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Letter to the SEC

July 25, 2005

Via Facsimile: 202-772-9205

Larry Spirgel

Assistant Director

Securities and Exchange Commission

Division of Corporation Finance

450 Fifth Street, N.W.

Washington, D.C. 20549

              Re:

    Paxson Communications Corporation

Form 10-K/A for the fiscal year ended December 31, 2004

Filed on April 29, 2005

Form 10-Q for the fiscal quarter ended March 31, 2005

Filed on May 10, 2005

File No. 1-13452

Dear Mr. Spirgel:

     On behalf of Paxson Communications Corporation (the “Company”), I am writing in response to a
conference call with the Staff of the Division of Corporation Finance (the “Staff”) on July 12,
2005 in which the Staff requested additional information to supplement the response submitted by
the Company to the Staff on June 15, 2005 to the comments set forth in your letter addressed to the
Company dated June 2, 2005 (the “Comment Letter”), regarding the Company’s Annual Report on Form
10-K/A for the fiscal year ended December 31, 2004 (the “Form 10-K”) and Quarterly Report on Form
10-Q for the fiscal quarter ended March 31, 2005 (the “Form 10-Q”). For the convenience of the
Staff, the additional information requested by the Staff is listed below in italics, with the
Company’s response to each comment set forth immediately following each comment.

1. Provide the Staff with an analysis pursuant to Staff Accounting Bulletin No. 99 “Materiality”
for the annual periods from 1998 through 2003 and for each of the quarters in 2002 and 2003
comparing the aggregate error in the period to the reported amounts of net income (loss)
attributable to common stockholders; net income (loss); and operating income (loss).

Attached hereto is the Company’s quantitative and qualitative analysis prepared pursuant to SAB 99.
As discussed with the Staff on July 12, 2005, the Company has concluded that at December 31, 2004,
the effect of the unrecorded adjustments and the correction of the out-of-period items as detailed
in the attachments is not material, individually or in the aggregate, in relation to any period
presented.

July 25, 2005

Page 2

2. Provide the Staff with the methodology utilized by the Company to allocate the consideration
paid to certain cable operators between the promotional advertising and distribution rights
obtained through the distribution agreements.

In 1998, the Company commenced entering into distribution agreements with cable television
companies for the carriage of the Company’s network signal in markets where it did not own a
television station. The agreements with the major cable operators are for a term of ten years. In
exchange for the distribution of its network signal to the cable operator’s subscribers, the
Company agreed to pay a fee in cash (typically based on the number of subscribers on the cable
system). In most cases, and as an ancillary benefit to the Company in addition to securing
distribution, the Company was able to negotiate the return of a portion of the fee in the form of
promotional advertising on other channels carried by the cable operator on its system (referred to
herein as “spot advertising”). The Company recognizes that the cable operator has an interest in
promoting the addition of a new channel to its line-up. The Company received spot advertising on a
“time available basis” as determined by the cable operators.

The Company entered into these arrangements for the purpose of gaining distribution and sought to
negotiate the lowest per-subscriber fees possible. Once the per-subscriber fee was negotiated, the
Company was able to obtain a return of a portion of the fee paid in the form of spot advertising.
The spot advertising informs the subscribers on the system that the Company’s signal is now
available to them. Without distribution on the system, the spot advertising is virtually worthless.
The benefit of the spot advertising is greatest in the earlier years of the distribution
agreements when the Company seeks to establish loyal viewers for the duration of the distribution
agreement. As a result, the Company sought to obtain the spot advertising during the first two or
three years of the distribution agreement.

Initially, the Company assigned a seven-year life to the asset created by the distribution
agreements (comprised of both the distribution rights and the spot advertising components). A
shorter amortizable life accelerated the recognition of expense into the early years of the
agreement, thus reflecting additional expense associated with the spot advertising. However, a
shorter amortizable life would also result in the Company fully amortizing the component of the
asset associated with the distribution rights within seven years rather than the ten year term of
the distribution agreements. In 2003, in order to bifurcate and determine the cost basis for the
distribution rights and the spot advertising, the Company allocated the consideration paid, on a
pro-rata basis, using the estimated fair values of each of the assets received. The estimated fair
values were determined through the negotiations with the respective cable operators. As described
above, the Company first negotiated a carriage fee with the cable operator (thereby establishing an
indication of the fair value of the distribution rights) and then further negotiated a return of a
portion of the fee in the form of a specified dollar amount of spot advertising (thereby
establishing an indication of the fair value of the spot advertising as well). The Company did not
consider it appropriate to use the contractually stated value of the spot advertising as its cost
basis, as these types of spot advertising arrangements are typically satisfied at “list” prices
(referred to in the industry as “rate card”) and the Company entered into these agreements for the
purpose of obtaining distribution rights. Using the allocated cost basis of the spot advertising,
the Company determined the amount of amortization that should have been recorded to reflect the
estimated annual benefit of the spot advertising. Additionally, the Company used the allocated
cost basis of the distribution rights to determine the annual amount of amortization that should
have been recorded in order to amortize the distribution rights over the term of the respective
agreement. This was compared to what the Company had recorded using the seven-year life initially
assigned to the

