August 9 1999

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The audience for Pax TV has gradually grown since its debut a year ago. But Wall Street analysts and industry insiders say it is still too early to tell if the family-oriented television network will survive. If the enterprise, started by born-again Christian and Home Shopping Network founder Lowell "Bud" Paxson (CT, Oct. 5, 1998, p. 15), does not attract a large enough audience by next year, media observers say it will not generate sufficient advertising revenues, jeopardizing its financial viability.

Nationwide viewer ratings of Pax, with a nightly prime-time line up of reruns of original CBS shows Touched by an Angel; Dr. Quinn, Medicine Woman; and Diagnosis Murder have inched up to an average of 0.8. To be profitable, the company needs an average rating of 1.0, says Jeffrey Sagansky, chief executive officer of the company that owns the network, Paxson Communications Corporation. The goal, he predicts, will be reached soon.

But compared to the six bigger noncable networks, it represents a puny audience. For the recently completed season, CBS led the pack with a 9.0 rating. The lowest-rated noncable network—other than Pax—was UPN, a start-up earlier this decade, with a 2.0 rating average.

Christopher Dixon, an industry analyst at PaineWebber, gives Pax a 50-50 chance of surviving. "They're doing exactly what they set out to achieve," he says. "But advertisers aren't going to come on board until Pax can show that it can deliver."

What the publicly traded network has in its favor is that Paxson owns 71 of the 116 stations, meaning the company can keep that ad revenue instead of paying a percentage to the stations as other networks do. Two independent appraisals estimated those assets to be worth up to $1.9 billion. ...