From Can Openers to Criminal Minds…
Lowell White “Bud” Paxson was born April 17, 1935, and he was Born-Again fifty years later.
When Bud Paxson first entered the media business, it was with a little AM radio station whose range was only one mile. This station—Newark’s WACK—did well enough for him to acquire the similar WXYJ, and eventually WNYP, in 1966. When WNYP folded in 1969, Bud looked south, towards Florida.
In Clearwater, he obtained ownership of WWQT, another AM short-range station. His triplet fared well during the turbulent 1970s, as advertisers were happy to flood his airwaves with commercials, whether or not they saw returns. Bud was quite good at ensuring advertisers of the breadth and quality of his broadcasts—a point made evident by his charismatic on-air talent, small-time talk-show host Bob Circosta.
On August 28, 1977, one advertiser found himself in a jam. He was eager to get his product to market, but he didn’t have the money to buy airtime for his commercial. Bud—eager to please his client—offered to barter his airwaves for 112 units of product. It was agreed.
Just like that, Bud Paxson had become the proud owner of 112 avocado-green electric can openers he did not want.
Being a smart businessman, he approached his DJ Bob Circosta about flipping them on-air. At first, Bob was skeptical about the idea (having never been in sales) but he eventually conceded. When his airtime began at noon, Bob began hyping the avocado-green electric can openers…
...and to the surprise of everyone, all 122 can openers were sold within an hour.
What many would’ve considered an interesting one-time victory, Bud considered an opportunity. He recognized the untapped market of stuck-at-home shopaholics: those who were persuaded enough by an unseen voice to call-in and purchase an avocado-green can opener.
Bud wanted to take this strategy to the reigning champion in media—the television—but he didn’t have the capital to acquire a channel — even a small one.
That’s where Roy Speer came in.
Roy Merrill Speer Jr. was born June 23, 1932. As a kid, he aspired to become a lawyer. In 1965, after years of showcasing his grit and legal acumen, he became the Assistant State Attorney in Pinellas County, Florida. The Governor at the time was Haydon Burns, a friend of Walt Disney.
With a low salary and a hefty caseload typical of state-level law, Roy grew sick of his job. Despite the long road he had taken to get there, he quit after only two years as an ASA.
He switched careers paths, taking up entrepreneurship with a couple of homebuilders in Pasco County. For their small enterprise, he formed Tahitian Homes, Inc. which built homes en-masse. Roy’s ambitions exceeded Tahitian Homes, so he founded a second development company called Lanbanque Inc. and a water/sewage pipe-laying company called Aloha Utilities Inc.
As his personal capital reserves grew, Roy routinely invested it back into the free market. His portfolio expanded to include cement block manufacturing, a beautician school, a walk-in clinic, a travel agency, an insurance agency, vegetable farms in Puerto Rico, a marine dredging service, a marina, a cosmopolitan salon, two country-western music recording studios, a book publisher, a telecommunications company, security camera monitoring facilities, an early internet data center, a Big & Tall (men's clothing store), several multi-level marketing schemes purveying hopes and dreams and vitamins and make-up, a mobile medical screening company, a mail-order diabetic supplier, an advertising consulting firm, a series of lounges and restaurants, mobile home parks, television stations, an AM radio station, petroleum product distribution, warehouse storage and distribution, a half-million square-foot warehouse in Las Vegas, a 225-room hotel in the Bahamas, a neighborhood, and a twenty-three-story five-star resort along the shores of Fort Lauderdale.
Pinellas County is a small region of Florida’s central east coast, consisting of only 274 square-miles. Its most serial entrepreneur: Roy Speers. Its county seat: Clearwater, home of WWQT, Bob Circosta, and Bud Paxson.
The three men naturally crossed paths. In 1982, Bud and Roy decided to establish a local cable channel with the intention of selling products on television, live. It was to be broadcasted out of Tampa Bay. Bob Circosta was chosen, for obvious reasons, to be the on-air host of what they called “the Home Shopping Channel.” For three years, Bob’s merchandising, Roy’s expertise, and Bud’s vision grew the local access channel into a pillar of Pinellas County society.
