FCC Spectrum Valuations Intrigue Meredith

Add Meredith to the list of companies interested by the recent Greenhill & Co. projections on spectrum valuations.

The FCC released the Greenhill projections, which pegged the overall value at around $45 billion, earlier this month in an effort to spur interest in the spectrum incentive auction.

Meredith is interested, but not yet committed, is what Paul Karpowicz, president of the Local Media Group, said in response to a question from Barry Lucas at Gabelli & Co. at Meredith’s analysts call following release of its quarterly earnings this morning.

“I think the auction is going to happen,” Karpowicz said. “I don’t think there’s any question about that. The question is when.

“We haven’t made a decision on participating in the auction. Even even if values are half [the Greenhill projections], it would make it a little bit interesting.”

Lucas had asked specifically about the divergence between estimated values for the Phoenix market (DMA 11) where Greenhill estimates top-end value of $36 million for spectrum, and Springfield, Mass., (DMA 114) with a $120 million estimate.

Meredith owns stations in both markets.

“It does speak to congested parts of country,” Karpowicz said. “If someone is trying to connect a coast-to-coast network, it makes sense that spectrum in those congested markets would go for a higher rate.”

Stephen Lacy, president-CEO of Meredith, however, injected a strong dose of skepticism regarding the auction.

“I wouldn’t be holding my breath for us to be carrying large bags of money into Meredith corporate headquarters,” he said. “I don’t think it will happen in my working career.”

Lucas also asked whether Meredith, like other print-broadcast property owners, is mulling separating the two lines of business in order to unlock value for investors.

“We have had lots of work done on this potential opportunity,” Lacy said. “We are not opposed to it but we would have to see a larger opportunity on one side of  the house that would create value for shareholders rather than separating for the sake of separating.

“It’s not like we’re locked in stone,” he added. “We were absolutely going to separate the businesses when we were going to combine with Time Inc., but separation for the sake of separation is not something we’ve seen that would create shareholder value.”