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  • Happy_Bull Happy_Bull Aug 12, 1999 11:54 AM Flag

    Back down to earth

    I don't want to rain on anyone's parade but I
    really do not think Pax is selling. The news that
    appeared in Reuters and Daily Variety about a buyout
    sounds like the same leak that appeared earlier this
    year stating that Paxson and another communications
    player were in negotiations.
    I believe that with the
    74 stations Pax has and the digital spectrum it
    owns, Pax is more valuable in the future than if it is
    bought out. Pax has great potential and a sale of the
    company is not in the cards.

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    • It is my understanding that they intend to
      address it by yearend. I don't know whether Kinnard has
      specifically stated that. On the topic of clout, you are
      correct about affiliates, but the ones most opposed (i.e,
      those outside the top 75 markets) have the least
      political clout. In addition to the O&Os, the large and mid
      market affiliates (who will be happy sellers to the
      networks) are, with a few exceptions, ready to to along
      with raising ownership caps.

      I will do a bit
      more research about the FCC timing and get back to you
      if I learn anything.

    • Cat:

      Not sure a 32.5% stake will result in
      sending salesforce home. While NBC's O&Os have presence
      in 12 or so markets, that leaves Paxson with an
      additional 61 market to go it alone. Why do you think NBC
      affiliates will help out PAX


    • Arminius:

      You suggest the networks might
      have more clout than the affiliates, but without NAB
      supporting increasing in national caps, what makes you think
      they will move higher? I would argrue that the
      affiliates might have more clout with Congress (politics is
      local, they say).

      Has the FCC specifically
      mentioned that it wants to address o/ship caps by y/end?
      Even before elections? That would be fabulous


    • a sales force, just someone to answer the phone and take orders, bud can run a infomercial to sell advertising and have boiler room phone order takers..

    • FCC has indicated it wishes to address national
      ownership caps by the end of year. Big group broadcasters
      want the change (which will bring more leverage to
      them vs. their affiliates) and smaller station owners
      are against it. With an election year coming up,
      guess which group will have more clout? I think we will
      see the cap go up to 45-50%. As always, I believe
      that Bud has a direct line to the Great Regulator in
      the Sky.

    • Toast,

      Could you elaborate on why you
      think a partner will help on sales side? From what I
      hear, Paxson's sales problems are at local level not
      network. So how do these guys get the help they need in
      markets where big networks don't have owned and operated


    • that this is the first step in a multiple step
      take-over. Current FCC rules prohibit NBC from buying all of
      PAX today (35% ownership reach caps), but do allow
      equity investment of up to 32.5% without violating FCC
      attribution rules (that's why NBC will stop at 32.5%

      The next big issue is when Congress will raise
      ownership caps to 50% from 45% allowing PAX to be fully
      absorbed. What's current scuttlebutt on FCC ownership caps
      from those of you who follow the


    • I, too, have heard from station brokers that
      prices have moved 50% or higher from pre-duop days.

      w/r/t PAX's current FCC licenses, i think your pal
      refers to analog licenses. Currently, Bud's UHF signals
      are slightly inferior to VHF analog signals
      (obviously, 66% of Americans receive TV through cable coax,
      so signal less of a big deal today). However, once
      all stations move to digital there will be no
      material difference in signal quality.


    • All the talk about the potential value of
      additional digital channels neglects one thing there may be
      more channels available for PAX and other broadcasters
      but the # of viewers is the same,whos going to watch
      all these channels?Let's say NBC/GE buys a 32% stake
      for X millions whose stake would they buy the Class B
      shareholders [8,311,639 shares]with 10 votes per?or would PAX
      issue new Class B shares or something else.The point is
      with the sale of a stake in PAX now more likely than
      an all out buyout where does this leave Class A
      holders?[anyone not named Bud]

    • A good deal with GE/NBC is likely to set off a
      chain of events above and beyond the initial stock
      price lift: S&P would likely upgrade PAX's bond rating
      ... analysts would finally understand PAX's
      underlying assets and upgrades would follow ... NBC
      programming would lift ratings and push PAX into the black
      faster ... and profitability will force observers to
      finally notice PAX's unique business structure in the TV
      network industry (owning its stations instead of
      distributing product through profit-draining affiliates.) Have
      I missed anything?

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