Contributed by: Show Editorial Team
Robert Smith, Founder/Managing Partner of IECP Ventures interviews Byron Allen, CEO of Entertainment Studios at Greenwich Economic Forum (Greenwich, CT)
- In 2018, Allen acquired the #1 weather news network, “The Weather Channel” for $310 million
- Entertainment Studios; est. in1993 has over $1 billion in total assets
- Allen recently secured a $10 billion sports network deal with Disney
INTERVIEW TRANSCRIPTS: Byron Allen, CEO of Entertainment Studios and Robert Smith, Founder/Managing Partner of IECP Ventures
Julia La Roche – Correspondent, Yahoo Finance: 00:00
Robert is a partner at Lido advisors, a $6 billion wealth advisory firm headquartered in Los Angeles, California, where he oversees the firm’s sports and entertainment division. So Robert, without further ado, I’ll let you introduce today’s keynote speaker.
Robert Smith – Founder/Managing Partner, IECP Ventures: 00:19
How’s everybody? Good bellies are good and full, settled. So today I have the distinct pleasure in interviewing and doing a fireside chat, but as you can see, there’s no fire, but we’ll work it out. It’s nice and warm. I met this gentleman about five years ago through a good friend of mine, Bill Bellamy who is a comedian and actor and was just astonished to find out that there was someone who looked like me, came from humble beginnings and owned his company 100%. He’s a mogul in the entertainment business. He’s a Maverick. He’s an innovator. And we’ve got a little clip here to show you just so you can be familiar with who he is.
Robert Smith – Founder/Managing Partner, IECP Ventures: 03:26
Ladies and gentlemen. Byron Allen.
Byron Allen – CEO, Entertainment Studios: 03:33
Come on now. Come on. Come on. This is not a tax convention. Come on now no one died. There we go. All right. Hello Rob. How are you doing? Incredible. Greenwich, Connecticut, look at you. This is great. All righty. Well thank you for having me. I really appreciate it. You know I live in LA, so I am not used to this weather. This is the kind of weather where you just like, I’m using what is going on is this legal and so I am happy to be here. It’s happy to just spend some time with you.
Robert Smith – Founder/Managing Partner, IECP Ventures: 04:23
Yes. Well I think it’s really important that we begin to be honest with your Genesis in terms of how you grew up and how you got exposed to the life of wanting to be an entrepreneur and where you derived your motivations from.
Byron Allen – CEO, Entertainment Studios: 04:40
Wow. You want the Hollywood answer or the real answer?
Robert Smith – Founder/Managing Partner, IECP Ventures: 4:46
I’m all about the real.
Byron Allen – CEO, Entertainment Studios: 5:04
Well then, I’m going to bring real today. Cause you asked for it. I’m a very blessed man. I’m extremely blessed. My mother got pregnant with me when she was 16 years old and she had me 17 days after her 17th birthday. And so, you know, you wouldn’t bet on that baby on, you know, a black teenage mother and a little black baby born April 22nd, 1961. I’m born without civil rights. You wouldn’t bet on that baby. But you know America is a great country, you know, things change for us. You know, Martin Luther King was assassinated in April of ’68. I was seven years old and I was in the street playing baseball with my buddies and all of a sudden I heard my mother and my grandmother scream like I’ve never heard before. “They killed Martin. They killed my Martin, they killed Martin.”
Byron Allen – CEO, Entertainment Studios: 05:47
And before I could turn my head back from looking at my mother and my grandmothers screaming I turned my head back and boom! And I’m looking down the street and literally I was looking down the barrel of a tank and the tank was coming towards me and this, and the troops were coming towards me. Bayonets, rifles, dogs get back in the house this is Detroit, Michigan. Detroit, Michigan. Riots broke out, military shut us down. Things were a little chaotic. So my mother and I and my mom said, let’s go to LA and let’s visit some family. Let’s visit some friends. And it was supposed to be a two week vacation. And we ended up staying and a number of friends let us sleep on their sofas, their floors, a couple of extra bedrooms, not too many. Did that for a while. And my mom ended up getting into UCLA and she ended up getting her master’s degree in cinema, TV production. And because she was at UCLA, she was able to get an interview with NBC to do a job interview and they didn’t have a job for it. And she said can I be an intern? And they said, no, we don’t have an intern program. And my mom asked a question that changed our lives. She said, “will you start one with me?” And they said, yes.
Byron Allen – CEO, Entertainment Studios: 07:27
Those were thin times, I like to say. My mom was young, so they talked to her about people, talk to her about not being able to afford me. All right. Not being able to keep me. And that’s a very real thing here in America. People were losing their children because they can’t afford them. And you hear that kind of conversation, it cuts to your core. And you know, I felt like I lost my dad in the divorce because he was back in Detroit and my cousins and I wasn’t about to lose my mother. And as a kid, I remember hearing that I was 10 years old. So I said, money won’t be the reason why I don’t keep my mama. So we’re going to learn about money and we’re going to learn how to make money right now.
