RE: WABU sold to PAX

[Bill Piacentini <billpi@ll.mit.edu>]

At 10:33 AM 5/5/99 -0400, David Merrill wrote:
>PAX can buy the rights to the Red Sox, Celtics, and Bruins and show them
>over and over on 46 & 60.  (said laughingly)
>Where is PAX getting the dough for paying BU this money?
Bill Piacentini writes:
Paxson Communications reported in its latest 10-K that, "The deferral of
approximately $119 million of taxes on the approximately $305 million gain
upon the sale of Paxson Radio could be contested by the Internal Revenue
Service ("IRS"). Based on the advice of counsel, management believes that,
in the event of a challenge by the IRS of these tax positions, it is more
likely than not that the Company would prevail. Should the IRS successfully
challenge the Company on these matters, the Company could be subject to a
material current tax liability."
So you have $119million that Uncle Sam isn't getting (yet!).
Further reading of the 10-K reveals:
"Gain on sale of television stations reflects the Company's sale of its
interests in stations WPXE, WNGM and WOAC during 1998 for aggregate
consideration of $79.5 million. The Company realized a gain of
approximately $51.6 million on these station sales. Of the proceeds
received, approximately $17.6 million was used to exercise the Company's
options to acquire WOAC and WNGM."
"At December 31, 1998, total debt and senior subordinated notes were $374
million, compared with $350.8 million in the prior year."
"Consolidated revenues for 1998 increased 52% (or $45.8 million) to $134.2
million from $88.4 million for 1997. This increase was primarily due to
television station acquisitions, new time brokerage operations and the
launch of the PAX TV network.
More accounting doublespeak:"Expenses for 1998 increased 144% (or $159.3
million) to $269.7 million. The increase was due to higher operating
expenses, such as programming and technical costs of $12.7 million and
program rights amortization of $31.4 million, incurred in connection with
the launch of PAX TV, increased selling, general and administrative costs,
such as commissions and bad debt provisions which rise in proportion to
revenues of $11.5 million, increased promotion costs of $28.8 million to
advertise the launch of PAX TV, other selling, general and administrative
costs of $50.9 million, which were higher primarily due to additional
employees hired and regional sales offices added, the majority of which
were incurred in connection with the launch of PAX TV and costs associated
with operating new television stations, increased stock based compensation
of $7.0 million, and higher depreciation and amortization, primarily
related to assets acquired, of $28.0 million.  

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