Paxson stock holds despite quarter loss

Revs up, but company spent heavily to prepare Aug. 31 PAX TV launch

Shares of Paxson Communications held steady Thursday after the company reported the results of a heavy-spending quarter in preparation for the Aug. 31 launch of family channel PAX TV.

Paxson’s net loss of $4.1 million for the quarter ended June 30 compared with earnings of $36.1 million in the year-earlier period.

The recorded loss would have been much greater had the company not included a $37.3 million pre-tax gain from the sale of television assets.

Revenues rose 64% in the quarter to $30.4 million, while operating cash flow — or earnings before interest, taxes, depreciation and amortization — swung from a surplus of $5.8 million in the year-earlier quarter to a deficit of $400,000.

Paxson attributed the declines to “PAX TV launch costs and additional costs associated with the company’s expanded broadcast television station group.”

The company reported that it signed on eight affiliates during the quarter and expanded on its existing cable-distribution agreement with Tele-Communications to include Compacts, InterMedia Partners and TCA Cable TV.

These additions were designed to give PAX TV a presence in the country’s Top 25 markets.

“All of the supporting elements are in place to ensure a successful launch,” said newly installed Paxson CEO Jeff Sagansky, who also cited a restructured sales team and a $25 million launch campaign.

The results, though unsurprising, aren’t likely to appease the credit rating agencies, which have expressed fears about Paxson’s increased reliance on entertainment.

Just last month, Standard & Poors downgraded Paxson’s debt to a triple-C rating, one of the lowest assigned by the agency.

Paxson stock gained 6¢ a share Thursday to close at $10.06.

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