Byron Allen – CEO, Entertainment Studios:08:18
And I’m not going to be a burden to my mama. So I started hustling and I remember I went to Ralph’s supermarket and I said, can I be a bag boy? Can I put some I get a job here and put groceries in the bag? And they said, how old are you? I said, I’m 10 years old. You can’t work here. You’re not old enough to work here. And I said, how old is that guy right there bagging the groceries? He like, Oh, he’s 16 years old. I said, well look, he’s putting the eggs on the bottom of the bag and I know not to do that. And I’m 10! I won’t put at the bottom. My grandmother, she’ll scream at me all the way home if I put eggs at the bottom of the bag. They said, no, you can’t work here.
Byron Allen – CEO, Entertainment Studios: 09:02
And I remember walking out of the market supermarket and I saw this lady walking towards me with a basket, bless you. And started walking towards me with a grocery basket and then I saw her put it in a machine and she got a stamp and I said, ma’am, what is that? And she said, well, they don’t want these grocery baskets all over the parking lot cause they’re denting the cars. And so they give you a stamp and if you get a hundred stamps, you can get a dollar’s worth of food. So I started working at that parking lot. Wow. And getting stamps and bringing home, bringing home food to my mother because I wanted her to know, don’t worry about me, I’m never going to be a burden. So I just started hustling right then and there and I used to go out with her to NBC.
Byron Allen – CEO, Entertainment Studios: 09:50
And that was an unbelievable blessing because I was able to wait for my mom to get off work and she gave tours and I would sit there in the corner and I’d just sit there in the corner. And I watched Johnny Carson rehearse and do the tonight show. And I watched Redd Foxx do Sanford and Son. Flip Wilson do the Flip Wilson show. And I watched Bob Hope tape his specials and George Burns. I watched an unknown sportscaster do the local sports on KNBC Bryant Gumbel before the today show. And I watched an unknown weatherman do the weather in LA, Pat say Jack. And I thought, what a wonderful way to go through life, making people laugh, making television. Before that I wanted to go to work with my dad and my granddad in Detroit. My dad worked at Ford motor company for 30 plus years and my granddaddy worked at Great Lake Steel for 30 plus years.
Byron Allen – CEO, Entertainment Studios: 10:43
These guys, you know, put on a uniform every day and I just want, and they just tried to figure out how to put 36 hours in a 24 hour a day. And I just wanted to go to work with them. But then I found a different kind of factory, a content factory, a comedy factory. And I thought, this is what I’m going to do with my life. I’m going to make people laugh. I’m going to produce content, produce television, and I’m going to do it for the world. And that’s when I had that epiphany and it changed my life. And I was fortunate. There was a comedian on the Gladys Knight and the pips summer show, Gabe Kaplan, he did stand up, told me to go to the comedy store. I went to the comedy store and I performed and I was 14 years old and I did my first routine, Mitzi Shore. God bless her soul. She put me on stage. There was literally four people in the audience and 200 empty chairs. And I say, well, I guess I got to figure out how to make empty chairs laugh. And I did the routine and then this guy came up to me and he said, who wrote those jokes? I said, I wrote those jokes. He says, those jokes were funny. I said, well, that was the intent.
Byron Allen – CEO, Entertainment Studios: 11:50
He goes, I’m sorry you only have four people in two chairs. I go, yeah, you know those chairs, they’re a little fickle. And he goes, listen, I know somebody they may want to write some jokes with you. Can I get your phone number? I go, sure. I said, what’s your name? He said, Wayne Klein. I said, all right, wing. It’s a give me a call. He taught. So I get a call like a week later and this guy calls me because, Hey, can I speak to Byron? I go, this is Byron. He goes, my man, Wayne Klein says, you’re funny. And if my man Wayne Klein says you’re funny, then you must be funny.
Byron Allen – CEO, Entertainment Studios: 12:27
I said, well, tell Wayne I said hello. I go, who’s this? He goes, this is Jimmy J. J Dynamite Walker. I said, Hey Jimmy, I love good times. He goes, do you want to come write with me and my boys? I said, sure, let me ask my mom. And he goes, Oh man, he’s got to ask his mom. And then I heard the smart Alec in the background say to Jimmy, tell his mom not to worry. We’ll have some cookies and milk for him. I’m like, who is that knucklehead? So I was embarrassed and my mom let me go. My mom took me and I walk into Jimmy’s apartment and sitting in his apartment is David Letterman who had just driven out from Indianapolis in a red pickup truck. And he drove out because even think he was going to make it and he wanted to be able to get back in his pickup truck and go back to Indianapolis.
