Open Mike by Preston Padden

FCC Auction Would Benefit All TV Stations

Because broadcasters have too many competitors, many are having a hard time earning a fair return. The common sense answer is for some stations to exit. Now, because of the compelling need for additional wireless broadband capacity, the FCC, in the incentive auction proceeding, is prepared to help ease some stations out the door.
By
TVNewsCheck,

Decades ago, clever communications lawyers proposed, and the FCC adopted, the Carroll Doctrine. Under this doctrine the FCC denied licenses for a new station if the existing broadcasters in the market alleged insufficient advertising revenues to support both existing stations and the new entrant. Pretty cool — the FCC protecting incumbent stations from new competition. Alas, in 1988 the FCC repealed the doctrine, deciding that more competition is always in the public interest. 

Since then, competition in the video marketplace has exploded with competition coming not only from more broadcasting, but also from cable, satellite and online. Consumers are well served, but in a business where economies of scale matter, the fact that we have too many competitors makes it hard for anyone to earn a fair return.

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The common sense answer is for some stations to exit and, indeed, some have considered doing so, if they can find a way to get fair value for their most important asset, namely their spectrum. Now, because of the compelling need for additional wireless broadband capacity, the FCC, in the incentive auction proceeding, is prepared to help ease these stations out the door.

If the strong stations in a market agreed over lunch to pay weaker stations to go off the air, they might all go to jail for a conspiracy to limit competition. But, in the incentive auction proceeding, the FCC is offering to provide the inducement for stations to exit — no need for the other stations to pony up. All broadcasters should be cheering for those stations willing to consider making a financial exit from the market.

It is manifestly in the best interests of all broadcasters to have the government offering to pay some stations to go off the air, leaving the ones that remain with more viewers, more advertising and access to more programming and network affiliations. And, with the possible exception of auction timing, the arguments being advanced by the stations willing to exit are good for all broadcasters. Here are a few examples from the comments filed at the FCC by such stations, the Expanding Opportunities For Broadcasters Coalition:

    Brand Connections
    • The FCC should make high initial offers to all stations. This simply creates potential opportunities for all stations, even if you choose to not accept, it is better to get a high offer than a low offer.

    • The FCC should provide more city of license coverage flexibility in choosing sharing partners. Again, this simply provides more potential opportunities for all stations. (If it is fine for a station to go completely off the air, there should be no problem with a mere change in city of license coverage.)

    • The FCC should prioritize discussions with Canada and Mexico to resolve border issues. This serves the best interest of all broadcasters, those remaining in the market and those considering an exit.

    • The FCC should try not to score stations. This will be a voluntary auction. The FCC will not get any station’s spectrum unless the FCC meets that station’s price. Scoring is a waste of the government’s time.

    • The FCC should not place restrictions on which wireless carriers may bid. It is in the best interest of all stations to have the largest possible wireless revenue available to buy out stations (and to fund FirstNet [First Responder Network Authority] and reduce the deficit).

    • The FCC should stick to the goal of clearing 120 MHz. The more spectrum that is cleared, the more stations that go off the air.

    Clearly there are aspects of this auction that don’t feel good to some broadcasters.  But, it made sense in the old days to pay your communications lawyer a fortune to try to limit entry in your market. And with today’s far more competitive marketplace, it makes even more sense for all broadcasters to support the incentive auction and those stations willing to consider a financial exit.

    It’s the economic equivalent of culling the herd.

    Stations planning to stay on the air (and Gordon Smith's revitalized NAB) appropriately are focused like a laser on repacking issues. That is as it should be.  At the same time, those stations should be cheering for those broadcasters willing to consider the FCC’s offer of a buyout.

    Preston Padden, a former lobbyist for Fox and Disney, is head of the Expanding Opportunities for Broadcasters Coalition, a group of anonymous TV station owners interested in selling spectrum through the FCC's planned incentive auction. He can be reached at ppadden@broadcastcoalition.org.

