Peacock: We're Protecting Pax Pact

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NBC Universal says it has no designs on the programming decisions at PAX TV and is instead just trying to protect its one-third stake in the company.

NBC U released a statement Friday in the latest volley between the two over the ailing netlet.

That statement came in response to Paxson's FCC filing Monday charging that NBC was trying to assert "illegal control" over Paxson's 57-station group.

"Paxson is in a financially distressed situation as evidenced by the stock price performance and its income statement," NBC U said Friday. "NBC has certain protective rights in its contractual agreements with Paxson, which we are using in an effort to protect the value of our investment.  The FCC has approved our contracts with Paxson, and we are pleased to confirm that we are operating in complete compliance with these agreements.

"NBC has no input nor intention regarding the local station programming on Paxson.  Our concern is that Paxson's strategy will erode our financial investment and, in our opinion, is not in the best interest of any Paxson stakeholders." 

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

NBC's arbitration request*, in turn, was prompted by a Paxson SEC filing suggesting it was planning to cut back on or eliminate entertainment fare in favor of paid programming. Paxson has since asserted that its intentions were misreported and that it will have just as much entertainment programming on next season as this, if not more. 

It was unclear whether Paxson's declaration was a clarification or adjustment in programming plans, but the reports of the programming change, including in this publication, stemmed from Paxson's own April filing with the SEC in which it said it planned to "substantially reduce or eliminate our sales of spot advertisements that are based on audience ratings."

The company also told the SEC: "We are not currently investing substantial additional amounts in new entertainment programming and are evaluating other programming strategies and opportunities that might be available to us that could improve our cash flow."

In February Paxson axed 50 staffers, many in the programming department. --John M. Higgins contributed to this story.

*NBC is asking arbitrators to either order Paxson to resume original programming--which Pax now says it isn't abandoning--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.

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