Arbitrator rules for NBC vs. Paxson

NBC won the arbitration complaint brought against it by Paxson
Communications Corp. last year after NBC bought Telemundo Communications Group

Paxson argued that NBC's Telemundo acquisition was a violation of the terms
of NBC's strategic alliance with Paxson because it made it harder for NBC to
acquire the two-thirds of Paxson it doesn't currently own.

But the arbitrator, retired U.S. District Judge Charles Renfrew, didn't buy
it, concluding that under current ownership rules, NBC couldn't buy a
controlling stake in Paxson, anyway.

In a prepared statement, Paxson chairman Bud Paxson said he was
'disappointed' with the ruling and disclosed that the company has engaged Bear
Stearns & Co. to 'review our company and to advise Paxson in developing the
best course of action to realize the company's inherent value for our

Both NBC and Paxson have opportunities to break up the alliance.

NBC has an annual 60-day window to force Paxson to buy back its one-third
interest in the company for the $415 million NBC paid plus 8 percent interest,
which would put the buyback price at more than $500 million.

Starting in 2004, Paxson has the ability to buy out NBC on the same

NBC also has an option, for
the next seven years, of acquiring control of Paxson if the Federal Communications Commission
raises its station-ownership caps to at least 50 percent.

The commission recently began an inquiry looking at all of the
media-ownership rules currently on the books.

In a prepared statement, NBC said it was 'gratified' by
the arbitration decision. 'Our options to acquire control of Paxson last until
2009. In the meantime, it's business as usual,' the network added.