The Paxson Communications garage sale continued apace yesterday, as the cash-strapped and debt-encumbered TV station owner and programmer announced plans to sell its Shreveport, La., station KPXJ-TV for $10 million in cash to KTBS, its joint sales agreement partner in the nation’s 81st largest market.
This is the second such disposal for the West Palm Beach, Fla.-based company. Earlier this month, Paxson sold its Albuquerque, N.M. station to Univision-owned Spanish-lingo net TeleFutura for $20 million.
Paxson operates the largest broadcast station portfolio in the U.S., with O&O stations reaching 64% of the U.S., including stations in all of the top 20 markets. But despite the considerable asset value of its stations, the company is weighed down by debt service obligations that may exceed its cash-generating abilities. Much of the problem stems from its struggling program network.
Ratings agency Moody’s last week was evidently unmoved by the pace of asset disposals and lowered its credit rating on several classes of debt, citing weak operating performance and revenue growth and continued program investment plans.
“Paxson has been challenged to improve ratings and grow revenues at a level that would be sufficient to support the company’s existing debt burden.” Moody’s concluded. And while it notes that the company will boost cash from operations this year, thanks to staff cuts and syndication sales, its continued investment in original programming will offset any potential gains.
Presiding over deregulation-inspired TV station sales is probably the only strategic option for chairman-CEO Lowell “Bud” Paxson. Paxson last month said he was awaiting word from 32% shareholder NBC as to whether the Peacock intends to tender for the balance of the company and its prized 63 full-power TV stations. If NBC declines, Paxson said he would look to unravel the partnership with NBC and entertain other offers.
For its part, NBC said it would not be pressured by Paxson’s overtures.
Speaking on his most recent deal, Bud Paxson said the transaction “demonstrates the keen interest in our broadcast stations heightened by the FCC’s new rules.”
Subject to FCC approval, the sale is expected to close by early fall.
Separately, Paxson announced that it has promoted Cheryl Scully to vice president and treasurer, responsible for all treasury operations and investor relations.