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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: debra vogt who wrote (56450)	8/18/1999 9:08:00 PM
From: kha vu	Respond to of 120523

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To: debra vogt who wrote (56450)	8/18/1999 9:50:00 PM
From: debra vogt	Respond to of 120523

Wednesday August 18 2:32 AM ET Paxson prepares books for sale By Jill Goldsmith and Cynthia Littleton NEW YORK (Variety) - Paxson Communications Corp.'s (AMEX:PAX - news) $70.5 million second quarter write-off looks a lot like a hasty effort to clean up its books ahead of a sale, according to many on Wall Street. NBC and News Corp. are said to be among the leading suitors for West Palm Beach, Fla.-based Paxson, whose stock price has been soaring since an Aug. 5 ruling by the FCC made it possible for big broadcasters to own two stations in the same market. The move has ignited a wave of speculation about imminent takeovers of Paxson and other pure-play broadcast groups like Chris-Craft/United TV and Young Broadcasting. Paxson, which owns 72 TV stations across the U.S., is now a hot commodity, even as its family-oriented Pax TV network fights an uphill battle with ratings and ad revenue. Industry sources say some form of merger or alliance deal is likely by year's end, possibly within the next month or so as Pax TV's losses mount. The $70.5 million write-off of its syndicated programming inventory reflects a decrease in the value of those programs' value due to lower anticipated future usage, Paxson said Monday. Ratings and revenue generated from Pax's telecasts of vintage syndicated fare were far lower than Paxson's initial projections to Wall Street. ``They're basically telling a buyer that they're cleaning the books up,' one Wall Street analyst said. He and others always felt a write-off was inevitable as Paxson's primetime ratings continued to be soft. Wall Streeters now wonder if the $70 million was everything. ``That's the question. That's what the buyer will be looking for,' another analyst noted. The write-off stems mostly from acquisition costs of ``Barnaby Jones,' ``Highway to Heaven' and ``Love Boat' and, to a lesser extent, ``Promised Land,' several Wall Streeters said. Paxson was apparently having telephone problems Tuesday and a spokeswoman wasn't available to comment. The company also posted revenue of $58 million and a net loss of $83 million for the second quarter. Paxson chairman and CEO Lowell ``Bud' Paxson launched PAX TV on his own last year after failing to find a studio partner willing to supply programming to his growing group of UHF stations. Paxson committed tens of millions of dollars for rights to syndicated shows, supplemented by some original programming and insisted he had no plans to sell, despite constant speculation to the contrary. But if he wants to exit, the FCC ruling certainly gives him a graceful, and potentially highly lucrative, way out. Wall Streeters said Bud Paxson was valuing the company at about $2.8 billion before the FCC ruling, and likely wants more now that the pool of possible bidders has expanded. The fact that he'd probably be willing to sell out completely and step down, which he resisted before, could also make a deal easier, several industry players noted. While Paxson's stock has climbed from a low of about $10 in late July, its share closed down $1.75 to $14.69 Tuesday on the weak earnings report. It's not yet clear if Paxson can command the price he wants. NBC has been eyeing the company for months. While insiders dismiss the idea, a number of Wall Streeters think NBC may want to use Paxson's impressive chain of stations to boost distribution of the ValueVision home shopping cable network, in which NBC owns a 40% stake. NBC has promised to roll ValueVision out on cable systems, but the network may not be able to get as much carriage as it had hoped. The Paxson stations could also become secondary outlets for all manner of NBC-produced programming, from local newscasts to daytime soaps. An NBC spokeswoman would not comment on rampant speculation about any merger or alliance. News Corp., meanwhile, is examining a number of options, including Paxson, Young Broadcasting or just Young's indie KCAL in Los Angeles, as well as the broadcasting arm of Barry Diller's USA Networks. Sources said talks with Diller grew complicated, but that nothing is being ruled out. Others think Sinclair Broadcast Group is a more likely buyer of the USA assets. As for KCAL, News Corp.'s Fox could consider the station as an L.A. outlet for its myriad TV sports rights holdings, most notably the Fox-owned Los Angeles Dodgers. Chris-Craft/United Television is also seen as a prime takeover targets, thanks to the flurry of buyout and merger rumors sparked by the FCC's decision to relax the decades-old duopoly rule. Reuters/Variety