William and Dave,
I thought Bud answers to the shareholders not the Lord. Bud needs to show some confidence in his plan (or in the Lord)and buy back some shares. I am afraid that his mission is now personal rather than financial. Comments?
Marc
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New Network Has Faith In Family, Infomercials
PALM BEACH, Fla. -- Can a TV network based on godliness and
infomercials get good ratings?
Lowell "Bud" Paxson thinks so. Wall Street is less
sanguine. The network in question is the brainchild of
Mr. Paxson, the founder of Home Shopping
Network and owner of an empire of 66
full-powered TV stations in cities including New
York, Chicago, Los Angeles and San Francisco.
Since Mr. Paxson announced his intention last
month to meld his stations next fall into a network --
PaxNet -- based on religious-oriented family
programming and infomercials, shares in Paxson
Communications Corp. have fallen by about 25%,
closing Wednesday at $7.6875 in composite trading
on the American Stock Exchange.
For Mr. Paxson, the owner of about 54% of the company's shares
outstanding, the drop has taken about $75 million out of his own wallet. No matter. "It was pretty predictable we felt going in that the market wasn't going to react," he says. "All I can say is that this is what the Lord wanted me to do."
Mr. Paxson says his new strategy was inspired
by his own faith. A decade ago, he became a
born-again Christian in Las Vegas, after his
former wife left him for another man. In
pursuing his network goal, he has also enlisted
the country's two biggest infomercial producers,
National Media Corp. and Guthy-Renker
Corp., to develop their first entertainment programming for prime time,brushing aside a TV convention that has held that programming and
advertising should always remain separate.
Mr. Paxson has shelled out more than $200 million for reruns of CBS Inc.'s family-oriented hits, including "Touched by an Angel" and "Promised Land."
He's also buying programs produced by Focus on the Family, the pressure group that has helped lead the boycotts of Walt Disney Co. and its ABC unit's controversial church drama, "Nothing Sacred." Late at night, PaxNet will scroll Bible verses across the screen set to inspirational music.
Another idea: an interview program called
"Celebrities and Charities" that would be
produced by Mr. Paxson's wife, Marla, and
would feature movie stars and magnates such as
Paxson friends Donald Trump and Sylvester
Stallone making pitches for their favorite
charities.
The plans baffle industry leaders who were at
one time intrigued by Mr. Paxson and his plans.
"He's just taking an absolute flier," says Robert
Wright, president of General Electric Co.'s
venture."
Mr. Paxson, however, is convinced he is tapping into a new spirituality in America. "In the 1950s, we were a bunch of puritans," he says. "Then the pendulum swung. But how many more car crashes, how many more Uzis can you watch? The pendulum is swinging back."
There is some evidence that he's on to something. "Touched by an Angel,"about heavenly creatures who intervene in real-life situations, is the second-highest-rated drama on television, behind "ER." A slew of books about faith are on bestseller lists, and there is widespread evidence of a renewed interest among young people in spirituality.
Making Mr. Paxson's venture even more
unorthodox is the fact that he's pairing his religious
ideas with old-fashioned Home Shopping Network
hucksterism. Many of his shows -- even those with
a religious tinge -- will incorporate some of the
selling tactics that Mr. Paxson pioneered in the
infomercial business. Among the ideas under
development: "The Mike Levey Show," a talk show
starring the host of one of the infomercial world's most popular programs,"Amazing Discoveries." If, for example, an author goes on the program to talk about his new book, the interview will be followed by a toll-free number where viewers can call and order it. All of the topics will fit under the family-values label that Mr. Paxson says will define his network. "It will be a total soft sell," Mr. Levey says. "The viewer will hardly be able to notice it."
Other possibilities that are under consideration include a fitness programwhere viewers can buy the featured equipment and a makeover show that would peddle makeup. The network's even talking about a "Touched" spinoff, which would ask people to submit their lifelong wishes, then would use the database generated by the responses to market products.
Mr. Paxson says his plan is to structure his network, which will reach 80% of the country, like a collection of local, independent stations,
depending on local advertising and a bare-bones staff. "This is all I've done my entire life -- sell local advertising," Mr. Paxson says. "It's a fairly simple formula."
But some of Wall Street's worries center on Mr.
Paxson's lifestyle, which, doubters say, doesn't
augur well for his plan to run a tight ship. He has a
corporate jet emblazoned with the PaxNet logo, a
132-foot yacht and a $12 million, 35-room
oceanfront mansion in Palm Beach that was once the winter home of
Woolworth heiress Barbara Hutton.
Sitting in the wood-paneled dining room, the Paxsons maintain that the lavishness of the surroundings mask what is a simple, spiritual life. "This is the way the Lord works," Mr. Paxson says, waving his hands towards a fountain garden that spills out into the Atlantic. "I see a blessing of the Lord in what I'm doing. Now, I've just got to keep it up."
Longtime Paxson watchers say his past success indicates he shouldn't be dismissed. One such observer, Eric Rhoads, a West Palm Beach publisher,says: "You read stories about people in history who are considered to be wacko. I think Bud is one of these guys who will prevail."
Mr. Paxson's first foray into selling came when he was a kid and realized he could raise hamsters, sell them to a university laboratory and make a mint.Later, after he assembled a group of radio stations in Florida, he agreed to take 112 electric can openers, instead of cash, from an advertiser who owed him money. Mr. Paxson took the can openers back to one of his stations, recruited a disk jockey, and sold them over the air. The idea for Home Shopping Network was born.
Mr. Paxson says most of his big business decisions have been directed by God. Most have also raised eyebrows. When he vastly expanded his radio portfolio in the 1980s, he was scoffed at by critics believing it was folly to own more than a handful of stations. Today, thanks to a repeal of federal laws that Mr. Paxson lobbied for, the radio landscape has consolidated.
Later, he repeated the same strategy in television, building a stable of independent stations at a time when the independent-TV market was losing its luster. Now, thanks to a Supreme Court decision that went in Mr. Paxson's favor, all of his stations have a guaranteed slot on local cable systems and will be given a chunk of the digital-TV spectrum once it's parceled out.
Mr. Paxson, whose office is lined with letters and lithographs from pioneers of the broadcast industry, says his goal with PaxNet is not to become a new media mogul. Rather, he says he hopes simply to spread his Christian faith -- and, as he puts it -- to stay in the game. "I can't retire," he says. "I've got the biggest house in Palm Beach and the most beautiful wife. What do you want me to do? Play golf? Go to the beach? You do it because you can do it." |