Byron Allen – CEO, Entertainment Studios: 13:30
Jay Leno was sitting there and he was sleeping in his car and Marty Naylor, who went on to write and produce Laverne and Shirley and happy days. And Wayne Klein and Jeff Dungan and Jeff Stein went on to do amazing sitcoms and I walked in, they said, have a seat. So I had a seat. It was just like this. We’re in Jimmy’s apartment. I had a big Afro. I looked good. I had plaid pants and Letterman was sitting there with shorts and he had some Indianapolis university shirt on or whatever it was. And I sat there and I started writing jokes with these guys and they taught me how to write material and really do it in a way that was just on point. And I just was able to do it with the best; Leno, Letterman, Walker, Marty Nadler, Leno and Letterman were getting $200 a week.
Byron Allen – CEO, Entertainment Studios: 14:22
That’s what Jimmy paid them 200 bucks a week. And he paid me $25 a joke. So what, bless you. I sold my first joke to him and I was able to quit my paper route and for 25 bucks and I was getting half a penny of paper to throw. The Herald examiner had to throw to those papers to make a penny. And so I quit my paper out and I still have that check that he wrote me hanging in my office, that $25 check because that check allowed me to quit the only job I’ve ever had. Because everything from that moment on has been absolutely what I love to do. That’s it. I never worked another day in my life. So that was really it. I have been really fortunate. I ended up doing the tonight show with Johnny Carson. I ended up being the youngest comedian to do it with Johnny.
Byron Allen – CEO, Entertainment Studios: 15:12
I was 18 years old. And I did it a couple of weeks before I graduated from high school. I thought it was going to help me get a date to the prom and it didn’t.
Robert Smith – Founder/Managing Partner, IECP Ventures: 15:31
It always comes back to the woman. It always does.
Byron Allen – CEO, Entertainment Studios: 15:35
And so I ended up doing this night show and I ended up getting a number of offers and I’m very numerical, mathematical. And so my agents put in front of me these offers and at that time in ‘79 and it went really well with Johnny Carson. I was very comfortable there because I had grown up in the studio literally hours and weeks and days waiting for my mom to get off work and I used to talk to Johnny Carson when he would pull up, he would pull up at two o’clock like clockwork in his parking lot and I’d always positioned myself to be near his parking space when he pulled up, act like I was doing my homework and he looked, hello, Mr. Carson.
Byron Allen – CEO, Entertainment Studios: 16:07
And he knew me by first name. Hello Byron. Hey, great show last night, sir. Thank you. That was a funny monologue, sir. You got it. Thank you sir. I got to talk like that was my, that’s my man. I love Johnny, right? So I said, look, let’s do this show. And they said, why this show? I said, there are only three networks, ABC, NBC, CBS, 66 hours of prime time television. This is the only hour out of the 66 hours. It’s different from the others. And they said, okay, it’s kind of risky. I go, no, no, this show’s going to work because it’s different from the other 65 hours. And they said, okay, we’ll let them know you’re going to, you’re going to do this show. And it was real people and real people gave birth to reality shows in America. It was on NBC from 79 to 84.
Byron Allen – CEO, Entertainment Studios: 16:52
I said, this is the perfect show. This allows me to do this show, be on television and go to USC film school at the same time. So that was it. So I’ve been really fortunate, really blessed. And what changed it? Education. Education. My mom getting into UCLA, that changed the trajectory of our lives. Real people was great. It was a great experience. Took me all over America. Cause I really got to see America, not just LA and New York. And then you fly over LA and you fly over America. I’m in coast Shockton, Ohio, Waterloo, you know Iowa. I’m in Bangor, Maine. Like some towns that have three, 400 people and no stoplights. And you go and you are in the community, you’re hanging out, you’re sitting on the porch drinking lemonade. You really get to know America. You get to know the way America thinks.
Byron Allen – CEO, Entertainment Studios: 17:44
Forget LA, forget New York. It’s what’s in between. That’s what’s running things. So that was a great experience. And then I had a contract dispute with real people and I didn’t like that feeling. And for a minute there they fired me and it was the worst thing that ever happened and the best thing that ever happened. And I said, okay. But I ended up getting the job back and I said, okay, let me learn this business. Because at that moment I knew when I was young enough where it was the best thing that happened. I was 19. I said, I’m going to learn business show, not show business.
Robert Smith – Founder/Managing Partner, IECP Ventures: 18:21
So you went away from being a creator and to now really understanding the principles of business.
