessful) bids for larger media assets like Paramount Global and ABC.

Key Decisions for Investors

• Potential acquirers of the Allen Media Group stations should conduct rigorous due diligence, focusing on individual station profitability, the status of network affiliation payments given the parent's reported delinquencies, and local market dynamics.
• Investors in other broadcast station owners, such as Sinclair or companies potentially interested in Apollo's Cox Media Group assets, should monitor the Allen Media Group sale process closely, as transaction multiples and buyer interest will provide key valuation benchmarks and insight into sector health.
• Creditors and debt investors in Allen Media Group should view the station sales as a critical deleveraging event, but must remain cautious given the company's junk rating and reported payment issues, focusing on the quantum of debt reduction and any residual financial risks post-transaction.