Tuesday is the deadline for TV stations across the country to inform the FCC whether they plan to participate in a landmark auction of broadcast spectrum, which could mean a number of outlets going out of business and others sharing their airwaves.
The long-in-the-works auction has drawn interest from major station groups such as CBS, Media General and Sinclair Broadcast Group, as they may reap huge sums from giving up some of their spectrum and sharing in the proceeds with the federal government. The auction is taking place to address increasing demand for spectrum for wireless use.
Exactly which stations are applying to participate in the voluntary auction is being kept confidential. But some public television entities have made their plans public, such as those overseen by public colleges.
In Southern California, KVCR-TV in San Bernardino, run by the San Bernardino Community College District, said that it was filing an application to participate. A spokeswoman confirmed a Los Angeles Times report of their plans, but she had no further comment. KVCR is a PBS member station.
After congressional authorization in 2012, the FCC went to work designing the complex auction. It consists of two parts — a “reverse” auction to determine what price the station can get for its spectrum, and a “forward” auction to determine what prices companies are willing to pay to obtain wireless licenses. The auction is scheduled to start on March 29.
Broadcasters have for years expressed concerns about a myriad of factors, including the FCC’s plans to relocate stations which stay in business. That “repacking,” as it is called, will be necessary so the FCC can clear enough of the prime UHF band for wireless use.
“NAB expects robust broadcaster participation in the reverse auction, and we hope to see similarly robust participation from wireless bidders in the forward auction,” said Dennis Wharton, spokesman for the National Assn. of Broadcasters.
FCC chairman Tom Wheeler has called the auction a “once-in-a-lifetime” chance for stations to profit from the sale of their spectrum. A potential enticement came in October, when the FCC published a list of opening bid prices, in which some stations would command hundreds of millions of dollars (KVCR, for instance, had an opening bid price of $628.6 million to go off air.)
The big caveat is that because it is a “reverse” auction, the prices fall as the auction proceeds, and some broadcasters have been viewing those opening bid figures with skepticism. Exactly what price a station can get for their spectrum will ultimately depend on the demand from the wireless carriers in the “forward” auction.
Stations also have the option to give up their spectrum and then share a channel with another broadcaster after the auction, or to give up their channel and move to a lower portion of the spectrum band. A station can drop out at any time.
University and government run public television stations and independent channels are thought to be among the most likely to participate in the auction, given the potential windfall.
Groups representing public TV in Washington have expressed concerns that the auction will leave some markets without a public station, as educational or government institutions seek solutions to budget constraints.
But in an interview this week, Patrick Butler, president and CEO of the Assn. of Public Television Stations, said that they are no longer as worried that the auction will leave areas of the country without access to public broadcasting.
“Very few of our public TV stations are going to offer their spectrum into the auction and go out of business,” Butler said. “Probably fewer than 10.”
He said that “the appetite may be greater for channel sharing,” and some stations have already forged arrangements. In Los Angeles, KCET and KLCS announced plans last year to share a single channel, with each still operating under independent licenses.
Lonna Thompson, executive vice president, chief operating officer and general counsel of APTS, said that she felt that the FCC “really heard us and took into account our concerns.” She said that they were hoping the auction could include a “fail safe mechanism so if it turned out an area would have no public television system, there would be kind of a warning bell.” While that is not in place, she said that the FCC is “confident that scenario won’t come true.”
“We are fairly confident it won’t come true, but we always worry about the ‘what if?'” she said.
Thompson and Butler said that APTS has been working with entities like universities to inform them about the auction and also the ramifications of losing a public TV station in a local community.
The Michigan State University Board of Trustees last month gave the university president the authority to participate in the auction of its station WKAR’s spectrum. On Monday, however, the university said that it would not participate, and instead announced a new partnership with Detroit Public Television.
Even if the auction doesn’t leave a market without public TV, Butler still has concerns over what happens as part of the repacking process, as many stations will be assigned new channels. He is concerned that a 39-month time frame will not be long enough, and that stations across the country will need more than the $1.75 billion allocated for moving costs.
Rep. Frank Pallone (D-N.J.) recently introduced legislation to fund a viewer education campaigns and a $1 billion emergency fund for the FCC to use if viewers are at risk of losing their broadcast signal.