In a bid to salvage its stake in the family friendly TV network formerly known as Paxson Communications, NBC Universal has found a buyer willing to pony up about $70.5 million to take the ailing company private.
Hedge fund Citadel Investment Group, which, like NBC is a major investor in the company now called Ion Media Networks, is offering to buy out its common shareholders for $1.41 a share in cash.
Ion’s stock price shot up more than 64 percent, or 40 cents, to $1.02 a share yesterday on the American Stock Exchange after the proposed deal was disclosed in a regulatory filing.
The shares also surged 9 percent a day earlier, a sign some investors caught wind of the deal before it was made public. AMEX spokeswoman Mary Chung declined to comment on whether the exchange is investigating.
NBC paid $415 million for a 32 percent stake in Ion in 1999 with an option to acquire the entire company.
But the investment soured after Ion became saddled with a heavy debt load and NBC and Lowell “Bud” Paxson, the network’s founder, squabbled over programming and NBC’s stake.
To protect its investment, NBC in November 2005 paid out $25 million to get the right to take control of Ion and replaced Paxson with NBC executive Brandon Burgess.
NBC has been scrambling to find a partner to buy Ion because the General Electric-owned media giant is prohibited from buying the company itself under federal regulators that put a cap ownership on TV stations.
If it had failed to find a partner for the deal, NBC would have had to pay out about $105 million to Ion’s common shareholders, excluding Bud Paxson.
NBC is keeping an option to take control at a later date if regulations change.
“I think investors are starting to see that traditional media has been underestimated,” Ion chief Burgess told The Post. “I think we’re going to see a renaissance in the next three to five years.”