NAB Won’t Push To Up Auction Opening Bids

NAB General Counsel Rick Kaplan said that the NAB is not supporting an effort to persuade the FCC to jack up the opening bids for stations in next year’s incentive auction because it is not a high NAB priority and has little chance of succeeding.

The NAB is “comfortable” with the FCC’s current formula for calculating the opening bids it will use to entice broadcasters to sell spectrum in a reverse auction so that it can resell it to wireless carriers in a conventional forward auction.

In the “hierarchy” of issues the NAB is working on to protect the interests of all broadcasters — those who sell as well as those who don’t — changing the opening bid formula is not high.

“It’s important for us to get the entire auction right, not just this one issue,” he said. Among other things, the NAB has to make sure non-selling broadcasters are not harmed in the repacking of the TV band that will follow the auction.

What’s more, he said, changing the opening bid formula is probably a lost cause. The FCC has signaled that it’s not going to change it, he said.

Kaplan made his comments Monday as a member of an NAB Show panel on the incentive auction.

Another panelist was Preston Padden, executive director of the Expanding Opportunities for Broadcasters Coalition that represents station owners eager to sell and that is leading the effort to change the opening bid formula.

Making his case, Padden argued that the agency reneged on its promise to base opening bids on the interference that stations cause, not on their value as broadcasting businesses. The consequence, he said, is that many stations will get lower opening bids and end up with lower final bids.

Padden also cited a separate problem. The FCC set its opening bids last December, a month before the final bids were in on the FCC’s AWS-3 spectrum auction that yielded more than $40 billion.

“The prices paid in that auction are the clearest, most unarguable market signal about the value of spectrum,” he said. “Yet, the FCC’s formula for setting starting prices … was set before that and cannot possibly reflect true market prices.”

While the NAB is not supporting the Padden and the EOBC on the opening bid formula, it is in league on another pricing issue — dynamic reserve pricing.

DRP — which FCC officials believe is necessary to prevent some broadcasters from getting overly generous payouts due a lack of bidding competition from other broadcasters, particularly during the auction’s opening rounds — would allow the FCC to ask stations to accept a lower price than they had agreed to take in the previous round.

Padden called DRP “truly a creature of the devil …. It’s just a hammer to drive down the prices broadcasters get paid.”

Without the colorful language, Kaplan agreed “100%” that DRP must go and said it probably would. “We do think the commission is going to reverse on that.”

The panel also included representatives of the wireless carriers and the consumer electronics industry. All agreed that the incentive auction would likely go forward next year as the FCC now plans.

However, Kaplan said that litigation could slow or derail it.

One suit is already pending — NAB’s own. It challenged the FCC over plans for the post-auction repacking of the band. If the NAB wins all or part of its suit, the FCC would probably be forced to open a new proceeding to modify its repacking plan, Kaplan told a reporter after the session.

The FCC could fast-track the proceeding, a move that would limit the delay to just two or three months, he said.

Arguments were heard in the case in March and a ruling could come this summer, he added.

Other suits could come from LPTV broadcasters who feel that they are being overlooked in the auction and from AT&T and Verizon, which object to the FCC’s plan to expand the spectrum set-aside for small carriers.

Read TVNewscheck’s other NAB Show policy coverage here. Find our full convention coverage here.