DIAMOND IN THE ROUGH; HOME SHOPPING MOGUL LOWELL `BUD' PAXSON'S NEW NET AIMS FOR BIGGER PIECE OF REVENUE PIE.

Byline: Keith Marder Daily News Television Writer

Lowell ``Bud'' Paxson didn't have many believers when he predicted in August that his newly launched broadcast network would be in the black within a year.

Less than two months later, Paxson is reassessing his estimate.

Now he thinks Pax TV, television's seventh network, could show a profit as early as February. And there are a few market analysts, he says with a chuckle, for whom he's preparing a ``feast of crow.''

Paxson, co-founder of the Home Shopping Network, seems to have figured out a way to make the spiritually minded, family-friendly network financially successful, doing it so far with a steady diet of second-run shows.

Its weeknight prime-time lineup consists of such familiar fare as ``Touched by an Angel'' and ``Dr. Quinn, Medicine Woman.'' Only 20 percent of its schedule is occupied by original programming. The combination keeps Pax TV's programming budget comparatively slim.

And therein lies part of Paxson's secret to success.

His strategy: Spend less to produce shows, spend more to promote the network, and own everything - the network and the stations.

So far, so good.

Ratings pulse

Pax TV (KPXN, Channel 30, check local cable listings), brand new and available in 70 percent of the country, has achieved a 1.1 rating during prime time in the 31 markets in which it appears that are metered by Nielsen Media Research. The network's Los Angeles affiliate has a 1 rating.

That sounds like nothing compared to the ratings the Big Three networks rake in. CBS, for example won the television season's second week with a 9.5 average prime-time rating. But, remember, those networks spend ungodly sums to air new products - NBC paid $286 million for this season of ``ER'' alone - and recouping those costs require big ratings. Pax doesn't spend anywhere near that much.

The new network has set its programming budget at a comparatively measly $100 million per year, while programming an entire broadcast day; even the other upstart broadcast networks, the WB and UPN, spend three times that on programming to fill only 10 hours a week.

And to keep the costs of producing original programming to a minimum, Pax does business with independent producers instead of more expensive major studios. The result: Pax spends an average of $800,000 for an hour drama, compared to the $1.2 million to $1.6 million other networks pay.

Low production costs mean Pax TV needs only minimal ratings to make money. Paxson has said that a 0.6 Nielsen rating (about 600,000 households nationally) is all his network needs to break even.

``I'm ecstatic with the way it's going,'' Paxson said recently. ``I'm really pleased at how America has responded to it.''

America, indeed, appears to be tuning in to the morals-heavy Pax TV, a broadcast network with all family programming all the time.

Even Pax's commercials are rated G; the stations won't accept advertising for alcohol and psychics, nor will it air violent movie trailers.

Going against industry trends - which, in the last few years, have begun leaning toward more sex, more violence and more liberal use of foul language on shows - and giving America what it apparently wants, is ground Paxson knows well. In his four decades in the broadcasting business - from radio to television - he has found success.

He is best known for co-founding the Home Shopping Network in 1982, selling billions of dollars worth of clothing, knickknacks and cubic zirconium. The Home Shopping Network not only made him wealthy, selling it off paved the way to set up the new network.

His vision for Pax TV is to take viewers to that happy place people yearn to be.

``I'd like to copy the Hallmark Hall of Fame,'' said Paxson, a born-again Christian. ``They are always great shows, have a little spirituality, are good family programs and are warm and fuzzy.''

The handful of shows Pax TV is developing on its own for daytime and weekend time slots fits the bill.

``Flipper: The New Adventures'' (9 p.m. Saturdays) is a remake of the classic '60s series about a friendly dolphin who helps a family in its weekly adventures; ``Great Day America'' (5 p.m. weekdays), an upbeat version of ``The Today Show''; ``It's a Miracle'' (9 p.m. Sundays), a reality-based show containing uplifting stories; and ``Cloud Nine'' (7 a.m. Saturdays, 6 a.m. Sundays), about a group of angels who run a television station, used as a wrap-around for the network's children's programming block.

Another new series, ``Little Men,'' based on the Louisa May Alcott book, will debut at 8 p.m. Nov. 7.

The Sagansky factor

Pax TV, which has less at stake than the other six networks, has offered the perfect place to let these kinds of family shows grow and be nurtured, said Paxson Communications Inc. president and chief executive officer Jeff Sagansky, who was the head programmer at CBS and developed many of the shows reprised on Pax TV's schedule.

Media buyers, who advise clients about how to spend their advertising budget, tend to agree.

``We think it has long-term potential,'' Tim Spengler, senior vice president and general manager of the national broadcast division of Western International Media, a Los Angeles-based media buying firm, said of the wholesome, family-oriented network. ``We think it is a great alternative for our clients.''

It doesn't hurt that Pax TV operates in a different stratosphere than the other networks when it comes to advertising rates. Advertising on Pax is similar to that on a basic cable station, which also penetrates about 70 percent of the country. A half-minute national ad costs about $5,000 on a Pax station, compared to about $100,000 for a hit on the WB.

The newest network can afford to offer such reasonable rates only because of another Paxson operating mode: He owns all the stations.

Paxson says the television advertising industry reaps approximately $37 billion a year, with part going to the networks and part to the stations. ``We own the stations and get to dip into every one of those piles - national, regional and local,'' he said.

As with the Pax TV programming budget, the stations also are run at a relatively low cost. Paxson downsized the staffs at his 80 stations to prepare to launch the network. Now, Sagansky said, a Pax station has an average of 18 employees - eight of whom sell advertising - compared to an average 100 employees for any network affiliate in a large city.

The positive early returns are aided by a large promotional budget - $25 million for the final three months of 1998, which will be spent primarily through November sweeps.

The prognosis for the newest network will be more clear after November ratings are compiled.

But Paxson, a shrewd businessman who paid $1 million an episode for ``Touched by an Angel,'' is not running this venture in a haphazard manner. He claims that studies have been done stating that the American public is hungry for shows like the ones on his network.

``Eighty-five percent of all Americans say there is too much sex and violence on television,'' he said, quoting a survey. ``People say they have a spiritual side and want family-oriented programming with a little warmth in it.''

And it's free, unlike those fake diamond rings he used to sell.

CAPTION(S):

3 Photos

Photo: (1) no caption (Lowell `Bud' Paxson)

(2--3) ``Little Men,'' at left, starring Michelle Rene Thomas as Jo (center), is one of the original programs on Pax-TV, which is relying heavily on reruns of the popular ``Touched by an Angel,'' at right, starring Roma Downey.