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FCC Ponders Selling Must-Carry Rights Divorced From Spectrum

5/15/2017 8:00 AM Eastern

WASHINGTON — The Federal Communications Commission has asked for some help in deciding whether it should allow a Los Angeles television station that agreed to give up its spectrum in the incentive auction, and by extension other similarly situated stations, to be able to sell its license and must-carry rights.

If the FCC approves the sale of the spectrumless station, it could trigger other such sales by stations that initially signaled they’d stay in the business, which was virtually all broadcasters that sold spectrum in the auction.

The National Association of Broadcasters has pointed to that fact to suggest broadcasting remains the highest, best use of spectrum.

KBEH, a Spanish-language station, sold its spectrum for $146.6 million, saying it planned to strike a sharing agreement and continue in the business — the FCC allowed stations to share rather than turn in their licenses, and said that must-carry would still apply.

KBEH owner Hero Licenseco still has a sharing agreement as a backup, but has petitioned the FCC to allow it to sell that license and some assets, including, it said, those must-carry rights, for $10 million.

An FCC spokesperson confirmed that winning bidders still have a license until they turn it in, so “to the extent we receive an application for transfer of such licenses we’ll consider them as they’re filed.”

Absent an extension, KBEH and similarly situated auction winners must relinquish their licenses no later than 180 days after receiving their auction payout, which they will probably get in about three months if past auctions are prologue.

Given the potential precedent of approving such a sale, the FCC has put the matter out for comment.

Preston Padden, who was involved in the auction and post-auction framework as a representative of stations who had expressed an interest in the auction under the right conditions, said the expectation had always been that the licenses and rights could be sold.

“At no time did the FCC even hint that these licenses would not be transferable,” he said.

Padden pointed out that following a petition from his group, the Expanding Opportunities for Broadcasters Coalition, the FCC liberalized its initial channel sharing rules, including the right of channel-sharers to move from one host station to another. The creation of those nomadic licenses was a key to getting broadcasters into the auction, he said.

“These nomadic licenses do not increase the must-carry obligations of the cable industry,” Padden said.

The FCC’s Media Bureau has given anyone opposed to the transfer until June 2 to file petitions to deny.

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