Genachowski Pitches Station Groups on Incentive Spectrum Auctions
LAS VEGAS -- Broadcasters shouldn’t be afraid to participate in the “unique opportunity” presented by the coming voluntary incentive spectrum auction, FCC Chairman Julius Genachowski said during remarks at the NAB Show late Monday. For stations that decide to share channels with other operators or move from higher UHF frequencies to lower VHF ones, the auction will provide a “sizable cash infusion for returning some or all spectrum,” he said. “Our phones have been ringing at the FCC with broadcasters expressing genuine interest in participating and expressing thoughtful questions,” about how the auction will work, Genachowski said. “Don’t be afraid to be interested,” he said. “Others already are."
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That’s not the sense NAB CEO Gordon Smith has received from his members, he said. “I can count on one hand the number of broadcasters who have told me they want to cash out and go out of business.” CEO Suzanne Goucher of the Maine Association of Broadcasters criticized the tack the FCC seems to be taking, after reading Genachowski’s remarks (http://xrl.us/bm37ck), while a state broadcaster association CEO who was among those meeting with Genachowski afterwards praised his constructive approach.
Goucher’s translation of what Genachowski said: “Broadcasting is a robust and important industry, and we're looking forward to encouraging many of you to go out of business, especially if you don’t air local news, which is the only benchmark by which we judge a station’s commitment to its community.” Genachowski suggested in his speech that TV stations not airing news might be among those seeking to auction all or some of their spectrum.
It’s good the FCC is communicating with industry about spectrum, and Genachowski’s meeting with state broadcast association heads at the NAB Show had “a genuine tone of outreach,” said New Jersey Broadcasters Association CEO Paul Rotella. “You can feel there’s a lot of tension whenever the spectrum issue is brought up,” so it’s good Genachowski’s comments weren’t parlayed as an “order” but rather “a request that we help,” which TV stations are eager to provide, Rotella said. “People have invested a lot of money into their stations, so they're scared” about the costs of having to change channels and the potential for interference, he continued. “There is just a lot of uncertainty” and Genachowski has “definitely shown that he is trying to work in good faith, and we're trying to work in good faith, too.” Goodwill from both the FCC and broadcasters are something both sides have said is needed on spectrum (CD March 5 p2).
The FCC is trying to get as much information as possible about the auction, Media Bureau Chief William Lake said Tuesday. Both he and Genachowski pointed to workshops on channel-sharing to be held later this spring. “We know that uncertainty is a killer of incentives,” Lake said. “We want to eliminate it as much as we can to allow people to talk to their financial advisers and assess whether contributing to the auction is an option for them.” The goal is to have either a large rulemaking notice or a series of smaller ones published by the fall, he said. “We may not resolve them all the same order, but we do think we want to put all the issue we can think of out on the table and welcome input."
The commission has been contacted by some station owners, but most of those inquiring so far have been attorneys, consultants and brokers seeking information on behalf of undisclosed clients, Lake said. Keeping the names of those inquiring about the auction confidential is essential to running a successful auction, Lake said. “We don’t expect anyone to make a decision at this point."
Genachowski was vague about the timing and form of future auction rulemaking proceedings. “We will have more to say in the coming months about the options available for participation,” he said. He stressed that broadcasters should seize the chance to put their spectrum in the auction: “Don’t miss the boat on an opportunity you might regret passing up.”
For broadcasters not interested in participating, the FCC is “committed to the continuance of a strong and healthy broadcasting industry, and we're committed to fair treatment,” Genachowski said. He gave the Obama administration some credit for the rebound in broadcast ad sales since 2009. “Economic recovery is helping broadcasters,” he said, citing the auto industry bailout as a part of the reason for stations’ improving finances. “Across the broadcast industry, auto ad revenue has seen strong growth,” he said.
Genachowski also pointed to the industry’s growing retransmission consent revenue and the FCC’s lack of intervention in disputes as having helped many stations. However, “the calls for agency intervention continue,” and the commission continues “to watch the marketplace carefully to determine if further commission action is warranted,” he said.
"Obviously an owner of a station doesn’t want their staff to know it may be out there for auction,” said Mark Fratrik, vice president of BIA/Kelsey. Struggling independent stations and public-TV stations in markets where there are multiple noncommercial outlets are among the likely candidates for participating in the auction, he said. Some investors have been buying TV stations in recent years with an eye toward selling them at auction, Fratrik said. “We've seen prices [for TV stations] go up by several hundred percent in large markets that are obviously ... a play, you could say, on the reverse auction.”