Timing is everything, and the youth-oriented WB Television Network is on a roll. For a TV station group of WB affiliates, what better time to offer shares to the public? And quick! Before the new TV season can deliver any untoward surprises.

Acme Communications Inc., formerly Acme Television, is the purest of plays: It owns nine WB affiliates and the chairman of its board is Jamie Kellner, who in his day job is chief executive of The WB, which supplies prime-time programming to Acme.

If the initial public offering goes as planned next month, Acme will receive at least $92 million for about 30 percent of the company. Most of the proceeds will go to reduce debt.

For bold investors, Acme offers a chance to invest alongside Kellner, who owns 5.27 percent of the Santa Ana-based company. Kellner, 51, was one of the architects of Fox network and has defied the odds with The WB, which gained prime-time viewers this season while total household viewing declined for ABC, CBS, NBC and Fox.

A word of caution: Most of the stations were "sticks," or virtual start-ups when acquired by Acme in the past two years. The company relied on a single station, KPLR in St. Louis, to provide its cash flow in 1990. And Acme's success is linked to a single network which, despite its buzz, is not yet profitable and depends on the continued fancy of young adults and teen-agers.

Still, Acme is one of the potential beneficiaries of a Federal Communications Commission ruling this month, which eased ownership rules. Acme stations may become takeover targets in markets where common ownership of two stations is now permissible. The ruling has done wonders for the stock price of Paxson Communications Corp., a broadcaster operating in many of the same markets as Acme.

How did Kellner come to straddle two companies? Therein lies a story: He is no ordinary employee. He negotiated an unorthodox deal in 1993, gaining an 11 percent stake in the new TV network he agreed to launch for Time Warner Inc. and Tribune Co. (which owns 22.25 percent).

When Time Warner couldn't or wouldn't invest in TV stations to extend the network's reach in 1997, Kellner did so with the blessings of Warner Bros. Studio Co-Chairman Robert Daly.

Kellner had an added incentive: He had seen the owners of early Fox TV affiliates prosper in the early 1990s, during his tenure as president of Fox Broadcasting Co. Even a Hollywood executive's paycheck paled next to the windfall profits scored by some independent broadcasters who picked up Fox programming.

Look no further than Barry Baker, who bought his first Fox affiliate in 1989 for $21 million. Six years later, Baker sold his River City Broadcasting assets for $1.2 billion. There were other success stories: Michael Finkelstein's Renaissance Communications Corp. and L. Lowry Mays' Clear Channel Communications Inc. benefited from their Fox affiliation.

Kellner, in his seven-year stint at Fox, was said to have chafed when he failed to gain control of the network programming and had no equity stake in the network he helped build. Hence the deal he negotiated with The WB's partners in 1993 to launch the network in January 1995.

The WB was initially outgunned by the rival United Paramount Network startup, which had better distribution nationwide of its programming. UPN is co-owned by Viacom Inc. and Chris-Craft Industries Inc., which have strong TV station groups.

In contrast, Time Warner owned no TV stations, and there were legal obstacles. As one of the nation's leading cable TV operators, Time Warner can't buy TV stations in many key cities because federal rules prevent it from owning cable and TV stations in the same market.

But the fledgling network's biggest problem was Ted Turner, after he became Time Warner's largest shareholder in 1996. The following year, Turner was vocal in his opinion that the money-losing operation should close.

In that atmosphere, there was little chance that Time Warner would buy TV stations to help the network. Kellner formed his own TV station group in April 1997 with broadcaster Doug Gealy and Tom Allen, who served as the Fox network's chief financial officer from 1986 to 1993.

The venture had encouragement from Daly, the Warner Bros. co-chairman, and the "Acme" name from Warner's cartoons. (In pursuit of the Road Runner, Wile E. Coyote buys gadgets like rocket-powered roller skates from a company called ACME.)

Kellner has a five-year, non-exclusive consulting contract with Acme. The WB requires him to recuse himself from any significant transaction between the station group and The WB.

The WB's fortunes changed in the summer of 1997, when it persuaded Sinclair Communications to switch all of its UPN affiliates to The WB for $64 million. When the switch took place in January 1998, The WB had the added fortune of airing a runaway hit in the teen drama "Dawson's Creek." The WB steamed past UPN in the Nielsen Media Research ratings and has not looked back. The WB's advertising sales in the 1999 "upfront" market surged 50 percent.

Meanwhile, Acme was up and running with venture capital from investors like CEA Capital Partners, Trust Co. of the West and Continental Casualty/Loews (part of the Tisch family empire, which controlled CBS until 1997) and the sale of high-yield notes. (After the initial public offering, Acme's outstanding debt will be about $200 million.)

Acme has targeted medium-sized markets like Portland, Ore., Salt Lake City and Albuquerque-Sante Fe, N.M., and the potential audience under age 25. In Salt Lake City, for example, Acme says 44 percent of the population fits that demographic.

But many of these markets already have four or more commercial TV station competitors, posing a challenge to the Acme sales force in pursuit of advertising. In several markets, Acme has struck deals most notably with Paxson Communications to share resources.

Acme recently bought three Paxson stations in the Dayton, Ohio, Grand Rapids, Mich., and Champaign-Springfield-Decatur, Ill. markets. In each case, Acme has shifted the "family-friendly" Paxson programming to morning or early evening, substituting The WB's lineup for the prime-time evening hours.

Under the new FCC rules, Acme will be free to combine with another station if eight full-powered stations remain in the market. The owner of a stronger network affiliate like NBC or Fox could even acquire Acme's WB affiliate in a given market, if both stations do not rank among the four top-rated stations.

For these reasons, some Wall Street analysts are looking for a surge in TV station valuations, much like those enjoyed by radio when that industry went through a wave of consolidation.

Acme's timing may be superb.

Kathryn Harris is a columnist with Bloomberg News.

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