FCC Launches Financial Pitch For Incentive Auction

Officials Say it is Not Out of Concern Broadcasters Aren't Interested

The FCC has begun sending out info packets to broadcasters making the financial case for why broadcasters should participate in the incentive auction.

That includes breakdowns of what a station in each market, in an ideal scenario, could be paid for its spectrum, plus the median price in each market. The packets were prepared by FCC staffers in conjunction with investment banker Greenhill & Co., which the FCC turned to help turn policy into a financial case for giving up spectrum.

For example, in New York, the high-end price is $490 million and the median $410 million. In Los Angeles, the high end is $570 million and the median $340 million. Those prices are not based on the value of the stations as businesses, but for their spectrum, how valuable it is in terms of repacking stations after the auction and clearing swaths of contiguous spectrum for the forward auction.

That is based on the FCC clearing 126 MHz of spectrum and auctioning 100 MHz. Estimates have been much lower, but officials point out that broadcasters can adjust it downward. For example, if only 84 MHz is cleared, the value estimates would be reduced by a third. In New York, for example, the median would only be $287 million in New York.

Officials said they thought that 126 MHz was a reasonable effort, but it also creates a more impressive number for broadcasters to ponder than one based on lower estimates.

Read more at B&C here.