Paxson Shares Drop on Revision7/02/2002 10:06 AM Eastern
Paxson Communications Corp. shares took a tumble Tuesday after the company
revised its second-quarter-2002 guidance downward, citing sluggish infomercial
Paxson shares dropped as much as 50.5 percent, or $2.50 per share, in
afternoon trading Tuesday before closing at $3 each, down 39 percent, or $1.95
The catalyst for the drop was a press release issued Tuesday in which Paxson
said it expected revenue for the second quarter to be flat at about $67.7
million. In April, Paxson had said second-quarter revenue growth would be in the
The company also said its earnings before interest, taxes, depreciation and
amortization -- also known as cash flow -- would be between $3 million and $4
million in the second quarter, down from the previous forecast of $8
Paxson said it has amended a bank-credit facility that reduces minimum
required levels for EBITDA and revenues for certain periods under the facility's
financial covenants and allows the company to retain the proceeds from planned
asset sales for general corporate purposes.
In the statement, Paxson said the revisions were made in light of softening
infomercial growth affected by the increase in the number of media outlets
competing for infomercial advertising and Federal Trade Commission complaints
against a maker of electronic abdominal exercisers.
'As the advertising market continues to show improvement, however, we expect
our infomercial business to improve as traditional networks and network
affiliates revert to normal business patterns and as new products are launched,'
Paxson CEO Jeff Sagansky said in a prepared statement.
Paxson added that it is also awaiting partial reimbursement from an insurance
claim regarding lost revenue stemming from the Sept. 11 terrorist attacks on the
World Trade Center. Paxson had a broadcast tower located on one of the towers
that was destroyed.