Paramount Drops BET Sale Plans Due To Its Own Debt Load: ‘Science vs Spook’ Podcast Highlighted Risk Of No Deal

Paramount Drops BET Sale Plans Due To Its Own Debt Load: ‘Science vs Spook’ Podcast Highlighted Risk Of No Deal

BET sale

Image: BET.com, https://www.bet.com/live-tv/drr3tz

Paramount Global has decided, after five months of bids and discussions, not to sell its majority interest in BET (Black Entertainment Television) Media Group because a sale “wouldn’t result in any meaningful deleveraging of its balance sheet,” people familiar with the matter told the Wall Street Journal. 

In other words, the bids came in lower than expected, Media Play News reported.

Multiple players publicly expressed an interest in buying the BET stake, including Tyler Perry, Byron Allen, and Sean “Diddy” Combs. Bidders included basketball superstar Shaquille O’Neal, who had teamed up with TV producer Kenya Barris, rapper 50 Cent and Richelieu Dennis’s Group Black.

Paramount got bids for its stake in BET ranging from around $2 billion to around $3 billion, people familiar with the matter told WSJ.

Paramount’s BET business unit includes VH1, BET Studios, BET+ the subscription streaming VOD service, and the BET channel. The business could be worth $3 billion based on annual cash flow, Fortune reported in May.

Paramount Global’s long-term debt for the quarter ending June 30, 2023, was $15.62 billion, according to research platform MacroTrends.

BET was launched by entrepreneur Robert L. Johnson in 1980 and became one of the most successful Black-owned businesses in history, making Johnson a billionaire. He sold BET to Paramount predecessor Viacom in 2001 for $3 billion.

BET “used to be Black-owned, and now this is the time for it to go back into Black ownership,” Allen said in May during a Bloomberg interview.

On Episode 4 of the Science vs Spook Podcast, aired July 26, KOS the Scientist (digital media pioneer Jamarlin Martin) shared insider information on a potential BET sale. He predicted that a BET deal might not be workable due to Paramount’s debt ratios and the price they needed to get to.

A Moguldom Nation podcast production, Science vs Spook covers current events, Black politics, macroeconomics and entrepreneurship through a scientific lens. Founded by Martin, the website The Moguldom Nation reaches more than 1 million monthly users.

BET “is the crown jewel in Black media,” Martin said. Why would Paramount sell it? Because “the advertising market is declining in general and media companies across the board are suffering,” Martin said.

Paramount is not alone among media companies in trying to sell off assets. Martin cited Disney as an example of a giant media company that is $40 million in debt and trying to divest assets.

“If Disney is putting on a fire sale and trying to sell stuff and there is an industry-wide recession, that’s telling you that if the media and advertising industry has a cold, the Black media is going to have long covid,” Martin said.

The failed BET sale is a sign of how challenging the traditional cable TV business has become, as consumers move instead to streaming services, WSJ reported. 

As of the end of the first quarter, just 45 percent of U.S. households had cable or satellite TV, the lowest in 37 years, according to research firm MoffettNathanson. 

The interest rate environment is not favorable for media companies who mostly have a good deal of debt on the books, Martin said. Media companies finance content and movies, but a big piece of the media business is debt business.

“If they can’t get new debt at a good price, that’s challenging for the whole industry. Of course, there are exceptions, but for the most part, the media and advertising business is rapidly declining behind the scenes…There’s a lot of challenges for ad-supported media.”

Martin said he would have expected the Las Vegas odds calculators, who calculate probability, to bet against a BET sale.

“That’s because the cable business is not only declining, it’s expected to decline in the future. There’s expected to be more competition there’s expected to be more streaming,” Martin said.

Viacom bought BET for $2.3 billion in stock and $570 million in debt. At the time of the 2001 sale, the BET channel was watched by 62.4 million U.S. households, according to Hollywood Reporter. For the past several years, Paramount has been looking to slim down its assets and scale up streaming and its core entertainment portfolio. That effort has boosted the Paramount+ streaming service to about 61 million subscribers globally, but the streaming division still isn’t profitable, with $424 million in losses in the second quarter.