Preston Padden, head of the Expanding Opportunities for Broadcasters Coalition, says one FCC proposal for the 2016 incentive auction could limit the prices broadcasters get for the spectrum of stations in smaller markets, thereby discouraging their participation. Another, he says, the use of “dynamic reserve pricing” during the auction, would be likely to result in lower prices for broadcasters than a more market-friendly auction approach advocated by the coalition.
SPECTRUM AUCTION
Padden: Auction Rules Could Limit Payout
New regulations expected to be proposed by the FCC next week could put a damper on the payouts to broadcasters during the agency’s incentive auction, discouraging their participation — at least according to the Expanding Opportunities for Broadcasters Coalition.
“Instead of trying to limit the prices paid to broadcasters, they [the FCC] ought to be encouraging broadcaster participation,” said Preston Padden, executive director of the coalition, which represents about 80 TV stations, in an interview with TVNewsCheck.
Under one of the proposals of concern to the coalition, the agency would essentially limit the price that broadcasters could get for their channels during the auction by setting individual price caps for stations based largely on the populations the stations serve, Padden said.
The proposal would give bigger stations more financial reward for participating in the auction than the smaller stations in the same market or adjacent markets, he added.
Padden also said an FCC proposal expected to be included in the public notice to use complex “dynamic reserve pricing” during the auction would be likely to result in lower prices for broadcasters than a more market-friendly auction approach advocated by the coalition.
Both proposals are part of a public notice that the FCC’s commissioners are slated to address during a public meeting Dec. 11.
BRAND CONNECTIONS
“These are tricky schemes to manage the prices that broadcasters can get and limit the prices that broadcasters can get,” Padden said.
He also said that unless the FCC changes the two proposals, broadcasters are unlikely to participate in the auction.
The FCC had no comment, according to an agency spokesperson. But one source familiar with the proposal said: “The proposal under consideration is an effort to meet all of the statutory goals of the auction, including offering generous opening bid prices to all broadcasters but also recognizing the statutory goal of providing taxpayers fair value for the spectrum sold.”
Coalition members would prefer to get as big a paycheck as possible during the auction, an outcome the group maintains would be best ensured by letting market forces work as much as possible during the auction. The auction is currently slated for 2016.
“They [the FCC] talk the marketplace talk but they don’t walk the marketplace walk,” Padden said.
“If you are about to get mugged, you run for a street light and scream, and that’s what we’re doing.”
Comments (6)
Ellen Samrock says:
December 2, 2014 at 4:11 pm
What was Preston Padden expecting? The FCC warned the industry almost from the start that spectrum valuations in this auction would be based on scarcity and that they were looking for the lowest amount a broadcaster would accept to vacate or move. Did he not believe them? The Commission effectively dismissed his ‘all spectrum is created equal’ argument. It’s a hard lesson but here it is: the FCC, like all government agencies, can only be trusted so long as your objectives completely line up with theirs. Where they don’t, you lose. And no amount of pleading will change that. In the end, this just means that the private island Padden was hoping to buy, when the dust from the incentive auction settles, will be a little smaller and more remote.
Wagner Pereira says:
December 2, 2014 at 7:36 pm
Gosh, property in NYC and LA is worth more than Kalamazoo and Duluth. Who would have thunk it?
Keith ONeal says:
December 2, 2014 at 9:57 pm
Another reason for the FCC to cancel this stupid auction.
Don Thompson says:
December 3, 2014 at 7:14 am
Based on AWS-3 bids of $40 billion, TV stations are looking at an $80 billion windfall from the planned incentive auction of broadcaster-occupied spectrum. Don’t U.S. taxpayers deserve $2 billion of that for footing the cost of the DTV converter box coupon program? Please follow me on Twitter @TedatACA
Julien Devereux says:
December 3, 2014 at 2:16 pm
I see this as the first step in getting TV to stop over the air broadcasting in favor of cable and satellite services, and possibly via paid internet subscriptions. Remember, the current head of the FCC is a former lobbyist for the CABLE INDUSTRY.
Ben Gao says:
December 3, 2014 at 2:17 pm
They FCC made enough coin on the AWS auction; What IF all the TV broadcasters do NOT show-up for the auction party and refuse to move frequencies for the robber-baron wireless industry? Would the FCC FORCE them to move (like they already did once) to worse coverage than what they already have? I gotta believe that there are more over the air viewers than there were 30 years ago, thanks to the old log-periodic antennae and converter boxes, and people finally realizing that they get FREE, uncompressed by cable, HDTV video, and can ‘cut the cord’. Maybe that’s the FCC’s objective, to kill the cord-cutters, forcing them back to cable? Wheeler has always kissed the ring of those who fed him (wireless, cable industries) so does his past alliances override logic with broadcasters?