FCC Plans Big Opening Bids For TV Spectrum

As part of an ongoing effort to encourage broadcasters to cash in their spectrum during the FCC’s incentive auction next year, the agency today unveiled some jaw-dropping opening bids that the agency plans to offer key major-market broadcasters for at least agreeing to participate in the auction — including top bids of $870 million for full-power stations in New York and $680 million in Philadelphia.

The FCC also said that some stations in smaller markets also could cash in big, with a top opening bid of  $480 million for an unidentified station’s spectrum in Greensboro-High Point-Winston-Salem (DMA 46) and up to $390 million for a station’s channel in Youngstown, Ohio (DMA 114), (see the FCC’s full report here).

But at the same time, senior FCC officials warned that broadcasters may not actually walk away with the eye-popping  maximums — or even the median amounts of the opening bids offered in key markets. The actual payoffs the broadcasters get will depend partly on how much other broadcasters in their markets are willing to relinquish their own spectrum for and other factors, FCC officials said.

“It’s an auction,” said one senior FCC official during a briefing for reporters Friday morning. “That’s how auctions work.”

FCC officials said they intend to discuss the opening bid amounts and other key auction issues during a series of face-to-face field meetings with broadcasters, starting with a Monday (Feb. 9) session in Philadelphia.

The agency is planning to conduct similar outreach sessions in other top-50 markets over the next few months, with the agency still “on track” to start the auction next year, a senior FCC official said.

Under the basic auction regulations, broadcasters who agree to relinquish their channels for the opening big price offered have to release their channels if the agency ultimately accepts the bid.

But if the price is lowered during subsequent bidding, the broadcaster can drop out of the auction, without penalty, a senior FCC official said.

“The auction really is a once-in-a-lifetime opportunity for broadcasters,” a senior FCC official said.  “It’s virtually risk free.”

Also during the agency road show, FCC officials will brief broadcasters on other aspects of the auction process, including plans for repacking broadcast channels in the auction’s wake how broadcasters will be reimbursed for their moving expenses, FCC senior officials said.

FCC officials also said the full opening bid prices were calculated for stations that agree to relinquish their channels, either by going off the air or by entering channel-sharing arrangements with other broadcasters in their markets. Broadcasters who opt to switch from UHF to a low VHF channel would receive between 20% and 33% less than a broadcaster that relinquishes its spectrum altogether, and broadcasters who switch from a U to a high V would receive 50%-67% less, an FCC official said.

FCC officials also said that in major markets, such as New York, the agency expects to buy out multiple broadcasters to clear spectrum to auction for wireless services.

Preston Padden, executive director of the Expanding Opportunities for Broadcasters Coalition, said the opening prices proposed by the FCC were lower than the expected values projected for some stations in the FCC’s Greenhill report late last year, including Wilkes-Barre/Scranton, Pa., and California’s San Diego, Santa Barbara and Palm Springs.

“Since the auction goes only down from the starting prices, stations in these markets have no chance of ever seeing the original Greenhill expected values,” said Padden, who wants the FCC to adopt a different formula that he says will result in higher opening prices for stations.