FCC Provides Opening Bid Numbers for Broadcasters Before Incentive Auction 'Roadshow'
The FCC “roadshow” information sessions on the incentive auction kick off in Philadelphia Monday, and the commission released an updated version of its “Greenhill book” information package Friday to coincide with the beginning of the outreach effort. Along with using the AWS-3 auction as an illustration of auction success, the new information package lists opening bid information for every market for broadcasters relinquishing their spectrum -- the previous edition (see 1410020029) gave broadcasters their estimated auction value, senior FCC officials told reporters speaking on the condition of anonymity.
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The new book also provides additional information on the other options available in the auction -- channel sharing and moving from UHF to VHF. In the roadshow, Gary Epstein and Howard Symons of the Incentive Auction Task Force and Media Bureau Chief Bill Lake will present information from the new Greenhill book and then meet privately with individual broadcasters at their request.
The information package lists the highest opening bid prices in each market and the median price. New York is listed as having a maximum of $870 million and a median of $660 million, while Houston has a max of $290 million and a median of $270 million. In the auction, the FCC will determine clearing targets in the markets where spectrum is needed and buy spectrum until those targets are met, the officials said.
The new Greenhill book illustrates the degree that the old one is an estimate, said Expanding Opportunities for Broadcasters Coalition Executive Director Preston Padden. In San Diego, Wilkes Barre/Scranton, Pennsylvania, and Santa Barbara and Palm Springs, California, the older book lists total value estimates that are higher than the opening bid prices listed for those markets in the new book. Because the TV part of the auction is a reverse auction, prices never climb higher than the opening bid, meaning “stations in these markets have no chance of ever seeing the original Greenhill expected values,” Padden emailed. This illustrates why the FCC pricing formula should be changed to give less weight to population served, he said. In a recent ex parte filing, Padden urged the FCC to lessen the impact of population on the opening bids and abandon the proposed dynamic reserve pricing plan (see 1412080068).
Though the senior FCC officials wouldn’t comment on the projected attendance at the information sessions, they said they were “excited” about the response they’ve received. Most owners of auction eligible licensees are likely to participate in the sessions, said Drinker Biddle broadcast attorney Howard Liberman. Interest in the auction has been stirred by the success of AWS-3 and recent comments by network executives that see the auction as a business opportunity, Liberman said. Auction eligible broadcasters are obligated to their investors to learn all they can about it, he said. However, since the incentive auction task force staff has been meeting individually with broadcasters for months and the Auction comment PN includes the formulas used to calculate stations’ opening bid, many licensees won’t need to attend the information sessions, one broadcast attorney told us.
The auction package and roadshow presentation provide further details on broadcaster options to channel share or switch to a VHF frequency, which the senior FCC officials said have been largely overlooked in discussion of the auction. Broadcasters choosing to channel share will receive the same price for their station as they would have for totally relinquishing it, while those switching to VHF will receive a discounted price based on auction participation and whether they switch to a low- or high-VHF band, the officials said. The FCC has “tentatively concluded” that the discount for a change to low VHF will be between 20 and 33 percent and 60-67 percent for a change to high, the information package said. When deciding whether to participate, broadcasters have to select whether they will move bands, channel share or cease broadcasting, the senior FCC officials said. Broadcasters can change the status of their stations from round to round, but only “from greater relinquishment to less,” the information package said. That means a station that initially chose to move to low-band VHF couldn’t decide later to give up its entire spectrum, the package said.
In the private information sessions held so far, broadcasters have shown interest in their opening bid prices and asked specific questions about the auction process and framework, the senior FCC officials said. Many broadcasters will see the information sessions as a good opportunity to raise concerns with the FCC officials who will run the auction, said Liberman. The information sessions are also an opportunity for broadcasters that don’t plan to participate in the auction, since information about the repacking will also be presented there, the senior FCC officials said. That fact also allows broadcasters to attend the information sessions without betraying their intentions toward the auction, a broadcast attorney pointed out.