Channel Sharing Deals To Be Highly Complicated, Says FCBA Panel
Channel sharing agreements (CSAs) under new FCC rules (see 1506120051) will be complicated, highly individualized deals that must account for a range of contingencies, said attorneys Tuesday at an FCBA brown bag lunch event on the rules issued in a reconsideration order Friday. Though the new rules allow term limits on CSAs, they’re still largely designed for agreements that last many years, and if a station in a CSA is sold, a station could find itself in a channel sharing agreement with a relative stranger, said Wiley Rein broadcast lawyer Jessica Rosenthal. Broadcasters interested in channel sharing needed to start exploring such deals “a couple months ago,” said Dorann Bunkin, aide to the FCC Incentive Auction Task Force (IATF).
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Though the channel sharing order lets broadcasters sign CSAs before and after the incentive auction, most will want to get such deals worked out beforehand, said Schwartz Woods broadcast attorney Malcolm Stevenson. “Why would you relinquish your spectrum if you don’t know who you’re going to share with?” It’s in broadcasters’ best interest to get a sharing deal ”nailed down” ahead of time, he said.
Broadcasters that have sharing agreements in place ahead of the auction get the advantage of being an exception to anti-collusion rules -- they're allowed to discuss bidding strategy with each other after the auction filing deadline, Bunkin said. The information will be submitted along with the auction application, she said. Broadcasters without an agreed-upon sharing deal ahead of auction aren’t allowed to communicate, Bunkin said. Broadcasters going into the auction without a fixed sharing partner should still tell the FCC if they intend to share, Bunkin said, so the cost of their changing channel arrangement to multichannel video programming distributors can be accounted for in reimbursement funds. The declaration to the agency isn’t binding, she said. The IATF is still looking at whether contingent arrangements, wherein stations agree to share based on how the repacking goes, will be afforded the same privilege.
Following the auction, broadcasters with deals in place and stations trying to find a sharing partner have three months after receiving auction proceeds to leave their former frequency and begin sharing, Bunkin said. The commission will “look favorably” on 90-day extension requests related to parties trying to complete sharing deals, she said.
Details of a CSA are likely to necessitate long negotiations, all panelists said. Broadcasters in a sharing arrangement have to determine how the shared spectrum is divided, what happens if a station is sold or loses its license, which pays how much for capital improvements to transmission facilities, and many other intricacies, they said. Many sharing arrangements may result in limited liability corporations being formed to simplify the legal issues, Rosenthal said. The channel sharing order also contains provisions that must be in all CSAs, such as allowing both licensees access to broadcast facilities, the specifics of who gets what band width, and contingencies for a sharing partner losing a license, Bunkin said. She said the commission doesn’t intend to question the parameters of such deals -- as long as the provisions are present, the agency will leave the specifics to the parties involved.