Byron Allen, the founder, chairman, and CEO of Entertainment Studios and Allen Media Group, has been facing issues with late payments to network owners, causing frustration and distance between Allen and potential deal partners. The stations owned by Allen Media Group, which include affiliates of ABC, CBS, and NBC, have been consistently 90 days past due on their payments, amounting to tens of millions of dollars throughout the year. This lateness in payments has worsened over time and has left networks increasingly frustrated.
Late payments from local broadcasters to network owners are unusual, as these broadcasters pay significant sums to carry the brand and content of the larger networks, particularly live sports events. The reasons behind Allen Media Group’s repeated late payments remain unclear. However, after CNBC reached out for comment, the group made a payment on the outstanding fees.
Networks typically collect fees from local affiliates every one to three months, funded largely by retransmission fees paid by cable TV operators. This payment structure can create a situation where money needs to go out before it comes in. With the rise of cord cutting and networks shifting their content to streaming platforms, broadcast station group executives have argued for changes to this payment structure.
In addition to late payments, various divisions of Allen’s company have reportedly undergone recent layoffs, with more expected at the end of August. Despite these challenges, Allen Media Group remains strong and continues to manage partner relationships prudently.
The late payments made by Allen stand in contrast to his frequent multibillion-dollar bids for media assets. However, his pursuit of deals has led some investment bankers and financial institutions to lose faith in him as a serious buyer. While Allen has expressed ambitions to grow his media holdings, his recent acquisition attempts have fallen through due to owners deciding not to sell.
Allen Media Group has reposted public media reports on its website, showcasing their interest in bidding on media properties, even for unconfirmed reports. Allen has a track record of failed bids, but he remains determined to expand his media empire.
In April, Allen Media Group acquired seven stations from Gray Television for $380 million. These stations, along with Allen’s other broadcast stations, generate revenue through advertising and retransmission fees. However, the shift from traditional TV to streaming has affected broadcast station groups, including Allen’s.
Despite the challenges faced by Allen Media Group, the record increase in political advertising ahead of the presidential election may provide some relief. Broadcast station owners, like Nexstar Media Group and Sinclair, have documented this uptick in political ad revenue in recent earnings releases.
In conclusion, while Byron Allen’s media empire has faced issues with late payments and layoffs, Allen remains determined to grow his holdings. The challenges faced by Allen Media Group highlight the evolving landscape of the media industry, with cord cutting and the shift to streaming affecting the revenue streams of broadcast station groups. However, with the upcoming political advertising boom, there may be opportunities for Allen and other broadcast station owners to generate revenue.