The world’s first home-shopping endeavor had succeeded, through the airwaves of the television. Come 1985, Bud wanted to access all of Florida — but at that point, why not just access the entire country? Broadcasting by satellite was new at the time, but it had promise, especially since its signal could canvas all of America.
Roy ultimately rented a satellite channel and, with the modification of the name to “the Home Shopping Club,” their channel was relaunched nationwide. The best part was that their commute didn’t change; Bob Circosta still worked out of the same set in Clearwater. Except, he wasn’t the same Bob.
By the time he reached the national market, Bob had honed his mercantile skills to become an adept and powerfully persuasive salesmen. Nobody could resist a cherub tchotchke or a titanium hair curler or a tea kettle that could trap spirits when their utilitarian praises came out of his gorgeous mouth.
What was soon renamed “the Home Shopping Network” had become an immediate national success, raking in more money than they could manage. The buzz around HSN was so incredible that Harvard’s MBA program even required its students to study their success story.
Capitalizing on their hype, on May 13, 1986, Bud and Roy brought HSN public via the New York Stock Exchange. — As of August 11, 2017, their stock trades on NASDAQ at $37.20, under HSNI. It’s up 0.35 cents since last register.
HSN would soon earn a billion dollars in net sales. Within the next three decades, Bob would rack up over twenty-thousand hours in front of the camera, with his personal sales measuring over a billion dollars across 75,000 uniquely-advertised products. So, what, that’s… $13,333.33 on average, per product. Let’s say the typical product cost three easy payments of $14.99, plus shipping and handling, which is $8 — so that’s $13,333.33 divided by $52.97, equals 251.7148 units of product sold, roughly. This count nudges out 112 avocado-green electric can openers by just over half, which really says something about the power of television over radio. It must’ve made it really feel like Bob was actually in your house and that tea kettle was actually in your ownership and it could actually capture that demon who scratches up the wallpaper.
So, not only did Bob Circosta become filthy rich by hocking wares over the airwaves, but he became the first-ever home shopping guru and the most prolific salesman of our time. Suck it, Billy Mays (I miss you).
Everything was perfect for Bud Paxson and the Home Shopping Network — until 1993.
That year, Roy Speer was implicated in multiple wrongdoings. I’m going to take a crack at deconstructing the large orange flag that could’ve foretold of his behavior. Let’s start with him being frustrated with a low salary as a lawyer, and more importantly, how salary was more important than obtaining justice. Also note that he preferred not to do things that required much work; he disliked caseloads as a lawyer and stuck to bookkeeping as an entrepreneur.
Add in the crucial details that he had become an expert on law, and then he became an expert on the machinations of, like, forty different business operations. The man had clearly grown a network and harvested success through more ways than what you see on the surface. Between quitting as a state prosecutor and joining up with Bud Paxson, fifteen years had gone by; is that enough time to have single-handedly built the empire he did? Let’s be logical about this.
In 1993, a class-action lawsuit was brought against Roy Speer for accepting bribes from vendors. He hid those bribes from everyone, including Bud Paxson and the accounting department. When executive vice-president/secretary/general counsel of HSN, Nando DiFilippo, caught wind of this (as in-house lawyers are wont to do), Roy paid him to keep quiet. Everyone else who found out about the bribes were threatened with termination if they didn’t remain silent.
Arguably worst of all, Roy refrained from telling the Securities and Exchange Commission (those in charge of policing the stock market) that some of his (and by extension, HSN’s) profits were bribes. This is known as defrauding the investors (the stockholders) who, together, own the company. Thus, they were entitled to the proceeds that were, instead, bribes.
For the unaware: bribes are gifts or “donations” given to someone as a persuasion aid; coercion through greed. It is illegal to accept bribes in a professional setting. Your mom giving you ice cream for dessert in exchange for snitching on the sibling who broke the toilet is drastically different from inconspicuously praising one product above another or removing their competitor from your catalog altogether, in exchange from some mystery money that your viewers and shareholders “don’t need to know about.”