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    Comments (16) -

    Joseph Belisle posted over 4 years ago
    Auctions are fine for stations willing to recieve no more than half of the forward bid paid for thier spectrum. They are not such a great deal for communities or viewers losing service or for broadcast stations forced to rebuild their facilities to accommodate the government's endless appetite for the revenues raised by spectrum sales. Of course auctions are horrible events for those station employees who will lose their jobs as a result of their government's decision to send them to the scrap heap. Culling the herd is not so much fun if you are relying on the "cullee" for over the air service or for employment.
    Mark2655 Nickname posted over 4 years ago
    The FCC was correct in repealing the Carroll Doctrine in 1988. Competition is the American way. I would ove it if the Government would stay out of the auction process. Wireless companies should purchase the stations and their spectrum directly from the owner.
    Upwind Nickname posted over 4 years ago
    "The common sense answer is for some stations to exit and, indeed, some have considered doing so, if they can find a way to get fair value for their most important asset, namely their spectrum." WRT auction discussions, I always find it interesting how broadcasters consider the spectrum they use as their private property. This is in direct conflict with decades of (U.S.) communications law that has established that RF spectrum is a resource of the American people.
    RealProfessional Nickname posted over 4 years ago
    Broadcasting is about public service. And it's free. It is about creating local and national programming. It is about trying to keep tabs on life in general and giving the viewer or listener the information they need to decide whether they have good or bad government, honest or dishonest business, and what the future holds. It is freedom of speech. It is Freedom of the Press. TV is the most used medium of communication today. But just because TV is the most used, so a lot of other people want to grab the space, and sell the services on a computer rather than free on TV. And reduce the sources of the news and the balance of reporting and diminish the balance that keeps our government free, and people informed by professionals with impartial reporting. Broadcast broadband works on other government frequencies too. But those frequencies don't have a business plan that lets the government to force sale of stations, or combine stations into a mess no person can use. Thus the new guys get the government to buy out their competition. With this comes control of programming. Note that the big money people who are pushing for moving TV to computers don't make programs, but they have totally revised the way music is sold. So we are getting a system where big money makes more money. What about the little guy, the local news, the local minorities, what about freedom of the press, when there is little or no local media? What about your job? The internet has to be open to work, and it is difficult to get people pointed to a source. This isn't as simple as a bald-face steal of peoples communication and business...it's also about freedom. And broadcast broadband will not be free.
    Upwind Nickname posted over 4 years ago
    Last time I checked, the television stations that serve the largest markets - and thus a very large portion of the overall US population - are owned and operated by a very small pool of media concentrated, BIG MONEY corporations like Comcast, Disney, Fox, and CBS just to name a few. Their reach extends well beyond just the television side of the media ownership. These corporations are most concerned with their bottom lines and this has affected the quality of local news where staples of informing the public - like editorials (taking a position on a topic of interest important to a locality/DMA) and investigative journalism (which is expensive to produce) - now belong to a bygone era of broadcasting. Local news is now about maximizing eyeballs on the screen as ratings = profits for those big money corporations whose mantra is still Share Holder Value, not Freedom of the Press or some of the other high minded ideals you have mentioned.
    Roger Thornhill Nickname posted over 4 years ago
    Self-serving horse manure. If a station really can't make it in its market, the owners can always sell or turn the license back in. But there are hundreds of small market stations that are super-serving their communities with local programming and relying exclusively on local advertising or underwriting. It's not about national advertisers or even ratings with them. Many are noncom while others are small businesses and nearly all have employees. These are the LPTV stations. And it is these stations that will largely disappear in the repacking, especially if the government gets all 120 MHz (not too likely according to Commissioner McDowell). It is well established that the biggest hoarder of spectrum is the federal government. It has gobs of it. Broadcasters have already surrendered 192 MHz of UHF spectrum. Most of it having so far been squandered. That's enough. If the telco giants want more they need to tap the feds for it. Broadcast television is on the cusp of some exciting things with ATSC 3.0--things that will open up new revenue opportunities for all classes of stations and provide useful, cutting edge features for consumers. But it all takes spectrum and broadcasters need all that they have been allotted. I would strongly suggest that these stations that contemplating selling spectrum at auction think about the future opportunities that will shortly be available to them, opportunities that will be lost if they surrender their spectrum for what will surely be a low-ball, pennies-on-the-dollar payout. Padden is in fantasyland if he thinks the feds are going to pay full price for what broadcasters thinks their stations are worth. They also know the worn out axiom of buy low, sell high. And after all, the voluntary incentive auction is all about one thing and one thing only--making money for the federal government. Nothing more.
    Johnny Fever posted over 4 years ago
    I agree with you D BP. This is about the telco monsters charging the public big money for something that has been free for decades. IF the telcos would offer a FREE OTA broadband (with sponsors) - then this has some legs - otherwise, it is all about money - more for the cellphone fat cats and the Feds. They've already 'taken-away' CH52-69, now they expect another 20 channels - can't happen. Let the telco's buy up the VHF-lo band and federal frequencies first. Customers don't want reduced quality OTA TV quality becuase of repacking after they've spent THEIR money on new sets - they want 1080, not 480 pixilation.