Byron Allen – CEO, Entertainment Studios: 18:29
A lot of people want to be in show business. That’s like whatever, go be in show business. You want to be in business show. You want to know the business side innately. Once you know the business side, I can literally, I mean I have 65 shows on the air, right? Cause I know the business side, right? We have 10 networks because we studied the business and we know it innately. I know it like breathing. So I really just studied the business. I went to my first television convention in January of 81. I was 19 years old and a was that the New York Hilton. And I said, and this is a big TV convention and I’ve gone every year since then. So I’ve gone 38 consecutive years and I’ve just made it a fact. I just made it a simple mission to know everybody in the business and for everybody in the business to know me.
Byron Allen – CEO, Entertainment Studios: 19:19
It’s all the people who own and operate TV stations and ad agencies. And I said, who’s the best in the business? And they said, Al Masini. And I said, what floor is he on? And was it the New York Hilton? My offices are across the street now in the old ABC offices at 1330 Avenue of the Americas. So it does come full circle. So they said, he’s like on the 45th floor. And I went up to the 45th floor and I walked in and he was standing there and he was bigger than life. Al Masini full of confidence. And he’s selling this television show. And he says, this is the greatest TV show ever. I’ve got the biggest movie star in the world on my pilot, Burt Reynolds on the set of Smokey and the Bandit. And he says, this show is going to be the biggest show ever.
Byron Allen – CEO, Entertainment Studios: 20:03
And they said, what’s the name of the show out? He said, Entertainment Tonight. Wow. So I watched him sell it in January and put it on the air in September. And he went on, went on to do solid gold star search lifestyles, rich and famous. The first mini-series syndicated mini-series, a woman called Golda Mier, just amazing. And I walked up and I introduced myself and I said, I understand. I said you’re, you’re Mr. Al Masini. He goes, yes. I said, I understand you’re the best in the business. He said, yes. I said, my name is Byron Allen and I’m here to be the best in the business, so I’m here to learn from you, so where are we going to have dinner tonight?
Byron Allen – CEO, Entertainment Studios: 20:44
He kind of laughed. He’s like, I like you kid. Like, and he became like a second father to me.
Robert Smith – Founder/Managing Partner, IECP Ventures: 20:50
You were intentional?
Byron Allen – CEO, Entertainment Studios: 20:52
Oh yeah. I was intentional. You know, he was just a great guy. Got married four times, really loved the ladies and he never had kids. And I ended up becoming like the son he never had. And he was so gracious with me and so loving and sharing with me and he took to me and I was fortunate that regard. And he just said, you are an unbelievable salesman. And you know, and he’d said things to me, I’ll never forget. It was, it was interesting. It was emotional for me because he was the first person inducted into the broadcasting and cable hall of fame 29 years ago. And they just inducted me last week.
Byron Allen – CEO, Entertainment Studios: 21:41
And I said I appreciate this, not because she wouldn’t duck to me and I appreciate that more than anything, but what I appreciate is that God gave me such a phenomenal human being and Al Masini is that he told me 29 years ago I would be here. And every American needs that, every child in America needs that person who loves them, nurtures them, appreciates them and invest in them. And that was it. So I was very fortunate and, and that you know, he came into my life and helped teach me the business and I started my company from my dining room table. Cause he told me I should. And I started my company from my dining room table and I started by calling every television station in the country to sell my first television show. And I had a TV show where I was interviewing people, a bunch of movie stars.
Byron Allen – CEO, Entertainment Studios: 22:27
And a Tribune had said to me, if you get 75% of the country, we will advance you 400 grand and we will sell your advertising time. I said, no problem. All you want me to do was get enough TV stations to carry my TV show to represent 75% of the country. I’ll do it. So I sat at my dining room table. I called all 1300 TV stations, asked them to carry my once a week show that had 14 minutes of commercial time. I would keep seven minutes. You, local television station, you keep seven minutes, you sell your seven minutes to local supermarkets and card dealers. I’ll sell my seven minutes to Johnson and Johnson and Pepsi and general motors and McDonald’s. And that’s how I will pay for the show. And literally, I got about 50 no’s from every television station. I got about 50,000 no’s to squeeze out 150 yes’s.
Byron Allen – CEO, Entertainment Studios: 23:20
Hardest thing I’ve ever done in my life. Sit at a dining room table from sunup to sundown for over a year, just about a year and clear that show. And unfortunately when I got that done, Tribune said we changed our minds. We’re not going to give you that $400,000 advance and we’re not going to sell your advertising time. And I went, Holy moly, I’m not going to call my mama. So and, and it was a very pivotal moment for me because I remember two weeks earlier, I was speaking to a television station, WHP I still remember it WHP the CBS affiliate in Wilksbarre I think it is. And I said, you know, my mom was doing my paperwork and I said to my mom, Hey mom, I noticed that the that you didn’t put the clearance of the CBS affiliate in Harrisburg. You didn’t put it on the clearance list.
