NEW YORK — TV broadcaster Paxson Communications Corp. announced Monday it has hired Wall Street investment bank Salomon Smith Barney to explore a merger or sale of the company, which has just become a highly attractive takeover target.
Paxson said the move, which pushed its stock to a new 52-week high, followed a key meeting last week by the Federal Communications Commission.
The FCC voted to relax its restrictions on station ownership. Under certain conditions, it will now be possible for a company to own more than one TV station in the same market. And the ruling also stipulated that a second station in a market would not count toward a broadcaster’s national audience reach, which is now capped at 35%.
The ruling is expected to launch a round of consolidation in the television broadcasting business, with Paxson the first to officially put itself on the block.
Paxson, of West Palm Beach, Fla., owns or operates 72 stations across the U.S., all affiliated with fledgling PAX NET, the struggling family-values network Paxson chairman Lowell “Bud” Paxson founded nearly two years ago.
PAX NET staples include reruns of “Touched by an Angel” and “Diagnosis Murder.” The net has been adding original programming but hasn’t found a big audience, although Bud Paxson has consistently denied rumors that his company is for sale. The FCC rulings opened the door for him to acknowledge, and to celebrate, a potential divestiture.
The stations, mostly UHF, reach 76% of U.S. households and would be a nice complement to a number of broadcasters looking to add heft and take advantage of the new rulings. Bud Paxson, well aware of this, has gleefully called Paxson “the prettiest girl at the party.”
“It has been the company’s plan to maximize long-term shareholder value with a number of media companies including television, radio and cable operators,” Paxson said in a statement, noting that it hasn’t yet made any decisions on where to cast its lot.
Potential bidders could include CBS Corp., Fox parent News Corp., Tribune Co. and others.
Paxson shares have gained every day since the FCC meeting. They closed Monday up $1.06 at $15.12 — about three times where they were trading last fall.