Some Broadcasters Would Not “Sell Out at Low Prices” and Sat Out the Auction


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logo-fccWhile some broadcasters are expecting to receive quite a bit of money from the FCC’s incentive auction and still plan to remain in business while others take their proceeds, retire debt and leave, there’s a third group that doesn’t get as much exposure. Some broadcasters have decided the auction bidding wasn’t enough so they didn’t take part.

“We pursued several channel-share arrangements with ourselves and other broadcast partners that would have allowed us to continue to operate our stations and serve our local communities while supporting the government in its attempt to recapture some broadcaster spectrum,” said Brian Lawlor, senior vice president, broadcast, for Scripps. “However, none of the spectrum we or our partners offered was selected during the auction process because the prices available in the auction fell below the value we ascribed to it. Scripps will continue to serve each of our local communities using our full spectrum capacity as allocated by the FCC.”      

Scripps is in the third group. Scripps owns 33 television stations; the FCC ASR database shows them owning 52 towers in 24 markets ranging from large DMAs like Tampa to smaller DMAs like Twin Falls, Idaho. It also owns 34 radio stations in eight markets.  

The company said on previous earnings calls it had a business plan worked around the auction, and was hoping to see certain financial gains out of it if the bids for its spectrum met an undisclosed internal number. But Scripps announced this week it won’t get any auction proceeds because that number wasn’t met.  

Wells Fargo analyst Marci Ryvicker believes Scripps’ strategy was smart and Wells Fargo was encouraged to hear that management took a “disciplined approach” to the auction.

“This reiterates our belief that the broadcasters did not ‘sell out at low prices,’ and that the FCC ultimately fulfilled its goal of repurposing any ‘excess’ spectrum via some of the smaller, non-public groups,” said Ryvicker in a client report. “With the reverse auction clearing at a substantially lower number than our target ($10B vs our estimate of $30B), we expected little-to-no proceeds.”  

February 15, 2017

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