'Quiet Period' of Uncertainty Ahead for Broadcasters Following Short-Form Application Deadline
With Tuesday the deadline for the Form 177 short-form application for the reverse auction, broadcast attorneys are scrambling to finish applications and prepare for an auction “quiet period” that broadcasters have never been in before, several lawyers told us. Though the type of quiet period mandated by the incentive's auction's anti-collusion rules is old hat for wireless companies, it's a new experience for broadcasters, and it's not clear how it will go, said broadcast attorney Jack Goodman. The deadline means broadcast legal experts will likely be working over the weekend to complete channel sharing agreements (CSAs) and finalize their auction applications, said Wiley Rein broadcast attorney Ari Meltzer.
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During the quiet period, broadcasters aren't allowed to communicate their bidding strategies or status to other broadcasters, and attorneys representing multiple clients in the auction aren't allowed to be “conduits” of such information. To comply with the anti-collusion rules, most law firms have informed their clients with stations in the auction that they won't be able to advise them on bidding strategies or discuss bidding information with them, several broadcast attorneys told us. Though some attorneys told us that sort of restriction adds a layer of difficulty to dealing with clients, it's intended to prevent attorneys from passing on information. “It's too big a risk for us and our clients,” said Fletcher Heald broadcast attorney Frank Jazzo. The quiet period doesn't end until the auction does, and it could stretch for many months. Since broadcasters have never dealt with this situation before, it's difficult to know what sort of issues could crop up, Goodman said.
Since channel sharing partners that have filed their CSA by the Jan. 12 deadline will be able to communicate with each other despite the quiet period, the deadline also put time pressure on negotiating those agreements, which tend to be very complicated, Meltzer and numerous other attorneys told us. It's “advantageous” to have those agreements done by the application deadline, Jazzo said. Since CSAs will be in effect for years after the auction, it makes sense to take particular care over them, attorneys said.
Form 177s involving CSAs or stations that have multiple owners are the most complicated to input into the system, the broadcast attorneys said. Applications involving stations selling all of their spectrum and owned by a single party can be completed in hours, but some attorneys told us they expect applications involving CSAs or multiple owners to be the bulk of those filed at the last minute. Such last-minute filings could also be caused by changing ownership situations, attorneys said. Media General said it's entering stations into the auction, and it's entangled in potential deals with Meredith and Nexstar. Nexstar Thursday said it agreed to buy Media General (see 1601070043), which Meredith is protesting.
The FCC declined to comment on how the filing process has gone, but broadcast attorneys we spoke with said there had been no difficulties with the filing software. Even if some forms are filed incorrectly, commission staff will notify those with mistakes and allow for corrections after the Jan. 12 deadline, the Incentive Auction Task Force said. “The FCC wants people to bid,” said Meltzer.