July 25, 2005

Page 3

combined assets. The Company considers the methodology employed to be both reasonable and
objective in determining the cost basis of the distribution rights and the spot advertising.

3. Provide the Staff with further information supporting your conclusions that no additional
stock-based compensation expense related to the October 2004 exchange should be recognized.

As previously described to the Staff, Financial Interpretation Number (“FIN”) 44 “Accounting for
Certain Transactions involving Stock Compensation” provides that a modification to a stock option
or award that does not affect the life of the award, the exercise price, or the number of shares to
be issued has no accounting consequence. As highlighted to us by the Staff, Emerging Issues Task
Force (“EITF”) No. 00-23 “Issues Related to the Accounting for Stock Compensation under APB Opinion
No. 25 and FASB Interpretation No. 44 Abstract” Issue 17, indicates that “any modification to the
terms of an option award to reduce the likelihood of exercise by the grantee shall be considered a
cancellation of that award. For example, any increase in the exercise price...shall be considered a
cancellation.”

The Company notes that Issue 17 of EITF 00-23 specifically indicates that “any increase in the
exercise price...shall be considered a cancellation”. As the Company increased the exercise price,
albeit by a nominal amount (one penny), it agrees with the Staff that re-measurement is appropriate
in October 2004. According to FIN 44, paragraphs 60-64, if there is a re-measurement the total
compensation cost shall be measured as the sum of the following: (a) the intrinsic value of the
award at the original measurement date, plus (b) the intrinsic value of the modified award, that
exceeds the lesser of the intrinsic value of the original award at (1) the original measurement
date or (2) immediately prior to the modification. As the Company’s stock price decreased from the
original measurement date to the date of the modified award, no additional stock-based compensation
should be recognized.

* * * * *

     The Company believes that the foregoing responds fully to the additional information requested
by the Staff on our conference calls on July 12, 2005. I would appreciate if you would let me know
at your earliest convenience if you have questions about the Company’s response.

Respectfully submitted,

Richard Garcia

Senior Vice President and Chief Financial Officer

    cc:

    Bob Carroll, Staff Accountant

Steve Belous, Ernst & Young, LLP

David L. Perry, Jr., Holland & Knight LLP

Adam K. Weinstein, Senior Vice President, Secretary and Chief Legal Officer

ACCOUNTING MEMORANDUM

    To:

    Files

    From:

    Tammy G. Hedge, Chief Accounting Officer and Controller

    CC:

    Distribution

    Date:

    March 16, 2005 (Updated on July 25, 2005)

    Re:

    UPDATE OF QUALITATIVE AND QUANTITATIVE CONSIDERATIONS OF FINANCIAL STATEMENT

ERRORS

In June 2005, Paxson Communications Corporations (the “Company”) received a comment
letter from the Securities and Exchange Commission (the “SEC”). On July 12, 2005,
representatives of the SEC (the “Staff”) requested that the Company provide the SEC with
the analysis of the qualitative and quantitative considerations of the impact of financial
statement errors prepared by the Company prior to filing its Annual Report on Form 10-K for
the year ended December 31, 2004. The following memorandum serves to update and supplement
the analysis prepared by the Company on March 16, 2005.

The Company evaluated the effect of financial statement errors for all periods presented to
determine if the errors were material on an individual or aggregate basis, considering both
quantitative and qualitative factors. The following serves to document the factors
considered and conclusions reached. Reference is made to the schedule attached hereto
“Quantitative Analysis of Financial Statement Errors”.

