PAXSON SEEKS FCC, ARBITRATOR RULINGS ON NBC, TELEMUNDO
Saying it could be forced to divest 5 major market stations, and NBC might be unable to complete anticipated takeover of Paxson, Paxson asked FCC and American Arbitration Assn. (AAA) to resolve its disagreement with network. Paxson charged NBC was exerting undue control over Paxson, potentially creating unacceptable duopolies, and its planned acquisition of Telemundo could create multiple “triopolies.”
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Paxson asked FCC for declaratory ruling whether NBC had exerted undue control over Paxson and to order remedies if it had, as well as to delay action on NBC-Telemundo deal at least until AAA acted on complaint Paxson filed there. “Our efforts are intended to require NBC to honor its [1999] agreement to acquire Paxson, conduct the partnership in accordance with FCC rules and terminate its acquisition of Telemundo,” Paxson Chmn. Lowell Paxson said: “Alternatively, we want to be free to explore other opportunities to sell the company or team up with other strategic partners.”
NBC is exerting undue control over Paxson by appointing its employees, rather than unaffiliated individuals, to 3 Paxson board seats and pressuring it to cooperate more with network in return for additional financing, Paxson said in FCC filings. Situation could mean that Paxson’s stations should be attributable to NBC for ownership limit purposes, Paxson said, creating impermissible duopolies in N.Y., L.A., Chicago, Miami, Dallas. “The opportunities for abuse are great given the economic power NBC can exercise” over Paxson, filing said, since NBC controlled 2/3 of Paxson revenue through agreement allowing it to sell ad time. Filing asked FCC to require that all NBC appointees to Paxson board as result of its 32% ownership of Paxson be truly independent. Other potential remedies, it said, include requiring divestiture of NBC interest in Paxson.
Petition to deny license transfer to complete NBC- Telemundo deal cites same key issues, but notes that Telemundo deal, along with potentially attributable interest in Paxson stations, could mean NBC would control 3 stations in same 5 markets. Paxson said that would be “a far worse situation.” At AAA, Paxson seeks ruling that Telemundo deal would violate terms of 1999 NBC-Paxson agreement, so Telemundo deal should be blocked. Paxson asked FCC to withhold action on Telemundo until AAA could rule.
NBC conduct, including Telemundo transaction, reflects network’s goal of “trying to reduce the price of its path to control of Paxson and to exert leverage to force Paxson to restructure the arrangement so as to provide even more favorable terms to NBC,” Paxson said. Paxson CEO Jeff Sagansky said Telemundo deal, at very least, created “additional regulatory hurdles” to completion of NBC takeover of Paxson.