Incentive TV auction anticipatory payoff might be worth it


An analyst is suggesting that returning spectrum to the FCC for auction to wireless interests might just be a good deal for smaller television broadcasters. RBC thinks that some stations would only need 25% of what wireless companies are paying for spectrum to beat what they might get for the station from another broadcaster.

According to, RBC Capital Markets believes cooperating with the FCC on auctions may be a very good deal for some broadcasters. Without referring to any specific deals, RBC’s David Bank said several recent sales were worth less than a quarter of what he believes the wireless industry is willing to pay.

What works in the favor of a smaller station is that as long as market coverage is on par with a market’s network affiliates, its value to a wireless buyer is also on par. There is no need to consider affiliations, programming, or ratings at all.

Bank believes major television operators could also benefit by selling slivers of their spectrum holdings, but believes the risks of such a move outweigh the benefits at the moment. However, Bank believes the value of an on-air presence for broadcast television will continue to diminish going forward, and as that value diminishes, the advisability of auctioning it off to wireless will increase.

RBR-TVBR observation: The RBC analysis is interesting, and it is entirely possible that turning in spectrum might make sense for some. But it hinges on how much of a cut the returnee gets from auction proceeds, among other things. The other problem, of course, is that the crunch really only affects the largest markets, so the stations that are perhaps most willing to turn in spectrum quite possibly won’t even be asked to do so.

We also must note that the FCC has an interest in keeping television on the air – until wireline and mobile program delivery models demonstrate that they can continue to function during an emergency, it is critically important that free over-the-air broadcasting remain available to the public.