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Payday for Paxson

Paxson Communications and several other broadcasters are starting negotiations with wireless companies that could lead to billions of dollars in payouts to companies with TV stations on channels 60-69 following an FCC ruling last week.

Under the new dictum, owners that relinquish their right to broadcast on the 60-69 band prior to the completion of the digital TV transition can delay the switch to DTV on their remaining allotment until Dec. 31, 2005. They also have the right to request additional extensions after that if U.S. DTV household penetration is less than 70%. Generally, broadcasters had to provide a DTV signal by May 2002.

The government's decision is predicted to bring a financial windfall to the holders of the 142 channels and allotments on the band. Some analysts predict Paxson's 18 channels on that part of the dial could fetch hundreds of millions or even a billion dollars. Auctions two summers ago in Germany and the UK, which fetched as much as $35 billion, have been pointed to as indicators of the TV spectrum's worth, but many analysts believe that the European buyers overpaid and that values will drop in the tanking U.S. economy.

Negotiations between broadcasters on the band and prospective buyers will be conducted by investment bank Allen & Co. and Greenbelt, Md., consulting company Spectrum Exchange Group.

By relaxing the deadline, the FCC aims to make sure viewers continue to receive conventional analog television if those broadcasters turn one of the two channels they currently control over to wireless companies. Those companies previously had been given FCC approval to negotiate early buyouts for Paxson and other broadcasters with frequencies on the 700 MHz spectrum band.

The decision was the last media-related vote of former Commissioner Gloria Tristani. Although she opposed the earlier ruling allowing quick evacuation of free-TV broadcasters for what are expected to be expensive new products, she grudgingly approved the delay in DTV transitions because it ensures the availability of conventional TV service.

FCC officials say the buyouts are necessary to speed the introduction of new "third- generation" mobile Internet services because broadcasters aren't obligated to relinquish spectrum before 2006. The government plans to auction the 700 MHz on a date yet to be set, and many officials worried that uncertainty over wireless companies' ability to utilize the spectrum quickly would diminish the government's revenue from the bidding.