Byron Allen’s media empire has everything riding on an $8B TV bet

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Byron Allen, the 1980s comedian-turned-media-mogul who owns the Weather Channel, is angling to buy a massive chain of TV stations that were formerly owned by the Gannett newspaper giant — and the outcome could make or break his budding business empire, according to some insiders.

Allen — who made headlines last year when he took a racial-discrimination case against Comcast to the Supreme Court, losing the case but nevertheless wringing concessions from the cable giant for his fledgling TV networks — is now eyeing an $8 billion deal to acquire Tegna, a chain of 64 TV and radio stations that span more than 50 markets across the US.

Allen’s motives may have become clearer last week when Fox launched a 24-hour streaming weather app that media insiders say looks like the basis for a new cable-TV channel. Fox Weather will likely have significant leverage as it eyes a rollout given the clout of Fox’s news and sports channels — and the Weather Channel is in its crosshairs, sources said.

A building with the Tegna sign
To win Tegna, Allen will have to battle a casino magnate, multiple sources say.
Bloomberg via Getty Images

Fox’s app, which touts free always-on video streaming and 3-D radar, will be broadcast from a newly renovated studio at its Midtown headquarters and can also take content from local Fox stations around the US. “Fox’s network of dual-polarity Doppler radars, helicopters, reporters and news crews around the world lets us show you weather in a way you’ve never seen before,” according to its Web site — illustrating what the incumbent Weather Channel and Allen are up against.

Fox, which shares a common owner with News Corp., the publisher of The Post, declined to comment.

If 60-year-old Allen — whose Allen Media Group thus has amassed 33 local TV network affiliate stations — gets his hands on Tegna’s 64 stations, his bargaining position with cable giants could get a major boost. Allen also could gain leverage to sell cable companies his other nine fledgling networks including Pets.TV, Comedy.TV, Recipe.TV and Cars.TV.

One problem: Allen is bidding for Tegna’s TV stations against the hedge fund Standard General, whose CEO Soo Kim owns the Bally’s casino empire and is teaming up in his bid with Apollo Global Management, the deep-pocketed private-equity giant. They have already submitted a fully financed offer of $22 a share for Tegna, according to multiple sources. Tegna shares on Friday closed at $19.66.

Byron Allen in a sports jacket
Byron Allen came to fame at the age of 18, when he co-hosted the talk show “Real People” starting in 1979.
Getty Images for Allen Media Group

That offer comes with its own issues — and could create an opening for Allen. Standard General earlier this year launched an unsuccessful proxy contest to oust Tegna Chief Executive David Lougee, pointing to allegations of discrimination and racial bias against Tegna, which Lougee denied. The Standard General-Apollo team would push out Tegna’s current management; Allen would keep them, according to sources familiar.

Nevertheless, sources said Allen may face an even bigger problem himself, which is that the Weather Channel’s business took a major hit during the pandemic. As TV advertising dried up, Allen Media’s earnings fell from about $185 million to $130 million before it closed in August on an acquisition of 10 stations from Gray Television — giving it a modest boost, according to a person familiar with the company’s finances.

As a result, Allen Media’s debt in recent months has climbed to more than seven times its ebitda, a closely watched measure of profitability, sources close to the situation said. That’s getting close to a red line where Allen Media could break its debt covenants — and makes it harder for him to secure financing for an ambitious acquisition, the person familiar with the company’s finances said. 

Allen — who got a star on the Hollywood Walk of Fame last week — already in recent years has tried to make a transformative acquisition and failed. In 2018 he wanted to participate in the $4 billion auction for Tribune’s television stations and could not line up co-investors.

Last week, Allen was reportedly talking to Oaktree Capital Management, Fortress Investment Group and Ares Management about partnering on a last-minute bid for Tegna, sources said.

The Tegna logo seen on a smartphone
Allen reportedly wants a controlling stake in Tegna — but he needs co-investors.
LightRocket via Getty Images

A sticking point for Allen is that his co-investors want a big stake in Tegna because they’d be putting up most of the equity. Allen wants to maintain almost complete control, sources following the situation said.

“I think he will cave,” a source close to the situation said.

Allen made some lenders skittish after an audit they conducted this summer revealed he’d drawn a hefty compensation package from his company, which had recent annual revenue of around $600 million, even as business was declining, sources said. Allen paid himself a total compensation package of $50 million in 2020, according to sources familiar.

Flagging Allen’s compensation, lenders charged him $40 million to allow him to borrow more money to finance Allen Media’s roughly $1.5 billion in debt, according to sources familiar with the matter. Allen Media is paying a blended interest rate of around 7 percent, sources said. If it weren’t for the spending concerns, he would’ve been charged less than $40 million, sources said. 

Byron Allen in a jacket and tie
The reality facing Allen and other prospective buyers is that Tegna might not even consent to a sale at all.
Getty Images for Bloomberg Businessweek

Meanwhile, Bloomberg reported that Allen recently borrowed $83 million to expand his Beverly Hills, Calif. estate. Since 2018, he has bought a lavish apartment on Central Park South for $27 million, a sprawling chalet in Aspen, Colo. for $27 million, and another estate on the Hawaiian island of Maui for $23 million.

If Allen doesn’t close the deal for Tegna, his mini-media empire could find itself on shaky ground under the weight of excessive debt, sources said. The Weather Channel earns less than 15 cents a month per cable subscriber and makes most of its money from advertising, according to a person familiar with the situation. Still, Allen Media did well in the September “upfronts” where media companies sell airtime to advertisers, according to a source familiar with the circumstances.

But in addition to rival bidders, Allen faces uncertainty from Tegna itself, which has said only that it’s exploring a possible sale. Tegna, which had two sale processes in recent years that did not result in a sale, said last Wednesday it is reviewing its “options to create and return value to shareholders.”

Allen and Tegna both declined to comment to The Post.

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