It gets better.
Soon after the allegations of bribery came at him, a second lawsuit was filed. This one claimed he reneged on his fiduciary duties as an executive of the Home Shopping Network by putting nepotism and embezzlement ahead of his shareholders’ best interest.
Essentially, Roy’s son Richard previously had a contract with HSN to sell certain software that HSN had exclusive rights to. The thing is, that contract had been terminated — and yet, Richard was still profiting off of the arrangement. In 1990, he personally earned just over a $3 million paycheck from HSN; in 1991, he supposedly earned $3,286,000; in 1992, he “earned’ $3,502,000. So if the software wasn’t actually being sold, why was Richard paid almost ten million dollars in the past three years?
It gets even better.
Surplus product that Bob Circosta couldn’t sell on-air was sold en-masse to Richard Speer, who was contracted to then sell the remaining product to brick-and-mortar buyers. On these sales, he would make a 15% commission. — Normally (in consideration of all fields of sales) commission rates are somewhere between 3 - 5 % of the sale, with a de facto maximum of 10%. Even realtors only make a general 6% per sale.
This left many people wondering “why the fuck is this guy making fifteen percent commission on easy bulk-sales of tchotchkes and kitsch to wholesalers?” Given the market, 15% is undeniably unreasonable. This holds especially true when you consider that the arrangement netted Richard Speer $1,427,000 in 1990, $1,615,000 in 1991, and $1,469,000 in 1992.
Take a dozen incensed shareholders and a few lawyers, throw in a bundle of cold hard evidence (such as that the founder’s son is the only one with a merchandise resale contract, and his commission rate is immodestly extravagant), and, baby, you’ve got yourself a lawsuit.
Really think about it: who in the entire company would authorize a 15% commission on sales, when the industry usually flies for 5%? What would the company stand to gain from losing 10% of the sale profit? Who would benefit from signing off on that? — Well, if the salesman is the son of the founder, then it appears the founder stands to benefit.
If the founder stands to benefit, it must be the founder who authorized the arrangement. So if he’s milking money for product resale, but also accepting bribes to assure certain products make it on-air over others, then that means he must have undisclosed relationships with certain vendors — which could simply mean bribes and bloated commission payments, but it could also mean collusion and private interests that haven’t been disclosed to the SEC.
The future was certainly grim for Roy Speer, and to a lesser extent, his son Richard. The two of them had mountains of evidence against them. Going to trial was the same as a trip to the guillotine. — But, fortuitously for Roy, he still had two cards to play: his background in law, and the many piles of stolen money he kept in a foreign bank account down the street from his Bahamian hotel.
Roy Speer arranged for a mediation between legal teams, ahead of the trial. Sure enough, they “mutually settled their claims,” and the plaintiffs dropped their grievances.
There was no trial; there was no conviction; there was no justice.
Roy Speer resigned from HSN following the settlement.
After that shitshow, and down one third of the dream team, Bud Paxson and Bob Circosta decided to sell HSN to someone else. In 1996, legendary film executive Barry Diller purchased the network, installed himself as Chairman of the Board, and began a long journey of revitalizing the company, bringing it into the 21st century.
HSN’s current slogan is “It’s Fun Here.” They don’t specify why, but I’m inclined to believe them. That’s the power of advertising. This is also evident in their homepage’s commemorative tagline, boasting that they’re celebrating “Forty Years of Fun.” They must be nostalgic for that magical day of electric can openers, as opposed to the original true semblance of HSN, which premiered only 36 years ago. But “filing for incorporation” is not as cool of a story.
HSN today is a multibillion dollar business. It’s how thousands of Americans buy their travel-size waffle irons and freshwater pearl broaches and tarnished brass reclamation kits. And yet, in the realm of home shopping—a realm they pioneered—they are being vastly outpaced by their primary competitor: Amazon.
