As stations look to make channel-sharing deals, unfortunately, there is no one right price, no equivalent to the cash flow multiple that many stations buyers/sellers look towards. The final negotiated price will depend upon a number of local factors all leading to the relative negotiating positions of the parties. Here’s a outline.
Connecticut Public Broadcasting Network will receive $32.6 million in auction proceeds through a complex three-way spectrum deal involving two of its stations — WEDY in New Haven and WEDW in Bridgeport. Both stations will continue broadcasting under channel-sharing arrangements, though details are confidential due to a non-disclosure agreement. Spectrum relinquished by WEDY, which will share channels with WEDW, generated $18.9 million, according to the FCC’s April 13 announcement of auction results.
The action today gives more sharing flexibility to TV stations that relinquished spectrum in the incentive auction, as well as to LPTV and TV translators, to help ensure continuity of service to viewers.
As part of its pilot project for meeting transparency, the FCC has released the text of an order on its March agenda to expand channel sharing outside of the auction context. The draft order will fill in many holes in the current channel sharing regime, but it still includes several restrictions on the type of channel sharing agreements that will be permitted.
They have FCC licenses, programming contracts and everything else you need to be a broadcaster, except spectrum, having sold it in the FCC’s incentive auction. So, now they are looking to find spectrum somewhere else or sell off their remaining assets in a second post-auction payday. There’s opportunity too for living broadcasters who wish to channel-share or lease the zombies a subchannel.
Stations that auctioned their spectrum still hold their broadcast licenses so they may continue broadcasting — with full must-carry rights — by leasing a channel from another station. And stations that did not auction their spectrum can make money by leasing channels.
Stations deciding to sell their spectrum in the FCC’s incentive auction and cease their business operations will be required to treat the event as a one-time sale or loss, the real accounting challenges will arise for stations that want to sell their spectrum but continue operating their business. They have options including channel sharing, joint ventures and license sharing. The differences between these interpretations have far-reaching consequences.
An Aug. 11 test in Syracuse, N.Y., of the Evertz 3480TXE MPEG-2 encoding and stat-mux platform demonstrates that it’s now possible for a pair of stations to share a channel without giving up existing services that viewers are accustomed to seeing. The test took place at the PBS Member Station Joint Master Control pictured above.