DESCRIPTION OF SELECT ITEMS DETAILED IN THE ATTACHED SCHEDULE

    •

    Adjustments 1 and 2 – Over-Amortization of Cable and Satellite Distribution
Rights — In 1998, the Company began entering into cable and satellite distribution
agreements for periods generally up to ten years in markets where the Company does
not own a television station. In 2003, the Company determined that it had
previously over-amortized certain of these assets and recorded a $6.6 million
reduction to its amortization expense in 2003. The Company had been amortizing
these assets on an accelerated basis which gave effect to the advertising
components included in these agreements. The Company discovered the
over-amortization in 2003 and recorded a correcting adjusting entry. The Company
has discussed this adjustment in the notes to its consolidated financial
statements and management’s discussion and analysis of financial condition and
results of operations.

    •

    Adjustments 3 and 4 – Impairment in Connection with a Purchase Option on a
Television Station — In 1997, the Company entered into two separate option
agreements with the same third party for the purchase of the assets of two
separate television stations. Because the option agreements were with the same
party, the Company had tested its investment in these assets for impairment on a
combined basis. The Company tests for impairment pursuant to the provisions of
Financial Accounting Standards Board (“FASB”) Number 144 “Accounting for the
Impairment or Disposal of Long-Lived Assets” whenever events or changes in
circumstances indicate that its carrying amount may not be recoverable. In the
third quarter of 2003, the Company concluded that testing on a combined basis was
not appropriate as the agreements were independent of each other (i.e. the Company
could have exercised one of the

Page 1

    options but not the other). As a result, the Company reviewed its past independent
appraisals and determined that, on a separate basis, an impairment existed in 2002.
Additionally, the Company determined that it had not previously amortized certain
assets associated with these purchase options. As a result, the Company recorded an
adjustment in 2003 to correct the recorded value of these assets. The aggregate
impact of these two items amounted to $5.2 million in 2003. The Company has
discussed this adjustment in the notes to its consolidated financial statements and
management’s discussion and analysis of financial condition and results of
operations.

    •

    Adjustment 5 – “Additional Lease Expense for
Escalating Lease Payments” —
Beginning in 1999 and continuing through 2002, the Company entered into various
long-term operating leases that provided for escalating lease payments.
Typically, the escalations are determined based on the greater of 5% or the
increase in the consumer price index. The Company had recognized the expense
associated with these operating leases based on the annual cash outflows required.
Under Generally Accepted Accounting Principles (“GAAP”), the Company is required
to recognize the annual amount of lease expense using the straight-line method
over the term of the lease. As a result, the Company recorded an adjustment in
the amount of $4.0 million in 2004 of which $3.1 million pertained to prior
periods. The Company notes that its disclosures of lease commitments, as they
relate to cash outflow commitments, have been materially correct. The Company has
discussed this adjustment in the notes to its consolidated financial statements
and management’s discussion and analysis of financial condition and results of
operations.

    •

    Adjustment 6 – “Reserve for Certain State Taxes” — The Company files certain
state income tax returns on a combined basis as permitted under certain
circumstances. Although the Company has a reasonable basis for its filing
position, in 2003 it determined that its basis for a combined filing position
could be challenged and that the exposure met the requirements for accrual
pursuant to the provisions of FASB No. 5 “Accounting for Contingencies”. As a
result, in the third quarter of 2003 the Company recorded an accrual in the amount
of $2.9 million of which $2.5 million pertained to prior periods. The Company has
discussed this adjustment in the notes to its consolidated financial statements
and management’s discussion and analysis of financial condition and results of
operations.

    •

    Adjustment 7 – “Additional Amortization for
Certain Leasehold Improvements” —
In 2004, the Company determined that certain leasehold improvements were not being
amortized over the shorter of the life of the leasehold improvement or the term of
the related lease. As a result, the Company recorded an adjustment in 2004 in the
amount of $1.7 million of which $1.6 million pertained to prior periods. This
error primarily resulted from the use of the initial lease term to amortize
leasehold improvements acquired subsequent to entering into the lease and with
lives that exceeded the initial lease term, rather than the remaining term of the
lease. The Company has discussed this adjustment in the notes to its consolidated
financial statements and management’s discussion and analysis of financial
condition and results of operations.

    •

    Adjustment 8 – “Use Tax Exposure” — In 2004, the Company determined that it had
not filed “use” tax returns in certain states in which it had operations nor had
it accrued for the resulting liability. In 2004, the Company commenced a
voluntary disclosure process for the affec