CHANGE THE NAME GAME
As of March 1, 2006 Paxson is no more. The new name is ION MEDIA NETWORKS. As any kid who took high school chemistry knows, an ion is an element that is short a few electrons. How appropriate for the company that has always been short a few bricks of a full load. And what about its shareholders? They will get a chance to approve the change that has already happened when they meet in June.... A rude awakening for those that bought Pax stock for $17.38 in August 1999 to find it worth 37 cents in November 2005 and the network $1.6 billion in debt. However, showing some degree of network leadership, the official name change came before UPN and WB became CW and My Network.
SOME HISTORY-
At high noon, local time, the family friendly "network" launched on schedule, August 31, 1998. Almost exactly one year later, PaxTV and its 50+ stations are sold.
NBC paid $410 million for a 32.5% stake and de-facto control. It cannot make an outright purchase because a network cannot own stations that would reach more than 35% of the combined national audience. Once in control though it could dissassemble the station group by selling to itself the duopoly stations (ie New York, Los Angeles, Chicago) which would not contribute to the coverage cap. It has already taken over operations of duopoly stations including programing them with left-over news casts. The remainder could be played as bargaining chips in other markets that may have uncooperative affiliates, such as KRON was in San Francisco.
NBC is still shopping for networks, and just coughed up $2 billion more for the Telemundo spanish language stations. Telemundo reaches an estimated 88% of TV hispanic households, primarily by cable channels. With the loss of TV transmitting equipment in the World Trade Center, NBC network will now have to pay to rebuild 3 complete full power stations-- NBC, Telemundo and Paxson. On the bright side Pax got his insurance settlement of $24 million for WPXN WTC losses in May 2005.
Of course this pales in comparison to the $36 billion purchase of CBS by Viacom that includes 5 duopoly stations. This deal also goes over the 35% cap so a few stations might be sold; but that is not a problem, everyone seems to be buying TV stations now.
Including Bud Paxson, who just bought back 9 TV stations in overlap markets from DP Media (DP is Devon Paxson, son of Bud). Seems DP bought these during the years that it would have been illegal for Bud himself to own them. Thus the new duopoly rule has put $135 million of shareholder money into junior's pocket.
For 2002, the picture shows little improvement. With NBC deciding to invest elsewhere, Paxnet continues to lose money at an astronomical rate, $102 million loss in just 3 months ending September 30, a cumulative loss of over $158 already for the year, with another 3 months to go. Just where does all these millions come from? care to make an investment. From NBCs viewpoint, it has until 2009 to exercise its option to purchase the rest of the company, and at the current state of affairs, Paxnet will have to be virtually bankrupt or otherwise worthless by then, so why rush in to push up its ultimate purchase price? NBC has pulled its nominated members out of the Paxson board proving it has no desire turn around the situation by providing good management. The network has maintained some liquitity by selling strategic stations, such as Merrimac (Boston) and Porterville (Fresno)
Bud has suggested that NBC recind its agreements so Paxnet can be sold to MGM studios for example. MGM has expressed no interest in buying the sinking ship, however they did indicate they would indeed be willing to buy national TV access time at below firesale prices. Rumors of buyers have emerged whenever Bud needed to sell off stock for pin money, the latest was in April 2005 when it was said Byron Allen would put up $2.2 billion to make over PaxNet as a Black television network.
Desparatly trying to keep the bride at the altar, Paxson filed with the FCC to deny NBC's purchase of the Telemundo network assets. After patiently listening to all the backroom shenanigans going on at the PaxNet board room, all the Commision could offer was a public admonishment concerning such child-like behavior. The public record makes for interesting reading, FCC 02-113, Memorandum opinion and order concerning NBCs petition to operate Telemundo TV stations.
NOT READY FOR PRIME TIME:
Paxson has finally been able to get ratings reported from Nielsen for its programs (it was hard for them to track such low numbers). Top rated show for week 27 (March 24-30, 2003) was the Thursday night Diagnosis Murder with a 1.2 a slight improvement over its lead-in program It's a Miracle at 1.0 When Paxson first started his network, he carried a couple of World Wrestling Federation shows temporarily while they were changing nets. The Thursday night rating for UPN WWF Smackdown! was 3.2 almost 3 times the audience running heads up against PAX's best. However note this, no nationally rated network (ABC, CBS, NBC, FOX, UPN or WB) had any show with a rating as low as PAX's top program. (Worst Non-PAX shows were WBs On the Spot and UPN The Parkers / Twilight Zone each with a 1.4)
NBC UNIVERSAL TO THE RESCUE
After firing his staff and threatening to program Ion as all informercials (not an idle boast, InTV the all informercial network, was the mother of Paxnet), Bud sold NBC an option to buyout his 63% voting stock for 25 cents a share (down from $12.50 originally). This leaves open an opportunity for Randy Falco, president of NBC Universal Television Networks Group to broker a sale of Ion to Yahoo or Google or perhaps another company that is not accustomed to making profits. Anyway NBC-U went in with Citadel investment group May 4, 2007 to finish the purchase, the partnership allows NBC to remain as a "minority" ownership interest. Stock holders would have prefered the higher buyout offered by Echostar, but now that the stock is so worthless that it has been de-listed, they are fortunate to have anyone running the show.
OLD SHOWS
Branden Burgess, new CEO for Ion has inked deals with Warner Brothers and Sony for tired 30 year old programs. The spin term he uses is "popular series and theatrical hits with proven audience appeal." That is almost the same spin that Bud himself used years ago to justify running all infomercials, "every show a winner". Two new old winners for ION is the Bodog fights (remember WWF?) and Melissa Scott, the 3rd and youngest wife of the late Rev Gene Scott, who was the former owner of IONs Los Angeles and San Francisco stations. A search of the Ion corporate internet site lists no shows committed for airing on the network, it might be better re-named as the Box of Chocolates Network, becuase you never know what you will get when you tune them in.
At one time Bud had the distinction of owning the most television stations. However he has been selling them off to make payroll, and his station count in 2005 dropped to below that of Sinclair Broadcast Group. The difference is that Sinclair stations have real network affiliations and make money.