ION Media Networks chooses PIK option for floaters

By Angela McDaniels

Tacoma, Wash., Aug. 19 - ION Media Networks, Inc. said it paid interest on its $405 million floating-rate second-priority senior subordinated notes in kind for the three-month interest periods that began on April 15 and July 15.

The move will reduce the company's cash interest expenditures by about $9 million in the third and fourth quarters, according to a company news release.

The West Palm Beach, Fla.-based television broadcaster said it expects to use the pay-in-kind option on these notes in future quarters until market conditions improve.

ION Media Networks reported that its free cash flow after capital expenditures and interest expenses for the quarter ended June 30 was negative $22.5 million, compared with negative $9.9 million for the same quarter in 2007.

The decrease in cash flow reflects a softening infomercial revenue marketplace and the company's spending on programming, staffing, research and development and capital projects designed to transition it to a programming and advertising-driven TV network business, the release said.

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