After selling HSN to Barry Diller, Bud Paxson used his lump sum to snatch up a series of Floridian billboards, radio stations, and television stations. He formed the Paxson Communications Corporation to handle his assets, though he would later sell these stations for profit and funnel the proceeds towards PCC’s true goal: content creation.
Bud launched PAX TV, on August 31, 1998. This independent cable channel was geared towards the wholesome family, as Bud had become quite evangelical during his first three years of friendship with Roy Speer. The channel’s first programming blocks were a weekend kids period brought to you by the animation studio that always got picked last on the playground, DiC Entertainment, as well as an all-week overnight programming block brought to you by “The Worship Network,” which (founded by Bud Paxson) was just an endless series of Bible quotes pasted over shots of nature while church music played in the background.
Their daily programming was an unhealthy mix of syndicating old CBS-distributed shows and creating original content that nobody found interesting. The latter section doesn’t warrant mentioning, since less than one percent of readers will recognize the titles, but those syndicated included Life Goes On, Highway to Heaven, Touched by an Angel, Dave’s World, Here’s Lucy, The Hogan Family, and Bonanza. PAX later featured Family Feud (with Louis Anderson), Who’s the Boss?, Candid Camera, The Wonder Years, and Growing Pains.
At launch, PAX’s broadcast hours were 24/7, but with unexpected low viewership, Bud had to cut back on weekend hours. Soon, weekday programming was cut back to noon until 1 am. In 1999, that was further restricted to 3 pm until midnight. Bud was nervous; PAX would be dust in the wind if it continued down this road.
The channel needed fresh blood, so he allowed NBC to purchase 32% of PCC. Two years later, NBC optioned to acquire Telemundo, an expanding Spanish-language network. Bud didn’t like this idea because he and Telemundo each owned television stations in certain markets, and there was overlap in jurisdiction. To avoid penalization from the FCC regarding broadcaster monopolies—and since NBC was trying to outright acquire Telemundo—if any stations had to be sold, NBC would end up forcing Bud to sell his stations.
Since NBC had their hands in his honeypot, Bud felt he had a say in the matter. After all, NBC made a deal with him first. He petitioned the FCC to disallow the Telemundo acquisition, but the FCC said “let's just see how this plays out.”
NBC didn’t appreciate Bud trying to step in their pudding, so they requested PCC to reverse their investment, to the tune of $549.2 million. This would have divested NBC of their interest in PAX TV, thereby allowing the Telemundo acquisition to pass without claims of monopolization.
However, granting this would’ve sunk PAX, so Bud declined. Three years of financial disappointment and low ratings had passed since NBC first bought a stake in his network, and broadcast hours had to be cut back even further, from 6 pm to midnight. Things were bad enough as it is — Bud didn’t need to sign his own death warrant.
NBC tried to play nice and gave Bud an additional nine-month window to return their investment, but Bud never returned their volley, so NBC filed a lawsuit against PCC. A year passed before Bud finally conceded out of court, granting NBC-Universal the right to purchase his shares of PCC during an eighteen-month window.
But NBC didn’t want to own PCC; it was garbage. It had no intellectual property worth cataloging and it had no reputable revenue streams. If they sold Bud’s shares, they’d have to forfeit the $549.2 million they poured into PAX TV and then they’d have to go out and shop the network around to prospective buyers. However, they knew nobody would want PAX TV — and anyone who possibly would want it couldn’t offer enough money to recoup the half-billion dollar loss.
In the end, NBC held onto Bud’s shares for all of those eighteen months. In the final moments of their option, they confirmed an agreement with Citadel Investment Group LLC in which Citadel would purchase Bud Paxson’s remaining shares for pennies on the dollar ($1.46 per share), leaving NBC with a minority interest. In addition, Citadel was promising to invest $100 million up-front into PAX TV (thereby soothing the nerves of NBC, as $100 million is a pretty solid notice of intent for trying to salvage the network as opposed to flipping it).
