JESSELL AT LARGE

Outfoxed, The FCC Changes Its Own Rules

After Bob McAllan found a loophole in the FCC's rules and sought to move two stations from the Rocky Mountain area to the New York and Philadelphia markets, the commission turned him down and put two new channels up for auction there. He's asking for a review so he can take the matter to court, but the FCC remains silent, scheduling the auction for February. He deserves his day in court.

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.

BRAND CONNECTIONS

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.


Comments (13)

Leave a Reply

Kathryn Miller says:

November 5, 2010 at 1:08 pm

The original law (which was fashioned to give RKO General an “out” on a license challenge that they were going to lose — they had lost all their other stations save KHJ-TV or sold them in political deals in long-running license challenges — was pure political “gerrymandering.” McAllan’s purchases and petitioning were clever, and he accurately cites the language that served to end the RKO/WOR matter. The commission knows that he will win at the Court of Appeals, so he’s going to have to wait about the same time as did Turner on his original must-carry challenge, which the court of appeals took up after 2+ years of commission inaction. It would be hard to imagine McAllan not bidding on the auctions, and/or tying that work-around up in new forms of red tape.

Matthew Castonguay says:

November 5, 2010 at 3:48 pm

I’m a little slow on this. Not getting why the FCC doesn’t just let McAllan move the stations? Why is it preferable to them to initiate two new licenses?

Teri Green says:

November 5, 2010 at 3:57 pm

Because TV allocations are a public resource. There are only so many of the. McAllan is taken this resource form an underserved poor market and moving it to a rich market. It’s like if the government said “OK we’ll give you a grant (free money) a doctors office in a slum.” Then you did this and found a loop hole to move your doctor’s office to Michigan Avenue in Chicago or Fifth Avenue in NYC.

You’re taking government resources (remember the allocations are licensed and can be revoked, McAllan doesn’t own them) from a poor area and moving it to a rich area, that is already over-served. So places in the west which NEED TV stations go without. While NYC and Philly which have enough TV stations get more and they don’t even need it.

Krista Prescott says:

November 5, 2010 at 4:16 pm

Seems to me that McAllan found “a gold nugget” and the FCC wants to take it from him. His group found the law… applied it… then the FCC said “oops, we don’t want to miss out on a big auction and lots of money” so they’re competing with him. This is unfair! I’m getting tired of seeing the FCC as the enemy and biggest competetor to the broadcasting business. They are there to ensure rules are followed (as Mr. McAllan has done) and to ensure people are being served by the stations under the existing rules and regulations. Taking spectrum which provides citizens with a non-pay service and replacing with a broadband paid service is certainly NOT the same. And what about all the white space that many of those broadband wireless providers already hold (UNUSED!!) Before coming after spectrum that IS IN USE, go after those “hogging spectrum”.
Going back to Mr. McAllan and his group, the FCC should and must award him the license change. If they feel (and one writer said) that the two former markets are underserved, then the FCC (within its power and rights) should open an auction for spectrum in THAT location. The FCC does NOT need to compete with the private sector (which stinks of communism and the former Russian government!)

Jeffery Sciackitano says:

November 5, 2010 at 4:25 pm

Mr. McAllan beat the FCC fair and sqaure, simple as that. He “won” and the FCC needs to do the right thing and follow thier own rules.

    Ellen Samrock says:

    November 5, 2010 at 5:48 pm

    Isn’t this typical behavior of a government agency? The FCC is great at mercilessly sticking it to broadcasters who transgress some minor rule with excessive fines. But they’re not so great at applying the rules to themselves. I hope this does go to the Court of Appeals The FCC has lost before in a court of law, they could very well do so again.

David Siegler says:

November 5, 2010 at 4:27 pm

If you make the rules, do you have to follow them or just change them?

Kimberly Gari-Luff says:

November 5, 2010 at 5:07 pm

The FCC will do what’s best for the government, totally neglecting the our industry and the public. I suppose it’s cheesy of me to quote an entertainment figure, but here it goes anyway:

“No matter how cynical you become, it’s never enough to keep up.” — Lily Tomlin

JM
A dual FCC licensee,
General Commercial & Amateur Extra

Kimberly Gari-Luff says:

November 5, 2010 at 5:09 pm

Kinda awkward when everything is run together, isn’t it? Does the cost somebody extra to use in the Comments section?

    Kimberly Gari-Luff says:

    November 5, 2010 at 5:12 pm

    the letters CR were supposed to appear before the word “cost.”

Hope Yen and Charles Babington says:

November 6, 2010 at 4:05 pm

With most bureaucrats subscribing to situational ethics rather than the rule of law, it doesn’t surprise me one bit. Just look at the morass we had (and still have) about the failure to swiftly close, size the property, and prosecute the operators or ‘pirate’ radio stations! Expect the FCC and courts to uphold law on this one? Gimme a break!

Helga Silva says:

November 8, 2010 at 6:58 am

John Zarlino
Owner
Cover Your Assets II, LLC
An Ohio Company

Please let me know what I can do to help. It’s time we “Take Back America” is a digital way.

Philip May says:

November 10, 2010 at 8:05 pm

The original language used in Congressional discussion was for a “nearby” station to be able to move or become relicensed to another state to provide a first VHF transmission service. It was never the intent for stations to be able to move 2,000 miles. The idea of such a vast relocation is ridiculous.


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