Hoping to buy low and sell high in the FCC incentive auction, NRJ TV, OTA Broadcasting and Locus Point have bought 39 stations over the past two years, according to SNL Kagan.
TV Spectrum Speculation Nears $345 Million
In anticipation of the FCC incentive auction, spectrum speculators have bought 39 TV stations — 14 full-power and 25 Class A low-power — since 2011, paying nearly $345 million, according to a SNL Kagan study.
NRJ TV has been the biggest spender, at $234.2 million for full-power stations, SNL Kagan found.
OTA Broadcasting, a subsidiary of computer retail billionaire Michael Dell’s MSD Capital firm, is runner up with deals totaling $52.8 million. Locus Point has acquired seven stations, all in November and December 2012, and all Class A properties.
The speculators are buying the stations with the intention of selling the spectrum to the FCC so that it can turn around and auction it to wireless broadband carriers. The FCC hopes to conduct the auction in 2014.
The speculators “are no doubt counting on strong demand from wireless buyers and a valuation premium versus what they invested in the stations,” SNL Kagan said.
“While averages for wireless spectrum comps are still far above those paid for the TV station spectrum at benchmarks typically north of $1 per MHz per pop,” the research firm said, “it is still unclear how much the wireless players will bid at auction and how the mechanics of the auction and distribution of proceeds will work for TV station owners.”
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Comments (5)
Christina Perez says:
March 1, 2013 at 11:28 am
This speculation involving a PUBLICLY owned resource, the airwaves, reinforces my contention that spectrum sales cannot benefit licensees who hold no property rights to the resource. Any financial gain must to to the public, not to licenseholders. The courts have ruled to this effect in the past, and they will in the future. Those who think they can turn the airwaves into their private casino must be shown otherwise, in a forceful manner. The FCC officials who have abetted this conspiracy to defraud American taxpayers are, in my opinion, guilty of malfeasance in office.
Ellen Samrock says:
March 1, 2013 at 11:39 am
And conversely the government knows about the ‘buy low, sell high’ strategy. The FCC has stated that, in the reverse auction, they are looking for the least amount station owners will accept to vacate their channel, channel share or move to VHF and if the numbers don’t work for either side, no sale. These guys just might be forced into becoming real broadcasters. I can just picture a clown like Michael Dell doing the weather.
Tom Tompkins says:
March 1, 2013 at 12:04 pm
In our work with television companies it is clear that there is potential value from a spectrum auction that involves the largest metros in the nation. These companies have invested considerable sums for these stations in anticipation of the TV Reverse Auction that will occur sometime in 2014 or beyond. While the final rules have not been issued by the FCC for the auction, the prospect of receiving substantial sums for relinquishing the license of these stations or opting to move to the high VHF band is considerable. Our analyses at BIA/Kelsey from previous auctions of similar spectrum, recent deals of spectrum, and the ever growing demand of devices using spectrum (e.g., tablets) indicates that those prices could be quite high in certain instances. Based on our analyses we are bullish on these auctions, but the devil is in the details.
Ellen Samrock says:
March 1, 2013 at 3:09 pm
“…in certain instances”, i.e., the small handful of markets the FCC is actually interested in. Hopefully every speculator bought into those markets. But you folks are dreaming if you think the FCC will agree to pay the same price for each station regardless of market. And given the spectrum deals already in the works, it’s hard to say just how much the telcos are willing to bid for 600 MHz spectrum.
Bobbi Proctor says:
March 1, 2013 at 12:28 pm
I agree with PhillyPhlash. Whatever happened to “the public owns the airwaves’? Spectrum is not someone’s property to buy or sell. If a licensee doesn’t want to operate a station they should sell it to someone who does or return the license to the FCC. This plan is a bad one in the first place anyway and will result in a diminished OTA service with fewer program choices, lower quality signals and interference.