Paxson Seeks Protection From Peacock - Broadcasting & Cable

Paxson Seeks Protection From Peacock

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Late Monday, Paxson complained to the FCC that NBC is trying to take "illegal control" of the the 57-station TV group rather that accept financially struggling Paxson's decision to drop original fare from its schedule and rely primarily on paid-programming.

Paxson is seeking a declaratory ruling from the FCC's Enforcement Bureau barring NBC from influencing Paxson programming. Paxson also asked the agency to impose "whatever additional monetary forfeitures it deems appropriate."

Paxson's petition is a reaction to NBC's May 12 request for binding arbitration by private negotiators to determine whether Paxson violated its 1999 joint sales agreement with NBC by dropping original programming.

NBC is asking arbitrators to rule that Paxson violated terms of the joint sales agreement by running paid programming during prime time and is asking arbitrators to either order Paxson to resume original programming or to pay damages to NBC, which invested $415 million for a 32% stake in Paxson six years ago and also is due almost $200 million in accumulated dividends from that investment.

The 1999 deal between the two companies led to NBC acting as exclusive sales rep for Paxson's network, PAX TV. NBC also began operating as a sale rep for Paxson stations in 12 markets where both companies owned and operate stations.

Paxson said it was not asking the FCC to rule on whether NBC is due any monetary restitution for breaking the 1999 agreement.

NBC's arbitration claim places Paxson "at the breaking point," Paxson told the FCC.

NBC "interference" with Paxson's programming plans would be illegal because a NBC by law must act only as a passive investor in Paxson, with no say over operations.

Becoming an active participant in Paxson's operations would make Paxson's stations attributable to NBC's station ownership tally and push it well over the FCC's broadcast ownership viewership cap of 39% of TV households.

In 2003, NBC triggered an option in the 1999 partnership agreement demanding to cash in its stake in Pax.

Earlier that year, Pax asked the FCC to kill NBC's Telemundo acquisition because, Pax claimed, it violated the Pax-NBC alliance.

Ironically, Paxson at the time sought federal arbitration to have NBC's investment deal voided. NBC won both fights.

In January, Paxson notified NBC of its plan to drop original fare in favor of paid programming  and plans to terminate sales agreements. In February, Paxson axed 50 staffers, mostly from its programming department.

NBC was still reviewing the petition at press time.

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