Pax Tv Moving In With Parent In Florida

In an abrupt sign of retrenchment, Pax TV told staffers Tuesday that it will shutter its Studio City office and consolidate operations at the West Palm Beach, Fla., base of its parent, Paxson Communications.

The Studio City office handles West Coast-based marketing, promotions and publicity for the network. While about 50 staffers work in the office, it was not clear how many will lose their jobs. A company spokeswoman said employees will be given the option of relocating to Florida but that no timetable has been established for the move.

Pax programming vp Tim Johnson, who works out of a separate office in Los Angeles and is the network's primary West Coast-based liaison with the Hollywood creative community, apparently will not be affected.

Pax spokeswoman Nancy Udell characterized the moves as part of a consolidation effort. "We're just looking at making (operations) more efficient," she said. "It's cost-effective to be in one place."

The move is the latest in a run of bad news for Pax, launched in 1998 as the nation's seventh broadcast network with the slogan "Feel Good TV." Last month, Paxson lost a bitter arbitration battle with NBC in which it accused the peacock of breaching a commitment to acquire Paxson by instead buying Spanish-language network Telemundo last year (HR 9/24). NBC has invested $415 million in Paxson.

After the arbitration ruling, Paxson hired investment banker Bear, Stearns to advise on strategy and possible options. The company is staggering under a debt load of about $870 million, plus about $1 billion in preferred stock obligations.

Paxson has focused on meeting its short-term cash needs by selling $100 million in assets, including the recent sale of several stations. According to the company's Web site, it owns and operates 65 TV stations.

One analyst, who spoke on condition of anonymity, suggested that Pax's latest cost-cutting move may be part of a long-term strategy to survive until 2004, the earliest time at which it would be contractually allowed to buy its way out of the deal with NBC.

The troubles have led some observers to speculate whether Paxson president and CEO Jeff Sagansky and other top executives might bolt. Udell was not available to comment on the rumors.

Staffers in Studio City first learned of their office closure during a 9:45 a.m. meeting with Dean Goodman, president and chief operating officer of Pax TV. Two staffers who attended said Goodman noted that the company was looking for ways to operate profitably and specifically alluded to the arbitration decision as a stumbling block.

"There was a lot of buzzing and rumors last week," one staffer said, but "we were all surprised. We were already on a pretty tight ship" financially.

Paxson's third-quarter earnings are scheduled to be released Nov. 13. The company lost $34.5 million in the second quarter on relatively flat revenue of $78.6 million.

Shares of Paxson closed up 1.9% on Tuesday to 2.67.