|
NBC eyes Paxson stake
|
 |
August 20, 1999: 5:52 p.m. ET
Network reportedly in talks to buy 32% of local TV station operator
|
NEW YORK (CNNfn) - NBC reportedly is in exclusive talks to buy about a one-third stake in broadcaster Paxson Communications Inc., which put itself up for sale last week after the government relaxed rules on television station ownership.
NBC, a unit of General Electric (GE), is talking about taking a 32-percent stake in Paxson (PAX), according to The Wall Street Journal, citing people familiar with the discussions. Such a deal would be worth at least $300 million based on Paxson's current stock price, the newspaper said.
Paxson last week hired investment bank Salomon Smith Barney to explore a merger or sale. That came after the Federal Communications Commission ruled it will be possible for a company to own more than one station in a single market.
The changes are expected to spark a flurry of consolidation in the television industry, and Paxson is viewed as a particularly attractive target because it owns more than 70 stations across the country.
Analysts said NBC is more interested in buying a piece of Paxson and setting up a strategic alliance than gobbling up TV stations outright. A 32-percent stake would likely be granted through the issuance of new stock, said one analyst, making the deal worth at least $400 million.
Jim Marsh, a Prudential Securities analyst who currently rates Paxson as a "strong buy", said in a research note on Friday: "This is the likely first step in a multiple step transaction in which NBC will take control of Paxson."
But in the meantime, an alliance rather than a buyout could leave open the door for Paxson to line up other such partners - including Fox or CBS.
That would also give NBC leverage in dealing with its local affiliates, which the network has asked to help pay for some programming costs. The Paxson systems would give NBC another conduit to homes.
The total appraised value of Paxson's television assets is around $2.9 billion, said Chairman Lowell "Bud" Paxson during a recent conference call.
NBC and Paxson declined to comment.
In anticipation of a possible deal, Paxson's shares have gained more than 30 percent in value over the past two weeks. But the stock lost ground Friday in the wake of the Journal report, which suggested a deal could emerge in the next several weeks.
Paxson, of West Palm Beach, Fla., shed 1-1/8 to 15-1/8, while GE shares added 7/8 to 111-7/8.
The Paxson network, a self-styled "family-friendly" network, broadcasts a mix of new programming and reruns. Its top-rated shows are "Touched by an Angel" and "Diagnosis Murder."
|
|
|
|
|
 |
|
