Incentive Auction's First Round Begins Without Apparent Hitches
The first round of the incentive auction appeared to proceed smoothly Tuesday, said broadcasters, broadcast attorneys, analysts and the FCC's own public auction dashboard. Anti-collusion rules are keeping participants tight-lipped about the proceeding. But by all accounts, the agency's system appeared to work as planned, industry officials told us.
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The FCC is "pleased" with the first round of bidding, an Incentive Auction Task Force (IATF) spokesman said Tuesday. The first round closed as scheduled, and the auction system processed the bids, he said. "Round 2 is on track to begin tomorrow at 10 a.m.”
Though the dashboard provides very little information to the public about the specifics of what's happening each round, Wells Fargo analyst Marci Ryvicker predicted in an email to investors Tuesday that it would take $37 billion in the forward auction to satisfy the FCC 127 megahertz clearing target, the upper limit of what she expects the forward auction to yield. Macquarie Securities is estimating a forward auction yield of $35 billion-$40 billion, it said in an email to investors. Analysts have predicted up to $60 billion (see 1605030064). The FCC didn't comment.
There is too little information about how the bidding is going to make informed guesses, BIA/Kelsey Chief Economist Mark Fratrik told us. The one clue to the inner workings of the auction is the IATF's revelation last week that some stations were frozen at their initial bid price (see 1605240047), Fratrik said. Though no one outside the FCC can know how many such stations there are, if there are a lot, that could indicate some of the higher estimates on how much forward auction money will be needed are correct, he said.
If the forward auction yield is nearer to $27 billion, the auction likely will go to at least a second stage, Ryvicker said. IATF officials have indicated a second stage likely would have a clearing target of 114 MHz. Comcast, Fox, Media General, Nexstar, Sinclair and Tribune are expected to profit greatly from the auction, she said. More information about the auction's progress will be available during the forward auction, enough that observers will be able to calculate the prices of various blocks of spectrum, Ryvicker said.
Bidding on the auction's first day went for a single round, for six hours. A single round also will take place Wednesday, for four hours. Thursday, the auction will transition to the form that it will take for the remaining 50 rounds, with two rounds a day, each lasting two hours.