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JUST SAY IT AIN'T SO TOM RANT
COALITION BIG MAP PROJECTION OF
3151 LPTV AND TV TRANSLATOR LICENSES AND PERMITS
TO BE DISPLACED FROM UHF 38-50
STAGE 4
INCENTIVE AUCTION REALITIES & IMPACTS
OVER $1 BILLION IN DIRECT IMPACTS
FROM FORCED UHF 38-50 CHANNEL RELOCATION COSTS PROJECTED TO BE INCURRED BY SMALL BIZ, NONCOM, AND CIVIC LPTV BROADCASTERS
LPTV & TRANSLATORS DISPLACED FROM UHF 38-50
Yesterday's news that limited and valuable "beach front" low band spectrum was offered to be relinquished for $10 billion in final Reverse Auction bids was disappointing.
But with a
ll factors now in place for the Incentive Auction Stage 4, the 84 MHz band plan, to sell UHF channels 38-50 to the wireless bidders in next week's Forward Auction, we could not be happier. It's been 5 years now since the auction legislation was passed and it is time to get on with some certainty in our biz.
However, the wireless bidders must do the following in order for the auction to successfully close:
- The key hurdle is to satisfy the "reserve price" of $1.25 per MHz Pop ($7.50 per TV pop) in the top 40 markets
- Cover the $10 billion owed the broadcasters selling their spectrum
- Plus cover the $1.75 billion to reimburse broadcasters for their repack expenses
- Plus cover the $225 million to reimburse the FCC for its administrative costs
- In total, about $17 billion must be raised in the Forward Auction
- In the last two failed stages, the wireless bidders bid $19 and $20 billion, so they got the money to spend
- And since 83% of the spectrum to be sold in Stage 4 comes from LPTV and translators, well why not another $1 billion or so for their displacement moves?
--- some industry comments ---
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Marci Ryvicker - Wells Fargo Securities
"(We)now assume that the auction will end with the upcoming forward auction with a minimum of $17 billion in bids...We view this as really good news...the auction is going to end a lot sooner than we thought, which would allow for the broadcast and wireless companies (namely Dish in our coverage) to pursue M&A."
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Dan Hayes - PwC Strategy
"...the new figure is well within reach for wireless carriers bidding in the forward auction...the dramatic reduction in the targeted net proceeds of the reverse auction shows just how effective the auction mechanics have been in bringing together supply and demand...at just over $10 billion we are confident that the auction is well within striking range of the budgets of mobile network operators ...with such a low clearing cost, forward auction bidding could very well close as early as next week. While a fifth stage is still possible...it is now "far from a certainty."
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Preston Padden - formerly with EOCB
"If there is a God, Stage 4 closes," said Preston Padden, former executive director of the Expanding Opportunities for Broadcasters Coalition, representing stations who were interested in putting spectrum in the auction under the right circumstances and at the right price."
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TV station owner Max Media chairman Gene Loving
He submitted a letter to Repub Commissioners Pai and O'Reilly the day before Stage 4 ended.
""I urge you to consider whether this auction, which was started under the previous administration, will likely end up as 'failed' just as the new commission takes over, leaving the new administration holding the proverbial bag."
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If we assume that Stage 4 will close and that the auction will be over, what will be the schedule going forward? Without going into all of the FCC auction language waypoints in the process, which is all spelled out
in the rulemakings, let's look at an estimate of the schedule we did this past fall.
Now, it is totally up to the FCC as to when they release the "
Closing and Reassignment PN" which is described here:
Page 5
"Once the forward auction concludes, we will release the Auction Closing and Channel Reassignment PN (Closing and Reassignment PN), which will announce that the reverse and forward auctions have ended and specify the effective date of the post-auction repacking. Among other things, the Closing and Reassignment PN will announce the post-auction channel assignment and technical parameters of every station eligible for protection in the repacking process that will remain on the air after the incentive auction.
T
he Closing and Reassignment PN will also announce the transition phase, phase completion date, and testing period for each reassigned station. Stations reassigned to new channels will have three months from the Closing and Reassignment PN release date to file construction permit applications proposing modified facilities to operate on their post-auction channel facility specified in the Closing and Reassignment PN. The Bureau will then issue each station a construction permit. The construction permit deadline will be the phase completion date for that station."
And don't forget, we are not really part of the post auction repack, as we have our own set of rules which were passed in the
3rd LPTV R&O.
Although we do have a few key issues to still deal with.
LPTV investors and operators still need clarifications for:
- LPTV construction permit holders still do not know by when they have to build out in order to qualify for the displacement window, ie, must build before the end of the auction.
- We still do not have any clarification of whether the channel assignments CPs currently have, will they be available for built, licensed, and displaced LPTV in the displacement window?
- Will there be a move to have CP's can not build during the 6 months between auction closing and displacement window?
- If displaced by a moving LPTV, would that CP then qualifies for CP displacement window?
- The method by which available channels will be determined and available for the displacement window, ie, use the proposed vacant channel finding methodology of 1 or 2 KM squares?
And whatever we end up having to do, the FCC has their own 10-phase schedule for clearing each of the 400+ Partial Economic Areas (PEA) that need to be cleared. And we have to adhere to it, although how and when is not so clear. We are suppose to have 39 months plus one year to clear and go to our new channels.
FCC's simulated 84 MHz outcome with a set of 796 inter-dependent stations
So, as soon as the auction closes, and the FCC within a short period of time releases the "
Closing and Reassignment PN", the clock will then start its' march towards the LPTV and TV translator "channel availability" notice, about 4 months into the process. It is at that time the FCC will tell you which channels in each market are available to displace to, and we are making sure that it is a very granular analysis, which we now think will be done with 2km squares, just like which is proposed in the Vacant Channel proceeding.
Example of a 2x2 km grid used for determining vacant channel availability.
Confused? Don't worry, this vacant channel thingee will all end up in the courts anyway.
How possibly can unlicensed have priority over licensed?
Ok, so about month 6 post the FCC issuing the "
Closing and Reassignment PN", which means about 60 days past when the channel availability notice is issued, this is when the actual displacement window opens. All of this is still under final review and approval, but in principle this is the process.
IF YOU WANT TO WRITE COMMENTS INTO THE FCC FOR THE POST AUCTION TRANSITION PLANNING, THEN YOU CAN GO HERE AND BE HEARD!
LICENSEES AND PERMITTEES
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