Television celebrity and businessman Byron Allen Tuesday said his Entertainment Studios Corp. may bid $2.2 billion in cash to acquire the struggling Paxson TV network and remake it for black audiences.
Allen, remembered as the star of 1980s TV show "Real People," told Reuters he is working with investment bank Credit Suisse First Boston and several undisclosed private equity firms to establish financing, but no company had yet committed to backing his company in an offer.
The network's parent, West Palm Beach, Florida's Paxson Communications Corp., owns 60 local TV stations that reach nearly 90 percent of all U.S. households.
But its family oriented programming has failed to catch fire with audiences. Paxson has continually reported annual net losses and is embroiled in a legal tussle with its major stakeholder, General Electric Co.'s NBC TV network. (MSNBC is a Microsoft-NBC joint venture.)
"This is an asset (Paxson) that has a great deal of unleashed potential," Allen said. "The goal is to take one of the largest groups of television stations and turn it toward African-Americans."
Allen reckoned that by combining his company's programming capability, which includes celebrity show "Entertainers with Byron Allen," with Paxson's network and aiming at a new audience, he can reduce program costs and attract new viewers.
He said it was "hard to say" when a formal bid might be made and declined to comment further on the possible timing.
"It's something that we definitely are aggressively pursuing," Allen said. "It would be history for a group of broadcast TV stations to be dedicated to African-Americans.
Spokespersons for both Paxson and the NBC Universal division of GE were not immediately available to comment.
If successful, the major competition for Allen and his company would be cable TV network BET, which is owned by Viacom Inc., but Allen said he felt there was more than enough room for two networks aimed at black Americans.
"No one network can speak to any one group of people," he said.
He said an offer would be "all cash," with roughly $2 billion used to pay off Paxson senior debt and preferred stock and the remaining $200 million for equity holders.
As of Dec. 31, Paxson Communications had 68.1 million shares outstanding, meaning equity holders would receive about $2.94 a share, a hefty premium to the 60 cents a share at which the stock ended on the American Stock Exchange Tuesday. Paxson shares last hovered around $3 a share in August 2004.
"We've talked to Paxson to try and get a better sense of what is happening with the business," Allen said, adding that any possible bid would be a friendly one and not hostile.
Allen is perhaps best known for his work on "Real People" because it was so widely watched, but he has transformed his celebrity into success as a TV executive.
Entertainment Studios produces 15 shows that are syndicated to local stations around the United States and include "The American Athlete" and 'Kickin' It with Byron Allen."
After a high-profile launch in the late 1990s as a seventh U.S. broadcast network, Paxson has struggled. In 2004, its net loss to common shareholders was $245.7 million, or $3.61 a share, which was wider than the previous year's loss of $146.3 million, or $2.14 a share.