As the clock ticks down on the Wheeler FCC, that has ramifications for broadcast-related issues on his agenda. In other words, there’s only so much he can do for the remainder of his time on the eighth floor of the Portals. That, in turn, could be beneficial to broadcasters regarding the spectrum auction, set-top-box proposal and M&A.
Speaking to regulatory sources, Wells Fargo analysts came away from meetings this week with positives on their tick sheet for broadcast coverage.
The big mergers are on-track, Wells Fargo hears. The major (hedge fund) focus still seems to be on the Charter-Time Warner Cable-Brighthouse transaction, which is due to close by end of March/early April. “So far, there doesn’t seem to be any major issue that would cause the parties to walk away,” says Marci Ryvicker in a research report. Of course, this doesn’t mean that Wheeler won’t or can’t ask for “something off the wall” last minute though this is not expected, she hears. When it comes to Nexstar-Media General, there is reportedly nothing that stands out from a regulatory angle that would prevent a post-auction close.
Sources predictions about the chairman’s set-top box proposal actually mirror what RBR+TVBR has reported, that it’s a complicated issue and the commission doesn’t necessarily have authority over “devices/apps in an Internet Protocol world”. Despite all the lobbying and publicity, the likelihood this gets done under Wheeler’s watch is doubtful and a subsequent administration could drop it given that the industry seems to be moving away from set-top-boxes. We’ve reported they’re expensive to build and maintain and some cable providers want to get those expenses off their books.
Wells Fargo sources had intriguing predictions about the FCC’s upcoming spectrum auction, such as it could only pull in $15 billion in gross proceeds, implying “only 39Mhz at the $1.25Mhzpop reserve price. This is by far the lowest estimate we have heard,” according to Ryvicker.
The FCC originally targeted $45 billion and Wells Fargo has been expecting closer to $30 billion. The issue is the forward side where wireless carriers would buy spectrum given up by television owners. Sources tell the analysts the auction is happening “way to close” to AWS3, which is a wireless auction. Disclosure of participants in the “forward” auction are expected soon.
