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Apr. 7--Paxson Communications Corp.'s stock soared Wednesday after reports that television host and entrepreneur Byron Allen plans to make a $2.2 billion bid on the West Palm Beach-based broadcasting company.
Allen's Entertainment Studios Corp., based in Los Angeles, would pay cash for the struggling Paxson, and turn it into a network geared toward urban and black audiences.
"We're very interested in the asset and aggressively pursuing it," said Allen on Wednesday. "It's a wonderful company with one of the best distribution systems in the business today."
Allen said he is working with Credit Suisse First Boston and equity firms to establish financing. He also said he's met with Paxson in West Palm Beach and praises its management. Allen said Paxson would remain a separate entity and may continue to be based in Florida.
"We like the infrastructure of the company," said Allen. "We're just looking to put a different type of programming in the tape machine."
Paxson owns 60 television stations across the country and its PAX TV network reaches 95 million homes or 87 percent of prime-time households. Bud Paxson founded the company in 1991 and focused its programming on family-friendly fare. But the company has struggled with rating and earnings.
On Tuesday, Paxson stock ended the day trading at 60 cents per share, far below its 52-week high of $4 per share. On Wednesday, after news circulated that Allen might bid for the company, Paxson shares opened and closed at $1.41 per share.
"Byron Allen is a talented entrepreneur," said Leslie Monreal, Paxson spokeswoman. "We're not commenting any further."
Allen is best known as one of the hosts of Real People in the 1980s. His company produces 15 syndicated shows including Entertainers With Byron Allen.
Buying Paxson would also mean paying off $1 billion in debt and buying out NBC Universal's 32 percent stake in the company. In 1999, NBC invested $415 million in Paxson, agreeing to share advertising and promotions.
"The idea is to cash everyone out beginning with the senior debt," said Allen. "Then take it private."
Allen said he has met with NBC to discuss the purchase.
A new, urban-geared network would compete with Viacom-owned Black Entertainment Television (BET), which is about to celebrate 25 years on the air. Allen says there is more room for more than one network aimed at that audience.
"No one network can speak for a group as diverse as African-Americans," Allen said. "Targeting an African-American audience will attract premium ad dollars that I know are out there."
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