UPDATE 1-Wachovia says Newport delayed financing process

(Adds Providence no comment, background)

NEW YORK, March 7 (Reuters) - Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz), in a dispute with buyout firm Providence Equity Partners, has told a court that it would be harmed if it was ordered to finance a deal where Clear Channel Communications Inc (CCU.N: Quote, Profile, Research, Stock Buzz) would sell its TV assets to Providence affiliate Newport Television.

Wachovia's answer to Newport Television's complaint and counterclaims, filed in the Court of Chancery in Delaware on Thursday, is the latest development in a dispute over the financing of the bid to buy 56 TV stations from Clear Channel.

Wachovia, which had agreed to fund the transaction under the initial terms in May last year, said Newport caused delays in the financing process in order to end or renegotiate its deal with Clear Channel.

Wachovia said Newport told it in November to "put pencils down," or stop diligence and preparation of definitive credit documentation, which delayed the financing process.

Wachovia also said Newport may be agreeing to a new deal that would effectively reduce the purchase price by $155 million.

"That amendment would excuse Wachovia from its obligations under the commitment letter because it would be materially adverse to the initial lenders," Wachovia said in its filing.

It is also seeking damages and other relief from the court. The case is expected to go to trial April 7.

Wachovia said if Newport had not caused delays and met its other obligations, under the May financing agreement it had with Wachovia and units of Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz) and UBS AG (UBSN.VX: Quote, Profile, Research, Stock Buzz), the lenders would have syndicated the loans to Newport in December.