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Pax, NBC Find Common Ground

Mar 22, 2004  •  Post A Comment

The honeymoon is still over for Pax TV and NBC.
The media world’s version of the War of the Roses is still on despite a head-scratcher of an announcement from Pax last week that it hopes to broaden its appeal and sharpen its image with executive expertise and development, production and programming help from NBC Entertainment and NBC Studios. The announcement came one day after Pax announced it would restate three years of financial results.
What Pax gets is the launch of two game shows, four reality series and the development and launch of at least three scripted series. Pax also gets NBC’s razzle-dazzle when it presents its 2004-05 lineup to advertisers in May. What NBC gets is an opportunity to boost revenues from the advertising the network and some of its own stations sell on Pax.
Pax, which hired Robert Word, a well-traveled entertainment executive, as senior VP of program development and production in February, is the seventh-rated national network, but it isn’t really a contender in the overall ratings race at this point. The latest move will add a little curb appeal to the unusual house that Pax built.
NBC still expects to be bought out of Pax in November, less than five years after sinking $415 million into the little network that couldn’t parlay G-rated programming into a significant audience. The latest moves may help make the 61 Pax stations and the network more attractive to potential buyers.
“There clearly is a lot of room to improve on our programming,” said Seth Grossman, executive VP and chief strategic officer for Pax.
Mr. Grossman said Pax wants go “a little more mainstream” without what he called the “foul language, gratuitous sex and excessive violence” in some of NBC’s most popular programs.
NBC Entertainment Senior VP Sheraton Kalouria and development director Narendra Reddy will render nonexclusive consulting services for Pax at NBC’s request, according to the announcement.
NBC announced in November 2003 that it was exercising its right to have Paxson Communications Corp. buy back the 32 percent stake NBC had bought in 1999 and which was in September 2003 worth about $549.2 million, including interest. Mr. Grossman said things remain at a “standstill” on that front, with Pax not in a position to redeem NBC’s investment.
A money crunch also forced Pax last year to cut back on original programming. Mr. Grossman suggested that announcements about new original programming-“still within our cost-containment structure”-are imminent. He indicated that new programming could debut as early as May.
Separately, Paxson said Monday that it would restate its financial results for 1997-2000 to correct how the company accounted for stock-based acquisitions of several television stations, and that it will file its 2003 financial results late because the audit of its books is incomplete.
The company said the restatements would not affect the company’s revenue, cash operating expenses or cash flow for the years in question but will change the company’s deferred tax liabilities related to the acquisitions.
Paxson said it failed to establish the proper deferred tax liability for the difference between the book basis and the tax basis of each station’s Federal Communications Commission license, as required by accounting rules.
In correcting the error, the company said it expected to record additional intangible assets and deferred tax assets.