Byron Allen – CEO, Entertainment Studios: 24:14
And I only go after the people where we have homes. And I noticed that you didn’t plug that in. She says, I don’t have the paperwork, the paperwork, I don’t, I don’t have it. I’m like, mom, you can’t misplace our paperwork. These are hard deals to get. So I called the guy back and I said, Hey Bob, it seems that my executive assistant has misplaced my paperwork that we’ve agreed on. He goes, no, I didn’t send it back. I go, what? You didn’t send it back? He goes, Nope, Nope, Nope. He said, some guys were in here from Paramount Studios and they came in to see me and they told me, you were calling me from your dining room table and that you were in your underwear and that that show that I bought from you, that show was not going to show up and you weren’t going to deliver that show.
Byron Allen – CEO, Entertainment Studios: 24:58
And if you did deliver, that show would be on the air for maybe two or three weeks and then go away. So I gave the boys from Paramount your time period. I said, really? Wow. I said, okay. I say, listen, I’m Bob, let me ask you. I said, let me just say this. Yes, the boys from Paramount are right. I am calling you from my dining room table and I am in my underwear cause I don’t have an office Bob, but they’re wrong about one thing. I’m going to put the show there and I’m never going to cancel it. And I’m never going to put them in a position where they can walk into a TV station anywhere in America and say that Byron Allen Show won’t be there. Tell the boys from Paramount, they got this one, they’ll never get another one. And because of them, I will never cancel that show.
Byron Allen – CEO, Entertainment Studios: 25:42
And that show will be on until the end of time. My grandkids will end up hosting that show. So just let the boys from Paramount. No, they got that. Never again. He says, I’ll let him know. So fast forward, Tribune said, we’re not sending you the money. And I thought about that conversation about the boys from paramount and I sit for me to have credibility with these television stations. They have to depend them on my word. They have to know that my word is better than gold myasthenia. My mother taught me that. Never doubt my word ever. So I said, I’m going forward. I didn’t have two nickels to rub together. I didn’t even know how to sell advertising time. So the pay for the tape, the pay for the satellite to pay for the camera man, there were days I didn’t eat. They were days, they turned off my pay phone. They turn off my, this was before pay phones. They turned off my phone. I had to call people from a pay phone. It was tough. My home went in and out of foreclosure maybe 14 times. I don’t even know. Over about a four year period. My credit was so bad, people wouldn’t take my cash.
Byron Allen – CEO, Entertainment Studios: 27:01
No, that’s true. And I didn’t know it was bad until I went to go get a car. They were like, the guy laughed and he actually said, I’m not sure I can even take your cash. So I, you know, it was just tough. It was just really tough. And I had a great lady at the bank, I think she worked at Bank of America and she was great. She was like, Hey honey, your desk, she’s really sweet. She said, Hey honey, your file keeps coming on my desk. What’s going on and you know, my mom had taught me, just always be honest, tell it all, tell it early, be truthful. I said, well ma’am, I’m trying to fund a television show. I’m trying to pay the camera man. I’m trying to pay satellite. She goes, Oh, I get it. She goes, I know you’re telling the truth cause I’ve never heard that before.
Byron Allen – CEO, Entertainment Studios: 27:47
She said listen up. She said, whatever you do, don’t let it go past day 89 because it will stay with me. But on day 90, it goes to Agnes who sits next to me and you don’t want to talk to Agnes. Agnes is not very nice. I said okay. And I put it on my calendar every 89 days. And I played the flow now to, I paid for my tape and that’s how I paid for satellite. And finally I went to all the heads of the movie studios and I said, it’s not about me, it’s about you. Here’s my value add. I’m interviewing all your movie stars, Tom Hanks, everybody, you name it, Tom cruise, whoever, Julia Roberts, Denzel Washington, your movie stars for an hour. I’m having your movie stars on. I’m selling your movies and I need you guys, you spend 200 to 600 million a year each and you don’t spend money with me. Please spend some of your ad dollars with me so I can be there to support you. I’m a one hour commercial, go to the movies and they said, okay. And I signed up all the movie studios and then after I signed up all the movie studios, I had that epiphany.
