PAX TV FOUNDER RESIGNS
By Jeremy Reynalds (11/09/05)
NBC Universal and Paxson Communications have ended a months long feud over the future of what is now called the "i" network.
According to Media Life (http://medialifemagazine.com/artman/publish/article_1170.asp),
NBC Universal and Paxson reached an agreement Mon. that could result in NBC buying Paxson.
That, Media Life commented, will definitely lead to a lot of changes for the long-struggling independent network.
As part of the agreement, founder Lowell "Bud" Paxson has resigned from the network, stepping down as chairman and CEO.
Essentially, Media Life wrote, the deal gives NBC the option to either buy the network outright or walk away from its investment, giving back its stock.
Under the deal, NBC Universal will pay $25 million and get 18 months to purchase all of Paxson's shares. Paxson controls the company's voting shares.
NBC can't immediately exercise the option, Media Life stated, because of current Federal Communications Commission rules governing station ownership concentration. Those rules may change, however, if the FCC attempts to again rewrite regulatory rules.
NBC may also transfer its option to a third party. According to Media Life, if the option is exercised within 18 months, NBC or whoever owns the option will offer to buy all of Paxson Communications' Class A stock and thereby take over the company.
If NBC or whoever owns the option doesn't exercise it in 18 months, NBC will return $105 million of the Paxson stock it already owns to Paxson shareholders.
NBC paid $415 million for a 32 percent stake of Paxson in 1999. According to Media Life, the two companies had a good relationship for a number of years, sharing programming and operating a joint advertising sales venture.
But more recently the relationship soured, Media Life commented. In May, NBC filed an arbitration complaint against Paxson after the West Palm Beach, Fla.-based company terminated its joint advertising agreement with NBC.
NBC also voiced concern when Pax rebranded as "i" earlier this year after months of ratings problems. Though the Pax/i brand is seen as weak, Media Life wrote that the network has value because of the 60 stations Pax owns across the country.
As part of the agreement, all legal actions pending between the two companies were dropped.
A FAMILY FRIENDLY ALTERNATIVE
Bloomberg reported (www.bloomberg.com/apps/news?pid=10000103&sid=aV1ygj84j5Bc&refer=us) that Paxson, a born-again Christian who founded the Home Shopping Network in 1982, created Pax TV as a wholesome alternative to typical network programming.
The schedule is filled with reruns of series such as "Bonanza," and some new shows such as "Doc," a drama starring country singer Billy Ray Cyrus as a country doctor.
"It's programming that tends to attract an older audience, and it's more difficult on Madison Avenue to get a premium price and any kind of revenue" with viewers older than 55, Bloomberg reported Randy Falco, president of NBC Universal's television networks group, said in an interview.
Although the network appealed to families, its ratings have slumped for the current TV season, according to Nielsen Media Research findings reported by Bloomberg. An average of 540,000 viewers watch the network during prime-time evening hours, a decline of 7.4 percent from a year earlier.
NBC and Paxson will seek a partner that will be able to help overhaul the "i" network's programming, Bloomberg reported Falco said. Paxson's 60 stations may provide a potential partner with an easier alternative for expanding into television than creating a new cable-TV network, he added.
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