This is a partial transcript from Your World with Neil Cavuto, February 20, 2002. Click here for complete access to all of Neil Cavuto's CEO interviews.
TERRY KEENAN, GUEST HOST: If bigger is better, then keep an eye on media companies this year because they may be the biggest movers and shakers when it comes to the battle for supremacy. My next guest has had a first-hand account of what it's like to be involved in a battle over network ownership.
Bud Paxson is chairman of Paxson Communications. He says that the FCC's move to widen or eliminate the 35 percent cap, if it comes, and we think it will, will lead to massive consolidation as smaller stations sell out. Bud Paxson joins us now from Boynton Beach. And, Bud, welcome.
You know, it seems like the appellate court has just put a big for sale sign on hundreds of affiliates nationwide. Why are so many station owners oppose the move?
BUD PAXSON, CHAIRMAN, PAXSON COMMUNICATIONS: Well, I think that they are worried about their network trying to buy them at a reduced price through some coercive pressure. I think what you have to realize, however, is that the competitive landscape in America has changed so dramatically that this rule, which is 20 years old, just doesn't apply any more and the court threw it out.
I think the FCC is going to have a tough time trying to resurrect it or even creating a new cap. And, obviously, the pundits all think they would have come in at 50 percent or better, but I think they are going it take a year to do it and hold us up another year from this dance of merger.
KEENAN: What do you say to those who say raising the limit and allowing one company to cover 50 percent of the U.S. map or even more would really hurt consumers?
PAXSON: Well, let's take a look at something, OK. Let's just take one market. San Francisco, for instance. AT&T controls 80 percent of all of the homes in that market through their cable distribution and anyone of the networks are way under 10 percent. So where is the competitive landscape hurt if you have consolidation in the broadcast media? I don't think so. The court threw out the cable rule concerning how much cable you can own in this country. And they have thrown out the one for broadcast. There is just too much diversity today. We have too many programming choices.
KEENAN: So, how does Paxson Communications figure in all this?
PAXSON: Well, first of all, you know, as we got together, we're the largest group of television stations in the United States that is owned by one company. Secondly, we have got a proprietary network which has achieved some startling results in the last year. And we've gone from a negative EBIDITA to a positive EBIDITA. So we're get to look pretty good at this merger dance.
KEENAN: You have a relationship with NBC, but some people would say that dance partner has kind of two-timed you with its deal with Telemundo. Where does your relationship with NBC stand right now?
PAXSON: Well, we're in the process of arbitration. It's almost a litigation, so I really can't comment too much. But the original agreement said that neither party would take any action which would raise the hurdle at the FCC for their acquisition of Paxson. And, of course, the Telemundo does because you have eight markets in which there would be triopolies. In other words, they would own three stations. And that just doesn't fly at the FCC. That rule, I don't think, is going to go away for sometime.
KEENAN: Even now. So, the fact that NBC has been in an acquisitive mode in the last couple of years, what does that make you think about all these pundits who say, hey, they are ready to jettison this whole network?
PAXSON: Well, I think that if you look at the time since Jack Welch list when Jeffrey Immelt has come in and now you have Bob Wright, who is vice chairman of G.E., you're looking at a situation where, in just a month ago, knowing that this court case was going to be ruled on, knowing that it was going to be thrown out, I mean, we have really all known it because you could look at the history of the case and understand that the FCC was unable to defend itself in this issue. So in the last month, they have come out and made their application to the FCC to buy Telemundo. So I don't think they are in a selling mode. I think they are in a buying mode.
KEENAN: Do you think maybe these executives who spend most of their time working on turbines and plastics have just too much fun running a network and being out at the Olympics to give it all up?
PAXSON: That's probably a good observation.
KEENAN: I won't throw you a total softball with this question, so don't say it is going to be your company. But aside from Paxson Communications, when this is all said and done and everything shakes out, who do you think the biggest player in television is going to be, say five years from now?
PAXSON: Oh, boy! You know, unfortunately, I can't see the future that well because we're in the digital television revolution which is clouding the picture quite a bit. But I think you have got CBS out there with Viacom. You've got Fox out there. They are going to be huge. And AOL Time Warner is going to be big and Comcast is going to be big. Who is going to be the biggest of all? I don't know. We just got to climb that cherry tree and find out.
KEENAN: All right. Thanks for joining us. Bud Paxson, Paxson Communications.
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