Byron Allen – CEO, Entertainment Studios: 28:52
It’s about not about me, it’s about you. How I’m, I’m here to make your business better. Value first. I’m here to be of service to you. Once I solidified the movie industry, I went and did the same thing with soft drinks once all the soft drink companies. Then I went and saw the pharmaceutical companies and then all of the packaged goods companies and all of the automotive companies and now I looked up and I was like, wow, I’m in business with every television station in the country and I’m in business with most major advertisers. And then I just kept smiling and dial and dial in and smiling, smiling and dialing. And next thing I know I had over 40 television shows and the largest privately held television library in the world. And I just said, okay, what’s next?
Robert Smith – Founder/Managing Partner, IECP Ventures: 29:40
Well it seems like you took, not even knowing certain principles that we deal with in the venture and private and high structure finance world. And technically applied that to being able to roll up certain assets and those relationships within television.
Byron Allen – CEO, Entertainment Studios: 29:43
That’s exactly right. And then, and I knew, I knew that I can’t just sit here, I, my thing is always about growth. It’s in my DNA. And it was like when you think about the automotive industry, the car is never good enough. They make a better one every year. That’s just that heart wiring we have as human beings. And I remember I was in New York and I was reading in the New York times that Verizon was going to spend $23 billion to lay fiber to the home and bring cable television to the home, and they were going to offer 150 HD channels. So I went to Verizon and I said, Hey, I understand you guys want to offer 150 HD channels. They said, yeah, that’s right. I said, well, I’m here to offer you 10 of them.
Byron Allen – CEO, Entertainment Studios: 30:26
And they said, how many do you have now? How many 24 hour cable networks do you have now that you want to offer 10 of? I said, zero. I said, but before you call security, I said, let me tell you what my thinking is. I’m originally from Detroit. I want to bring Henry Ford efficiency to television. When I did my first television show, Real People, I’d never seen such ways. I saw guys worked for two hours trying to get paid for 12 that’s not my DNA. So when I send a camera crew to pebble beach to shoot the car show Concours d’Elegance, I don’t want them to just shoot car content for a 24 hour car network cars.tv shoot content for a recipe.tv with all of the chefs up there at the resorts. Shoot the resorts for a travel channel, my destination.tv shoot, all of the pet community.
Byron Allen – CEO, Entertainment Studios: 31:13
Shoot what’s going on in the pet community for pets.tv and blah, blah, blah. They said, you know, we’ve heard a lot of ideas, but that’s one of the best we’ve ever heard. We’re not going to give you 10 networks. We’re going to give you six networks. So we made history and we launched six 24 hour HD networks. Then I went back a year later and said, I’m the largest producer of court shows. I have six court shows on the air. I like to do a 24 hour court channel. Then they gave me a seventh network and yeah. Then a guy came to me who satellites, all my networks. He came to me and he said, can I have dinner with you? I said, sure. We go to dinner and his company’s very successful. They satellite our networks. He goes, you may not know this, but before I ran this company encompass sataleting networks, I used to be the chief operating officer of The Weather Channel and he says, you live in LA and it’s always 80 degrees and sunny.
Byron Allen – CEO, Entertainment Studios: 32:01
You don’t think about the weather. He goes, but the weather is a great business and it’s owned by a private to private equity firms, Bain and Blackstone, and they own it with Comcast and are not getting along. He says, it’s like the best way I can describe it. It’s a beautiful home in a beautiful neighborhood and a bad marriage and you can get a good deal. He goes, you’re really smart. You’re very efficient. No one thinks the way you think and the way you operate businesses. You’re the perfect person to own the Weather Channel. And he goes, and I know you’re not thinking about it, you should buy it. And he started telling me about the revenue and the EBITDA. He’s like, yeah, these guys are pulling know like a couple of hundred million a year out in dividends, blah, blah, blah.
Byron Allen – CEO, Entertainment Studios: 32:42
I said, you have my attention, and so, and I said, so who owns it? He goes, you know, Bain and Blackstone. And I said, Oh, okay. He goes, why did you say it like that? Oh, okay. I said, I know those guys. And he’s like, Oh, you know them. I go, yes. I was at a coffee shop and I’m sitting at the coffee shop and this guy sitting next to me and I’m just friendly. Hey, how you doing? What’s your name? Well, my name is Byron. You do? And this guy says, yeah, I just moved here and this isn’t in the LA at the Beverly Hills hotel downstairs because I just moved here from New York. I go, why did you move here from New York. He goes, I bought a bank. I said, you bought a bank? I go, what’s the name of the bank? He goes, Indie Mac. I go, Indie Mac? I said, I saw people on the news last night standing in line trying to get their money out of that bank.
