Seven days until 104 applicants battle it out in 600MHz auction

At 6pm Eastern on March 29, all the possible US TV stations that would like to sell their broadcast spectrum will have committed to do so. From there, the Federal Communications Commission will work on a blueprint to sort out how that spectrum in the 600MHz band can be put together for sale. That leads up to the next step for the commission in the auctions process, setting up a clearing target.

The order of things

The clearing target is the total amount of spectrum the FCC thinks can be sold in auction. The government currently estimates a high-end of that total to be 126MHz. Analysts think the number will clear 100MHz. Carriers are said to be looking for at least 80MHz so that the big bidders have enough to take home. It’s an initial number that can only fall as station owners drop out or if carriers don’t bid enough to satisfy the commission. The clearing target will be announced when the government is done repackaging the spectrum. That’s expected to be sometime around late April or early May.

Prospective bidders then must pay for credits to be used in the auctions. A final list of bidders will be announced by the FCC when that process is finished, though we won’t be able to determine how much the bidders will have paid until they make official financial statements — likely reflecting in earnings reports for Q2.

It is expected to be over the course of the June that broadcasters will participate in the reverse auction. The FCC first offers the highest possible price for their spectrum and progressively lowers that price until it believes it can secure its clearing target for the lowest possible price. Once the reverse auction is done, the FCC will publicize the minimum cumulative bid that bidders will have to meet in order to end the upcoming forward auction, possibly in July.

Bidders in the forward auction will be anonymous, but bid statuses per market will be public along with the minimum goal needed to end the auction. The FCC will increase asking prices round by round until all but one bidder drops out. Some spectrum has been set aside for participants that don’t already own more than 45 percent of a market’s given low-band spectrum.

If the minimum cumulative bid is met, broadcasters will begin either moving to lower-frequency channels or going off-air, depending on what they’ve decided to do. The commission wants that done by 2020, but stations want more time. AT&T has also requested a revised timeline as it continues to convert 800MHz spectrum for cell use it got in June 2005.

Wrench in the works

If it is not met during the course of the auction, the FCC will initiate another reverse auction for broadcasters and lower its clearing target.

AT&T, Comcast, T-Mobile, US Cellular and Verizon are among 104 participants looking for a piece of this airwave pie (Sprint is not one of them). There are doubts about how much money will actually trade hands as carriers are itchy to hear about the clearing target while broadcasters fear that bidding activity will be tepid.

LocusPoint Networks, a holding group for a private equity firm, just closed a $24 million sale on three of its TV stations late last month. They had the lowest opening bids in LocusPoint’s portfolio and were bought for $4.8 million. It had bought at least 16 stations since 2012 in the hopes of making huge returns with the auction — returns that sound too optimistic at this point.

Other holding firms are holding onto their stations.

Source: FierceWireless, Reuters
Via: TVSpy

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About The Author
Jules Wang
Jules Wang is News Editor for Pocketnow and one of the hosts of the Pocketnow Weekly Podcast. He came onto the team in 2014 as an intern editing and producing videos and the podcast while he was studying journalism at Emerson College. He graduated the year after and entered into his current position at Pocketnow, full-time.