In accordance with the original deal, since NBC exercised their right to sell, Bud Paxson had to step down from his dual-role as President and CEO of the Paxson Communications Corporation. His replacement was R. Brandon Burgess—a pasty Wharton grad who had previously been the CFO of the NBC Television Network and had shepherded NBC in the acquisition of Telemundo. It goes full circle.
There’s not much to say about R. Brandon Burgess that his life choices haven’t already made obvious. For those of you who don’t know about the Burge, let me first remind you that he was appointed to the Presidency and the Chief Executive Office of a national media conglomerate. A failing one, but nevertheless, one.
The Burge had a bad habit of seeing non-white, non-male figures as incompetent, lesser beings. For instance, there was that one time he earnestly called a woman a “whore” during a meeting. To a black employee, he once said “I don’t know how to get da file out da folder,” using what one lawsuit against him said was a “very exaggerated ‘black’ dialect.” He was remembered by others for calling that same employee and her subordinates “monkeys.”
When the Burge would peruse résumés, he would sort them by their ethnicities; to the non-whites, he’d decry—and I quote—”wrong gene pool!” before tossing them in the trash.
It was this kind of behavior that influenced the Burge’s own CFO to resign and submit one of these lawsuits against him, citing a “toxic work environment” and historically corrupt business operations.
PAX TV was in trouble. In addition to not being profitable and having no redeemable original content, the network was heavily in debt. (Think somewhere in the realm of $250 million owed.) Naturally, PAX needed to rebrand.
Its previous slogans weren’t too good. It was changed every damn year, so none ever stuck — and they were oh-so-increasingly desperate for vaguely anyone’s attention, going so far as implying that other people were feeling enthusiastic about it (when, really, nobody was).
From 1998-1999: A Friend of the Family.
From 1999-2000: Share It With Someone You Love.
From 2000-2002: Share the Wonder.
From 2002-2003: Feel Good TV.
From 2003-2004: Feel the Spirit.
From 2004-2005: Oh What a Night!
No one slogan was good enough for Bud — probably because Bud couldn’t yet find confidence in his network even as the years renewed.
The Burge thought he could do better. In 2005, PAX TV was rebranded as “i.”
That’s not a typo.
The nightly blocks of The Worship Network were replaced with strings of infomercials, which earned money instead of burned money. The 24/7 schedule was revitalized, filling every hour with some form of proven and purchased syndicated television show.
Best of all, the Burge found a new slogan…
From 2005-2007: i — Independent Television.
Doesn’t that send shivers up your spine?
Okay, so that didn’t work too well. He chose a half measure when he should have gone all the way. But that’s okay, because he would never make that mistake again.
“No more half measures.”
In 2007, the Burge tried again—this time, on a grander scale. He rebranded “i” as Ion Television, and PCC had become Ion Media Networks. The slogans they’ve used since had improved.
From 2007-2008: What’s Your Ion?
From 2008-2008: Ion — Your Home for Popular TV Favorites.
From 2008-present: Ion Television — Positively Entertaining.
That last one sounds like someone with a background in marketing was actually paid to write it.
Citadel Investment Group LLC made an arrangement with NBC-Universal to acquire all of the public stock and privatize the company. This way, Ion would be held responsible to nobody outside of the company — except for the banks, which still held Ion captive by the ankles. It didn’t help that they had to make a $1.7 million settlement payoff to Positive Ions Inc. for using the word “ion” as their logo, which Positive Ions had long-ago trademarked.
In 2008, the Burge negotiated with Comcast to be included in their starter package. This meant that Ion had officially entered the big leagues, despite having come from the “wrong gene pool.”
The network had been trying for a decade (since its conception) to develop original programming that attracted audiences, but it always fell flat. Recognizing their financial turmoil if they continued down this path, Ion decided to become a mass-syndicator, such as TV Land or USA — at least, until they could get on their feet and get back into the original programming market (such as TV Land or USA).