Byron Allen – CEO, Entertainment Studios: 33:30
He goes, yeah, that’s my bank, and they were talking. He’s like, I want to be your banker. I go “in that bank???” and he goes, yeah. He goes, I’m going to turn this bank around. He goes, I got investors, I got sorrows. I got Michael Dell, I got Polson and we raised billions of dollars. I got a backstop from the government, $10 billion. I’m a going to turn the bank around, and he goes, you know, why don’t we have breakfast? And it turned. I said, what’s your name? He goes, Steve Minutia. I go, okay. I said, all right. He goes, can we have breakfast? I go, yeah, this had breakfast. We go to breakfast and we’re talking. He and we like, yeah. He goes, I’m going to be your banker, right? I go, yeah. Okay. I don’t have a banker. You can be my banker. I don’t have one. At that point, I had factors. I had to, I couldn’t get it. I couldn’t get an invite. People ask me, why do you own your company 100%? I couldn’t get an investor. I’m going to talk about that. I’m going to talk about nobody would invest in me. That’s how I ended up with the company. 100 I couldn’t even get a bank loan. I had to go to people and say, I literally pay 26% interest for the first almost 20 years of my company, 17 years of my company.
Byron Allen – CEO, Entertainment Studios: 34:40
Which is predator, but I couldn’t, I was giving them receivables from McDonald’s and Coca Cola and Pepsi and General Motors. I didn’t have access to capital. And that’s one of the things that’s very challenging, especially for people of color. So I just said, it is what it is, but it’s not an excuse. I’m going to take care of myself. I’m going to take care of my mother. I’m going to take care of my family. We’re going to get this done. No excuses. We don’t run up to the wall. We run through the wall right, right? So he says to me, minutia calls me up. He says, I’m having my 50th birthday, I want you to come. So, okay. So my wife would mind, he says, you know, you have to wear all white bus fun. Go to his 50th birthday. And on one side of me I got this guy and I say, Oh, how are you doing? What’s your name? I go, Steve Schwarzman. I go, Hey Steve, how you doing? And the other guy was shot Howard marks. Okay, Hey, how you doing?
Byron Allen – CEO, Entertainment Studios: 35:38
And then, you know, and Steve and I started talking, he’s like, Hey, you know, I really like chatting with you, but why don’t we have lunch? I’m like, okay, you know, let’s have lunch. And then, you know, I’m sitting there and Schwartz and was like, you know, I’ve got this company in private equity. We manage like, I don’t know what trillion dollars, whatever it is. And he says, you know, I like the way you think. I want you to meet with my guy who runs media. His name is Peter Wallace. Mike Wallace’s grandson from 60 minutes. I go, this might while I was going to said, Oh yeah, I want to meet him. Right. So I go meet Peter. I said Schwartzman once you and I to meet. So I’m sitting here talking to you. He and I just talking to each other for about an hour. Nothing really to talk about. All right, nice to chat with you Pete. I go to breakfast with Howard Marks seven in the morning. I don’t know all these private equity guys want to have breakfast at like seven in the morning.
Byron Allen – CEO, Entertainment Studios: 36:28
So, I’m sitting with Howard and Howard’s like, yeah, you know, blah, blah blah. He goes, listen man. He goes, I really like you. He says, you’re really smart. He said, if you ever need anything you call me. He goes, my fund is right down here. We manage about a hundred billion. I said, all right, I’ll call you. So I go to try and get in the process to buy The Weather Channel and the bank won’t let me like, who are you? So my name is Byron. They go do you have the money to buy The Weather Channel? I said, I think so. I can get it, click hang up. All right, so I call up Schwarzman gets me in. Peter Wallace gets me in to the process, right. And there was a guy, Sandy Grewshaw who was on the board of the weather channel and he used to be the chairman of Fox and they went to him and he said, Byron Allen wants to be in the process.
Byron Allen – CEO, Entertainment Studios: 37:23
And he kind of laughed. He chuckled. He says, I don’t know how to say this to you. I ran Fox and this guy from his dining room table ate our breakfast, lunch and dinner. We had meetings about how fierce he was as a competitor and stole time periods from us. And we had meetings on like how to deal with him. Let him in the process, put them in the process. He will figure it out, right? So I get in the process and we had this private equity firm. All of a sudden, last minute they changed the deal up on us and I don’t know what that was all about. And you know, like he said, yeah, this is your interest rate, but then I want flex terms and then we can like, we can increase it by five times. I’m like, what the hell is wrong with you?
Byron Allen – CEO, Entertainment Studios: 38:12
So I said, you’re out. And my lawyers said to me, where are you going to get 310 million bucks? And in 24 hours you need to show Bain and Blackstone 310 million bucks or you’re out. I said, no problem, I’ll get it. Woke up the next morning, Friday and I called up Howard Marks. I said, Howard, we have an opportunity because the way I always looked at it is money is not the real commodity. There’s $20 trillion floating around us, right? The real commodity is the entrepreneur, the unstoppable entrepreneur who can get that money back with a great return. I’m the commodity. So I called up Howard and I said, Howard, I have an opportunity for you we can buy the Weather Channel and here’s where we can get it at. It’s a great price, blah, blah, blah. It was Friday morning. Howard said, don’t move. And he said, call this guy, he’ll be in your office on Monday.
