After buying MGM in 1986, legendary media mogul Ted Turner marveled that go-go media moguls are celebrated for being so rich, while their bankers constantly remind them that they owe a fortune.
“That’s exactly right,” chuckles Byron Allen of the parallels to his company Entertainment Studios, founded 25 years ago as CF Entertainment. “And Ted’s one of my heroes.”
The standup comic-turned-Hollywood entrepreneur has built his privately owned company into a sizable entertainment enterprise with 650 employees. His burgeoning empire spans basic cable TV networks, over-the-top video streaming channels, motion pictures, TV production/syndication and digital media.
Two events in the past year provided transformative leaps: Allen acquired basic cable network the Weather Channel in March for a reported $300 million, and then lined up a $500 million credit line in September that can fuel more expansion. It is estimated that adding the Weather Channel lifted Entertainment Studios — solely owned by Allen — to about $600 million in annualized revenue.
With that $500 million credit line — organized by Deutsche Bank Securities, Jefferies Financial Group, Brightwood Capital Advisors and Comerica Bank — Entertainment Studios has the capital in-hand to be a serious bidder for media-entertainment properties.
“We’re very acquisitive at this point and building organically as well,” says Allen, who is chairman and CEO of Allen Media, the parent of Entertainment Studios. He says the company intends to expand from eight 24-hour HD television networks — including Cars.TV, comedy.TV, ES.TV and Pets.TV — to 30.
The Weather Channel acquisition gives Entertainment Studios clout in TV carriage negotiations covering its whole channels portfolio, entrée to advertisers and financial muscle as a mature business. Allen “can finance other projects out of that cash flow,” says Hal Vogel, veteran media analyst and CEO of Vogel Capital Management. “So he has flexibility in his financing, unlike other indies” that are pure film or TV program companies.
Entertainment Studios was founded on TV shows, some of which are hosted by Allen, who starred in NBC’s “Real People” primetime reality TV series after gaining national fame at age 18 as a standup comic on “The Tonight Show Starring Johnny Carson.” Its TV series, 43 in all, are flashy yet low-cost, mostly in the genres of interview, court and reality TV series. They include comedy game show “Funny You Should Ask,” the long-running “Entertainers With Byron Allen,” and court shows “Justice With Judge Mablean” and “America’s Court With Judge Ross.”
“At the end of the day, we’re creators and innovators for TV programs,” says Andrew Temple, president, domestic television distribution at Entertainment Studios. “We make TV shows for use on as many distribution platforms as we can.”
The company plans on sticking with low-budget TV programming in which it can hold all distribution rights. “We’re cost-conscious and every efficient,” Allen says. “It’s part of our DNA. It’s what we needed to be to get this point.”
Shows are syndicated to broadcast stations, where Allen has deep roots. Allen is a recipient of the 16th Annual Brandon Tartikoff Legacy Award on Jan. 23 at NATPE Miami, TV syndication’s premier event. That brings Allen to his 39th consecutive NATPE conference, where over the decades he’s cultivated personal relationships with TV station executives.
“The Byron that I know is a salesman — he’s always got a pitch — combined with a visionary who believes in the need for more diversity,” says Robert L. Johnson, founder of Black Entertainment Television. “And he’s going to be the one to deliver that diversity.”
Johnson, a friend of Allen for more than 20 years, sold BET to Viacom in 2001, and last year merged his OTT streaming RLJ Entertainment in a venture with AMC Networks.
Allen originally founded his company with his mother, Carolyn Folks, changing its name to Entertainment Studios in 2003; she continues to work for him today. As it marks its 25th anniversary, the company shows growing confidence, a track record for stability and Allen’s inclination to maintain relationships. TV distribution chief Temple has 22 years with the company. Allen’s first employee, Joan Robbins, is still aboard, serving as president of talent relations and based in Philadelphia, where she re-located from Los Angeles for personal reasons. “In 25 years, I’ve seen it go from one TV show to something massive,” says Robbins. “Byron always has another idea and another vision for the next step up.”
Diversification includes its digital video news platform TheGrio, which is focused on African-American topics.
In 2015, Entertainment Studios acquired theatrical distributor Freestyle Releasing and renamed the core Freestyle film business as Entertainment Studios Motion Pictures. Freestyle Digital Media provides marketing services for company releases and also third party-titles.
Those two side-by-side movie silos are planted in the indie film sector, whose larger ecosystem is roiled as giant streamers like Netflix use their dump-trucks of money to carve out their own turf. Its releases include “Chappaquiddick,” “Hostiles” and “47 Meters Down.” The latter, a scuba-diving yarn starring Matthew Modine released in 2017, rolled up more than $44 million at domestic box office, its biggest theatrical take so far.
What’s next for Entertainment Studios?
The company, African-American owned with Allen as sole proprietor, has lawsuits pending against cable system operators Comcast and Charter Communications for racial discrimination in channel carriage decisions. Earlier, Entertainment Studios reached an out-of-court settlement with AT&T.
Stepping back to look at the bigger picture, Allen is quick to say he has no plan to lower the curtain and exit stage
right. “I’m not a seller,” he says, emphatically. “We’re one or two acquisitions away from being a fairly large company.”
Allen is non-committal about possibility of taking on partners or eventually mounting an initial public offering in what would raise equity capital and accelerate growth. “Anything is possible in the future,” he says.
His ambition is large, as Allen cites as his role models iconic industrialists Henry Ford and John D. Rockefeller, and also Hollywood giants who reshaped the media/entertainment landscape such as Rupert Murdoch, Motown sound’s Berry Gordy, and Ted Turner. Allen feels today’s digital revolution, especially its direct-to-consumer distribution model, makes possible his ambition of creating nothing less than the world’s biggest media company.
“I believe that these are unbelievably exciting times that bring a lot of opportunities. Some people are threatened by the change and frightened by it. But they shouldn’t be. When the dust settles, it’ll be a level playing field and enormous opportunity for those who should profit the most,” he says. Specifically for content creators, he believes “the barriers of entry have gone away.”