Outfoxed, The FCC Changes Its Own Rules

The FCC this week notified the world that it would be offering two new VHF channels in New Jersey and Delaware at auction on Feb. 15, 2011.

If you want to get in on the bidding, you’ll have to come up with the minimum bid of $200,000 for each by Jan. 21.

Curious, isn’t it?

Why would the FCC be dropping in two TV stations in the crowded Northeast corridor at a time when it is trying to recover broadcast spectrum there so it can feed the insatiable wireless broadband beast?

The simple answer is, it’s the law.

But the real answer may be that the FCC is trying to block a group of clever broadcasters from taking advantage of that same law to move two TV stations from Nevada and Wyoming where they are worth a combined $1.2 million into the New York and Philadelphia markets where they would be worth many millions more.

Way back in 1982, Congress mandated that the FCC must insure that every state have at least one VHF TV station. Remember, this was a time when the world was analog and VHF channels were considered vastly superior to UHF channels.

Shortly thereafter, RKO agreed to move WOR (ch. 9) from New York to Secaucus, N.J., as part of a settlement of the license troubles it was having with the FCC. The station is now WWOR and owned by Fox. It has been operating on ch. 38 since the digital transition.

Up until the digital transition last year, all was well. But after the transition, when many stations, including WWOR, moved from the VHF to the UHF band, New Jersey and Delaware were once again left without VHF channels.

So, in keeping with its statutory obligation, the FCC created two new channels, one for Seaford, Del. (ch. 5), the other for Atlantic City, N.J. (ch. 4), and scheduled the February auction.

But there is more to the story.

It seems that the FCC was not the first to notice that there would be a post-transition VHF vacuum in the two states.

The first was Bob McAllan, an owner of radio stations in New Jersey and Florida who has bounced in and out of TV over the years. He likes to stir things up and enjoys the sausage making of broadcast law and regulation. And he’s a good guy, by the way. There’s a building at his alma mater, Monmouth University, named after him.

McAllan figured out long ago that the digital transition would present a rare opportunity to move two new TV stations into the most densely populated region of the country and into two of the most lucrative TV markets.

So, McAllan and his partners purchased two VHF stations, probably the cheapest two they could find. In 2008, they paid Sunbelt Communications $200,000 for KVNV Ely, Nev. (ch. 3), and the following spring another $1 million for KJWY Jackson, Wyo. (ch. 2). Sunbelt had been using them as satellites to extend the reach of its network affiliates in Las Vegas and Jackson.

Then, in June 2009, they petitioned the FCC to allow them to move the Ely station to Middletown Township, a New Jersey suburb well within the New York DMA, and the Jackson station to Wilmington, Del., in the Philadelphia market.

But they did not get the answer they were looking for. In December, the Media Bureau turned down their request and at the same time triggered the process for creating two new stations in New Jersey and Delaware to satisfy the law. McAllan promptly appealed the decision to the full commission.

McAllan is not happy. He feels he is suddenly competing with the FCC for the stations and because the FCC got beat at the outset it is now bending the rules in its favor.

McAllan points to the law, which says that if a VHF station notifies the FCC that it is willing to move into a state without one, “at the time [of] such notification, the commission shall, notwithstanding any other provision of law, order such reallocation.”

“Read the law; the law is very clear,” says McAllan. “It’s at the time of notification and we got there before the FCC even thought about this.

“Here you have a group of people sworn to uphold the laws of the United States, but they never read the damn thing. This is definitely a CYA operation.”

McAllan doesn’t seem optimistic about the full commission reversing the staff, but he wants the commissioners to act so that he can take the case to the U.S. Court of Appeals in Washington. “By sitting on it and not issuing a final decision, I can’t take them to court.”

McAllan says he has a plan for the stations: “Build them, own them and operate them.”

The FCC’s foot dragging is doing no one any good, he says. “People who get involved in these things at the FCC start eating up capital that would have been better used to serve the public interest. Isn’t that what the very purpose of the commission is?”

I think I understand what the FCC is trying to do. It’s got a couple valuable channels and it would rather auction them and earn some money for the treasury than give them away to a clever broadcaster. It’s also obvious that the FCC has decided that if has to put VHF stations in New Jersey and Delaware, it is going to put them as far away as it can from Philadelphia and New York.

But fair is fair.

McAllan got there first. And the law seems to suggest that it is a first come, first served kind of deal, even if the second one in line happens to be the FCC itself.

In any event, McAllan deserves his day in court. The commissioners should act promptly on his petition for review and give it to him.

Harry A. Jessell is editor of TVNewsCheck. You may contact him at 973-701-1067 or at [email protected]. You can read his earlier columns here.