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Talks reported between NBC and Paxson

Saturday, August 21, 1999

By Rob Owen, Post-Gazette TV Editor

NBC 2, anyone?

The network is in talks to buy a stake in Paxson Communications Corp., which owns or operates 73 television stations across the country, The Wall Street Journal reported yesterday.

The talks focus on NBC buying 32 percent of Paxson, the newspaper reported, citing unidentified sources familiar with the talks. The move would be worth more than $300 million at current stock values.

Last week, Paxson said it had hired Salomon Smith Barney to explore its options following a federal decision allowing a single company to own more than one TV station in a local market.

The Federal Communications Commission decision allows Paxson to sell nearly a third of its stock to a TV network.

Launched last year, Paxson's Pax TV has a presence in most of the nation's largest markets but has been struggling to find an audience for its rerun-heavy programming, often attracting less than 1 million of the 100 million households it reaches.

If NBC's bid is successful, Pax TV's family-friendly programming may give way to a network of secondary NBC stations. This week's Broadcasting & Cable magazine suggests NBC could use secondary stations to move into local sports programming or to create a teen-skewing network like The WB without draining viewers from NBC.

The Wall Street Journal reports NBC may use secondary stations as leverage in bargaining with affiliates. If NBC can't reach an acceptable financial agreement with an affiliate, it could pull its programming and put it on the Pax station.

The uncertain future of Pax TV raises questions about the sale of WQEX, Channel 16.

The proposed sale, which has been awaiting an FCC decision since July 1997, would allow WQED and WPCB to split the $35 million Paxson is paying for WPCB's spot on the dial. WPCB, a Christian station owned by Cornerstone TeleVision, would move from Channel 40 to Channel 16. Pax TV would take over Channel 40.

Steve Lerman, Washington, D.C.-based communications counsel for WQED, said there would be no negative impact on the WQEX deal if NBC buys into Pax.

"I would view it as a positive," Lerman said. "I would view it as a strategic alliance that would enhance Paxson and it wouldn't have any negative effect on Paxson's need or desire for a Pittsburgh outlet."

Pax paid WQED a $1 million advance on the purchase of WQEX earlier this year. Under terms of the agreement, if Pax pulls out of the deal, WQED gets to keep the money.

Nancy David Udell, vice president of publicity for Pax TV, said the company has no comment on the potential deal with NBC.

-- The Associated Press contributed to this report

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