In April of 2008, they acquired the syndication rights to CBS Television Studios’ police procedural drama Criminal Minds, which follows the FBI’s Behavioral Analysis Unit as they track down hundreds of serial killers within the contiguous forty-eight states of America.
Syndication of Criminal Minds began in 2009, followed by syndication of USA’s Psych in 2011 and Burn Notice in 2013. Law & Order: Criminal Intent was syndicated from NBC in 2012, with the original series and the spinoff Special Victims Unit joining in re-airing sessions of Criminal Intent on Ion in 2015.
The only show that Ion scheduled throughout the day of this article’s writing (August 12, 2017), from midnight to midnight, was Law & Order: Special Victims Unit. I was surprised, because I had long believed that their daily programming is eternally-scheduled as back-to-back-to-back episodes of Criminal Minds.
Shows like Psych, Burn Notice, Criminal Minds, and especially the Law & Order franchise carry dense libraries of hour-long episodes. For a network based on syndication, television shows such as these are veritable gold for producers: only 24 episodes have to be selected, they’re interspersed with advertising, and then boom, you have yourself an entire day’s programming schedule. One man with a spare two hours every day could operate this kind of station. Easy money. “Positively Entertaining.”
In April of 2009, Ion Media Networks quietly unveiled that they were $2.7 billion in debt. (I wonder how many unused slogans this hefty deficit amounted to…) On May 19, 2009, Ion filed for Chapter 11 Bankruptcy protection, for the second time. Citadel was in the hole on their Ion gamble, and their commitment to running a television network was dwindling fast.
The Burge met with his first lien debt holders (those who he borrowed money from first) and most of them agreed to wipe away all $2.7 billion by taking an equivalent asset (re: all of the stock). These secured lenders (the only people who hold priority of repayment over the shareholders) ponied up their new stake in Ion Media Networks, forming the “Ion Media Liquidating Trust” for the purpose.
Near the end of 2009, a private equity threesome purchased 62.5% of Ion Media Networks, becoming the united controlling interest. The equity firm Black Diamond bought the majority, followed by Avenue and Trilogy Capital; each established an LLC subsidiary to hold ownership, because—as everyone knows—if an LLC fails, its assets are recycled to pay off the debts (as opposed to the owners having responsibility to pay off the remaining debts. “LLC” specifically means “Limited Liability Corporation”).
Their mentality was “we have a lot of money, so we’ll buy it — but we don't trust that it'll succeed, and we don't want that responsibility. We just want the revenue if it succeeds.” Such is the glory of a holding company.
The other 37.5% remained with the executives, the banks, and the few itchy shareholders. After another five years of seeing no returns, many of those shareholders went on to throw in the towel. But instead of cashing in with Ion, they sold their shares to the equity trifecta.
Today, Ion is 15% public. The other 85% are held by Black Diamond, Avenue, and Trilogy — a triplet of capitalists who are indifferent if Ion fails, and indifferent if it succeeds.
Sure, profits are nice — but they have no intention of growing the network, developing original programming, or leaving a mark on history. If they can milk those syndicated shows for a few more years of ad revenue, they’ll be happy. And the Burge is just happy to still have a job.
That's right: he's still there. Chairman and CEO.
Roy Speer died August 21, 2012. During the remainder of his life, he had donated a considerable amount of his illicitly-acquired wealth to televangelist Billy Graham’s Christian Crusades.
Lowell “Bud” Paxson died January 9, 2015, at the age of 79. He was living quietly with his wife in urban Montana. I like to think he spent his final years watching syndicated procedural dramas or shopping from home via the television, as the wasting elderly are wont to do.
Bob Circosta is still around, as of this article. Nowadays, he's a business consultant who charges obscene amounts of money and delivers more posturing than advice.
Bob also frequently tours the lecture circuit, speaking at conventions such as “the Enlightened Wealth Institute” and “T. Harv Eker's World's Greatest Marketing Seminar” — both, of which, sound very legit.
I guess that's what 112 avocado-green electric can openers gets you.