Paramount Considering BET Sale After Turning Down $3 Billion Offer to Sell Showtime

Paramount Global may be turning down billions to keep some of its assets, but the company is not willing to double down on all of its media entities. The Wall Street Journal reports that Paramount is looking into selling the majority stake of BET Media Group, which operates the cable channels BET and VH1 as well as the BET+ streaming service.

The entertainment company’s decision to explore selling parts of its portfolio is a new component in its strategy trim corporate losses while continuing to build up its subscription video-on-demand (SVOD) streaming service Paramount+ and its free ad-supported TV (FAST) service Pluto TV. To compete with other major streamers in an oversaturated marketplace, Paramount has prioritized increased investments in Paramount+, highlighted by its decision to integrate pay cable network Showtime into the Paramount+ brand. Both the premium cable channel and the ad-free tier on the streamer will be known as “Paramount+ With SHOWTIME.”

Along with profitability, the goal of this unified offering is to showcase the breadth and depth of the company’s libraries by bringing all of its most well-liked television shows and films under one roof.

Even though BET and BET+ have a powerful, well-established brand, integrating those two services into Paramount+ would be difficult, according to the WSJ, due to Tyler Perry’s minority stake in the company. Because Paramount doesn’t own BET outright, it is limited in how it can handle the property. No matter what happens with BET, Paramount plans to continue doing business even if it decides to sell its stake.

While Paramount is interested in selling BET Media Group, it’s not open to offloading all of its assets. Last week, the Wall Street Journal reported that Paramount turned down an offer from former company executive David Nevins who offered to buy SHOWTIME for more than $3 billion in recent weeks. This was just the latest in a number of offers Paramount has received over the past few years for SHOWTIME.

Paramount CEO Bob Bakich addressed the numerous offers to buy SHOWTIME during the company’s fourth-quarter earnings call last week when the company announced that its flagship streaming service Paramount+ had grown to nearly 56 million subscribers. At the time, the company also confirmed it would raise its price when SHOWTIME is fully integrated into the Paramount+ platform.

“There is enormous value to unlock with the integration of SHOWTIME and Paramount+,” Bakish said. “If we were to divest the asset, it would have to create more value than our own operating plan … But frankly, that bar is pretty high.”

The expansion of Paramount’s franchise-focused strategy is another aspect of its plan for financial success. The pay-TV channel will house franchises drawn from the company’s extensive archives, according to Bakish and his staff. To complement the stories presented in the original versions of “Billions” and “Dexter,” Showtime is already developing new series. The premium channel will be rebuilt in the manner of the Sheridan-verse, according to Paramount, who believes that Showtime has a much brighter future.

“By extending and evolving these powerful Showtime franchises and supplementing them with the breadth of content on Paramount+,” Bakish said, “we’re able to deliver a powerful consumer proposition in both linear and streaming formats, thereby preserving revenue while meaningfully reducing total content expense.”

But while the company believes that integrating the two streaming services will save money and generate more revenue than selling Showtime would, Puck News reports that some Paramount shareholders told executives that offloading Showtime would have made “perfect sense,” and some analysts think so too.

“Given the headwinds facing linear TV and the multichannel bundle, selling Showtime for $3 billion-plus would be a big win for Paramount,” analyst Rich Greenfield told Puck. “If there is still interest, we suspect Paramount investors would applaud a transaction.”

Beyond the platitudes from company executives about profitability, Puck’s Matthew Belloni argues that part of the concern of Paramount offloading Showtime could signal to private equity firms that the company will be sold for parts leading to an investor exodus. However, Paramount doesn’t seem to have that same worry if it sells the majority stake of BET Media Group, showing that not all assets are created equally.

Moreover, Paramount appears to value Showtime more than BET, as it turned down $3 billion — much more than it would get from selling its majority stake in BET — at a time when the company’s fourth-quarter streaming losses widened to $575 million. If the company was looking to achieve its goal of profitability this year and beyond, selling Showtime would net billions more than the $700 million in savings and revenue benefits from merging Showtime and Paramount+ in the near term. And while offloading its majority stake in BET will help the company see a return of growth, it’s not the most cost-efficient move.