Byron Allen – CEO, Entertainment Studios: 39:06
Guy came in, set my conference room for four hours. We went through everything. He said, this is the most amazing business story I’ve ever heard. He says, you didn’t get a term sheet tonight and a commitment letter tomorrow morning close on the Weather Channel. So Howard gave me 310 million in one day. And that was because we had breakfast, right? At seven in the morning. Wake up and go walking. So we close on the Weather Channel and Howard gave me like seven years, six or seven years to pay him back. And I’m like, no, no, no, no. I gave him the money back five months later. And so I get an email from Howard and I’m going to keep this email. I’m going to frame it was like he emailed like 4:30 in the morning. I’m like, what you’re doing up?
Byron Allen – CEO, Entertainment Studios: 39:57
How? And he says, you don’t know this, but we’re public. You may not know this. We’re publicly traded and you are, you were a shining star in our quarterly report because not only did you give back that 310 million bucks, she gave you back in five months and it $30 million thank you. Right? And five months, he goes, that’s one of the best returns we’ve seen in a long time. He goes, if you ever need capital, you call me first. You don’t need to call anybody else. Just call me. I got you. And I said, thank you Howard. And so we bought the Weather Channel a year and a half ago and it’s been a great investment for us. We’ve increased revenue. We just won our first Emmy. We just hit our highest ratings since 2012 and it’s been great. And so I started buying other companies. I bought, started buying TV stations, big four network affiliates. So now sports.
Byron Allen – CEO, Entertainment Studios: 40:52
Well that was different on this world. I bought the big four network affiliates under Allen media broadcasting. Okay. So ABC, NBC, CBS and Fox. In the last six months I’ve invested about 455 million in that category. I plan to invest billions more. Cause my goal is to be, when I met my wife almost 20 years ago, she said, what are you doing? I said, I’m building the world’s biggest media company. It always comes back to my wife. I said, happy wife, happy life. There it is. Hey, beautiful. Do you want to ride along with me? And she said sure. So we’re going to invest a lot of capital and buying big four network affiliates. That is something that is absolute foundation of our community. Local news, weather, sports. So right now we own about 15.
Byron Allen – CEO, Entertainment Studios: 41:39
We own 15 stations in 11 markets. It’s a great business. You’re talking about the regional sports networks. I did that personally and it’s the only thing I’ve ever done personally because I don’t, I don’t like to take capital in, you know, in the debt market and deploy it unless I control it 100% and the regional sports networks, Sinclair is running that. And I did it personally because I have a relationship with Sinclair. I’m one of their largest providers. And that was the purchase of the 21 regional sports networks from Walt Disney, from the Disney company, for 10.6 billion. Right. But that’s me personally with Sinclair, the two of us, that’s not Allen media because they’re running that. And I, if I take money from the debt markets, I have to be the one to carry the ball into the end zone.
Byron Allen – CEO, Entertainment Studios: 42:31
No excuses, I’ll put the ball in the hoop every time. So I didn’t control that. I’m like, Hey, if I’m passing the ball to use and clear, this has to come out of me, out of my family office. And that’s the only thing I’ve ever done outside of my corporation. 110% Everything else is in my corporation. For me and my family. So that’s really it. So I’ve just been buying companies and I’ve just been building. My focus is media. I love cable networks, I love broadcast networks, I love digital properties and we now see a pathway to double digit growth. So that’s really kind of where, where that’s been the story I think for us, I think there’s a great opportunity. A hundred years ago it was the industrial revolution and a hundred years ago the industrial revolution was funded. I mean, it was fueled by gas and oil. Today, 100 years later, it’s the digital revolution and the digital revolution is funded, it’s fueled by content. Content is the new oil content is the new gas and oil. And my goal is to be the Rockefeller of content. And that’s what I’m doing. I’m pushing out the content for all devices, completely agnostic and that’s why we own so many platforms. So that’s really it.
Robert Smith – Founder/Managing Partner, IECP Ventures: 43:53
Well, there you have it ladies and gentlemen.
Byron Allen – CEO, Entertainment Studios: 43:57
So as I was saying, there are a lot of you here. If you ever want to chat, email me. I’m happy to chat about anything. My email is Byron@es.TV. This is a community I’ve never seen all these beautiful people before in my life, so hopefully we can be new friends and I hope everything if anything I can do to help and give you advice or anything you’re looking at, let me know. Thank you.
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