Paxson Reports Q1 Decline in Revenue

May 10, 2005  •  Post A Comment

Paxson Communications on Tuesday reported a slightly narrower first-quarter loss and a decline in revenue, all brought on by the continuing ratings challenges confronting the broadcaster.

West Palm Beach, Fla.-based Paxson posted a loss of $48.2 million, compared with a year-earlier loss of $48.7 million. Revenue fell 4 percent to $68.3 million, a result of lower network spot revenue triggered by lower ratings at Paxson’s struggling Pax network.

“We expect 2005 to be a challenging year for us,” the company said in its quarterly financial filing to the Securities and Exchange Commission. “Our principal business objective is to improve our cash flow and increase our financial flexibility, so that we may pursue refinancing alternatives with a view to reducing our cost of capital.

“We believe that if we are able to improve our cash flow and reduce our cost of capital, we will be able to improve the degree to which our operating business supports our capital structure and improve our ability to avail ourselves of future opportunities to strengthen our business that may arise due to changes in the regulatory or business environment for broadcasters or other future developments in our industry.”

The weaker financial performance comes as Paxson also faced higher expenses related to operating its 60 television stations and its purchase of original and syndicated programming. The company also booked a one-time restructuring charge of $2.4 million related to employee termination costs related to its strategy shift toward relying more on paid programming.

To that end, Paxson is in the process of unwinding joint sales agreements it has with NBC and with several station groups with NBC affiliates to make way for paid programming content. That process should be completed by the end of June. Also, Paxson has eliminated 50 positions.