FCC

FCC Allocates $1 Billion in Initial Repack Funding

Says that should cover initial costs in TV station, MVPD moves 10/16/2017 12:35 PM Eastern Last updated at 10/16/2017 5:26 PM

The FCC said Monday it is giving TV stations and MPVDs $1 billion to cover initial expenses in the repacking of close to 1,000 TV stations following the incentive auction.

That came in a much-anticipated public notice Monday (Oct. 16). Stations and MVPDs can submit their invoices ASAP but the FCC does not say how long it will take for them to get the money.

The initial broadcaster cost estimates for what they would need over the entire life of the channel moves was $2.139 billion, but the FCC was able to reduce that to $1.864 billion (still above the $1.75 billion Congress has allocated), though that will likely increase due to added costs, like tower rigging, broadcasters did not include but the FCC is figuring will be needed.

Most of the repack money goes to broadcasters, though MVPDs will need some for re-tuning headends to pick up the new channel moves.

The $2.139 billion figure is a new one. The initial broadcaster estimate total by the July 12 deadline had been $2.115 billion, but a few more estimates came in after deadline.

The FCC will be giving broadcasters and MVPDs 52% of their total estimates in the $1 billion first disbursement, while noncoms will get 62% due to their unique funding challenges. NAB had wanted closer to 80% for commercial stations and 90% for noncoms.

Broadcasters were looking for closer to $1.6 billion in the initial outlay after the FCC signaled $1 billion would be the initial payment--with the balance coming as expenses and how the money was flowing became clearer. But the FCC signaled in the public notice that based on a more full evaluation of the funding, including tower-rigging needs"--an area where the FCC thinks more money will be needed than initially estimated by broadcasters--the FCC would keep back $750 million for later allocation.

The FCC concluded that the $1 billion would be more than enough to cover the initial expenses across all 10 phases of the station moves.

The revision from broadcasters' $2.139 estimate of the total expenses for the repack was revised down by the FCC due to a variety of factors, including some reengineering by stations. Fox and T-Mobile's repack partnership, for example, will result in something like an $80 million savings by moving WWOR and WNYW from the Empire State Building to One World Trade Center. Stations also revised some of their own estimates downward. For example, some of the estimates for upgrades may have been for the entire upgrade, while the FCC is paying only for a like-to-like replacement, with broadcasters having to pay for the upgrade--say, taking the opportunity to get ready for ATSC 3.0 next gen transmissions.

Then there were some estimates that may not have been able to justify why they were in excess of the FCC's cost catalog, though in those cases the stations could still come back with documentation and get extra money out of the $750 million still to be allocated.

The allocation of the money is all about funds management and making sure all stations across all phases have the money they need to get started, with priority for the kinds of purchases that need a check now, says a source familiar with the fund management approach.

The FCC will be able to provide follow-up funds as it sees how quickly the stations are spending the money, and on what Stations will continue top revise their estimates and the FCC will supply further funds.

But only up to a point.

Until and unless it gets more money, the disbursement plan is about managing what money the FCC has as responsibly as possible, the FCC has indicated.

In an April 13 public notice on the repack, the Incentive Auction Task Force said that after its review of initial cost estimates submitted by broadcasters, it would cap initial allocations at $1 billion, with $750 million held back.

The National Association of Broadcasters had asked the FCC to open its repack wallet a little wider.

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