Moving nearly 1,000 TV stations in the TV repack will cost around $2 billion, according to TVNewsCheck's review of nearly 500 individual cost estimates filed by stations at the FCC. Counting another $200 million or so in costs from MVPDs, the total cost of the channel migration figures to be at least $2.2 billion, $450 million more than the $1.75 billion that Congress has currently allocated.
UPDATED 10:55 A.M.
TVN: Stations’ Repack Expenses To Hit $2B
The estimated cost of moving nearly 1,000 TV stations to new channels in the post-auction repack on the TV band will likely reach $2 billion — some $250 million more than the $1.75 billion Congress allocated for all relocation-related expenses, including those of MVPDs, according to a TVNewsCheck examination of roughly half of broadcasters’ filings with the FCC.
According to estimates, the MVPD expenses could add another $200 million or more to the total, creating a shortfall of $400 million to $500 million.
Such a shortfall would leave TV stations in the position of receiving less than full reimbursement for their relocation expenses for major RF components and associated services unless broadcasters can convince Congress to increase the reimbursement fund.
“Depending on how the funding issue comes out in terms of the amount of money needed, that will be something we will be working with the Congress to resolve,” said NAB spokesman Dennis Wharton.
The FCC had expected to release its official tally of repack expenses sometime later today, an FCC spokesman said. But that was before the FCC’s electronic filing system for the broadcasters’ expense estimate began to seize up yesterday afternoon. TVNewsCheck found this morning that estimates from many stations were still missing from the database.
Broadcasters moving to a new channel had until the end of yesterday to submit estimates of their relocation expenses using FCC Form 399. The form provided stations with a means to detail relocation expenses for items like transmitters, antennas, transmission line, tower costs and professional services, as well as information about their existing RF facilities.
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Stations provided the FCC with two estimated costs on the form: a “Predetermined Cost Estimate” and “Estimated Cost.” The former drew on the pricing within Widelity’s Report and Catalog of Potential Expenses and Estimated Costs, and the latter on a station’s own cost estimates drawn from vendor quotes.
TVNewsCheck examined the Form 399 filings for 484 stations. Of those, about 68% were from stations estimating their expenses to be below their Widelity-based estimate; 14% came from stations with estimates that were higher; and 17% were from stations estimating relocation expenses equal to the Widelity-based estimate.
As would be expected, the estimates varied widely among stations. Not surprisingly, the highest estimated expenses came from stations with complex replacements in big markets. For instance, Fox’s WWOR, which transmits from the Empire State Building in New York City, estimated a repack expense of about $42 million, some $6.6 million more than the Widelity-based estimate for the station.
On the other end of the spectrum was WYHB-CD in Chattanooga, Tenn., which estimated its repack expense to be $22,675, or $115,570 less than the Widelity-based estimate.
At some future point, the relocation expenses of each station will be vetted by outside specialists the FCC has retained to guard against authorizing reimbursement beyond the minimum needed to replicate existing facilities.
The FCC gave broadcasters until 11:59 p.m. ET July 12 to submit their Form 399 filings using the agency’s electronic Licensing and Management System (LMS). Sometime in the early afternoon on Wednesday, the LMS filing system began to bog down –at times returning messages advising of internal server errors and at others locking up entirely.
It is unclear whether the FCC server failure was the result of the LMS being overwhelmed by the sheer number of filers waiting till the 11th hour to submit their Form 399s or the unrelated crush of comments that came in as part of a nationwide “Day of Action” to protest FCC Chairman Ajit Pai’s plans to kill Obama-era net neutrality rules.
(Editor’s note: TVNewsCheck intended to provide a complete tally of expense estimates for all stations required to change channel assignments, but the online LMS became so unresponsive that the decision was made around 9 p.m. ET last night to base this story upon the nearly 500 station records it was able to examine up to then. The LMS appears to be operating smoothly this morning.)
In response to questions from TVNewsCheck, an FCC spokesman acknowledged in an email this morning (Thursday) that broadcasters had difficulty submitting their estimates after 3 p.m. yesterday and missed the deadline. “We’ve been in contact with most of those entities and are working with them to get their estimates submitted.” he said. “Any entities experiencing technical difficulties will not be excluded from the initial allocation. We currently have no evidence that the technical issues were related to the Internet Day of Action.”
TVNewsCheck’s review of the filings found the total expenses of the 484 stations examined to be $998 million and the Widelity-based estimate total to be $1.01 billion, a difference of some $103 million.
Projecting that ratio of stations to dollars across all 957 stations that have to move suggests that just under $2 billion will be needed.
MVPDs that incur expenses resulting from the repack by law also are entitled to be reimbursed. Estimates for their expenses run around $200 million.
Sinclair Broadcast Group this week in an ex parte letter filed with the FCC expressed its concern the agency may take steps to remedy a shortfall in available funds by “artificially” reducing the total repack reimbursement.
Specifically, it is concerned the FCC will not authorize replacement transmitters with excess capacity, or “headroom,” that is comparable to that of existing transmitters in use by stations as a way to save money.
Insufficient reimbursement funding should not influence agency “judgment as to what is rightfully reimbursable or not,” Sinclair said. Doing so would “foreclose the possibility of future reimbursement of these costs in the event the Fund is supplemented in the future.”
While important, yesterday’s expense filing deadline was simply a first step. Ultimately, whether or not Congressionally authorized reimbursement funding will be sufficient depends on the real costs stations incur installing new RF infrastructures or modifying existing facilities to transmit on their new channels.
Determining that total will depend on the real invoices they receive for the equipment and services they require, not mere estimates, and that’s still years away.
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It should be pointed out that $21M of WWOR’s expense is to ESB for building modifications. And their AUX location in West Orange is in there too.
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1.75 billion is a ridiculous figure, something only a politician could dream up. There is no indication Congress did any research on how much it would actually cost to move hundreds of stations. What if the FCC had reached its goal of 120 MHz? During the DTV transition, it cost broadcasters 15 billion dollars to go digital (2009 money). How can the Feds think 1.75 billion would be sufficient?
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