    Roger Thornhill Nickname posted over 4 years ago
    Johnny; the NTIA did put out a call in 2010 to auction 500 MHz of government spectrum. Have not heard anything about it since. But this is where telcos should be looking for their next spectrum fix. And Hadden deserves a loud and long horse laugh if he thinks the feds are going to offer top dollar for these stations at auction. They've already said that they are looking for the lowest dollar amount station owners will accept. I highly doubt the feds will change their mind on that.
    Roger Thornhill Nickname posted over 4 years ago
    Sorry, that should be Padden, not Hadden.
    Chuck Nickname posted over 4 years ago
    Once again viewers are being ignored. We view all of the stations available to us (with the exception of two religious stations) and will have our program choices reduced if any go off the air. With HDTV the OTA service has never been better and isn't matched by cable. This repacking will cause interference problems and likely reduce our choices. We have already had problems as a result of channels 52 to 69 being taken away. In our market two stations (one LPTV and one full-power) have gone on the air. If someone wants to operate a new station in the future where will they find space? The new LPTV has a full news staff providing a competitive news broadcast. Had repacking already taken place I don't think this station would have ever gone on the air--a loss to viewers. This plan is not good for viewers.
    James Cieloha Nickname posted over 4 years ago
    I'm seen to know how to understand the entire spectrum situation. I would take a bet that Daystar, Trinity, Ion and all the other religious and minor broadcast network plus all the diginets multicast networks would round up being regulated to cable only network that would be made available to customers with FTA systems and be made available on all cable systems as well as on both Directv and Dish Network and also be allowed to stream their programming online for internet users at no cost. I like the idea in which NBC stations on 1080 share their channel with Telemundo on 480 in widescreen, CBS stations on 1080 sharing with CW on 1080 in widescreen, FOX stations on 720 sharing with MyNET on 720 in widescreen, Univision and Telefutura share a channel together on either 480, 720, or 1080 in widescreen, and ABC would continue to not have to worry about sharing their stations with another network or another station and still on 720 in widescreen, but could likely share it with other network affiliated channels on either 480, 720, or 1080 in widescreen. PBS stations would likely be forced to merged and share it’s stations on the same channel frequency and still be able to transmit in 1080 widescreen. The stronger PBS stations would end up sharing the channel space with the weaker PBS stations in markets where there are multiple PBS affiliates in the same market. The mid-sized and smaller TV markets could end up carrying 2 to 3 subchannel feeds in widescreen SDTV or HDTV on the same channel frequency. I would recommend that all the TV stations that are now on the UHF 14-51 band in digital that were on 7, 8, 9, 10, 11, 12, and 13 in analog be forced to move on 7, 8, 9, 10, 11, 12, and 13 in digital and all the TV stations that are now on the UHF 14-51 band in digital that were on 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, and 30 in analog be forced to move back to those channels in digital plus all the TV stations that are now on the VHF 7-13 high band with different RF physical channel numbers on the VHF high band in digital that were on 7, 8, 9, 10, 11, 12, and 13 in analog to be forced to move back to those channels in digital as the best way to not mess up on frequency assignments in the future maybe by around 2020. I like the idea of all the TV stations be allowed to transmit all HDTV and SDTV as well as mobile programming in the MPEG 4 format in the future maybe by around 2020. I like the idea of both IVI TV and FilmOn HDi be allowed to go in business again and be able to transmit all the local stations to the viewers on the net for free without any interference from the government for violating any copyright laws with benefits for online viewers that want to watch their favorite stations programming such as local news and shows even after the spectrum auction and plan becomes very mandated and very hard for TV stations to be able to stay on the air without being able to stream all their programming online to the viewers online. Me wanting IVI TV and FilmOn HDi transmitting the locals online for free to the viewers on the internet would be very beneficial when it comes to very severe weather outbreaks and breaking news that the viewers would want to be very informed the sooner and the better as a public service to all online users and all television stations in the future. I’m afraid that my take of what channels the TV stations ought to be on with the planning of an spectrum auction. Thank you for my understanding to this crisis in the TV business lately as it relates to the spectrum crunch going on right now. My comment to this matter is not a negative attack but a opinion and theory on my own terns to the spectrum auction in the future.
    Chuck Nickname posted over 4 years ago
    What you propose would be a disaster for our home viewing. Most TV stations in our area are already utilizing their sub-channels with viable programming. The Fox station already provides Antenna TV on their .2 channel. The ION (which we watch a lot) provides programming on .2 and .3. If it goes to cable we will lose this programming. My wife won't be happy. The ABC station airs ABC on .1, weather on .2 and CW on .3. CW is not in HD so we watch it on another CW station from an adjacent market. We also get two PBS stations and we often can choose from six different public TV programs. Less is not better. We don't want to lose the choices we have now. A
    Retran101Man Nickname posted over 4 years ago
    A long time ago, Padden was a champion for UHF independent television as head of INTV. From there he went to News Corp where he was a champion (and parttime assasin) for Murdock/Fox. Later he worked for ABC. Just because he has worked for broadcasters before does not mean he is doing that now, He is a LOBBYIST, nothing more! He is just somebody that we used to know...
    newsbot Nickname posted over 4 years ago
    Padden is a front for the likes of Michael Dell and NRJ; they are a cancer on the OTA television industry.
    AZObserver Nickname posted over 4 years ago
    If they take the likes of Kevin Adell and other degenerate owners out of broadcasting, that's a good thing.
    Bob35795 Nickname posted over 4 years ago
    Preston is up to the noes in bull and horse manure. If he had his way, he'd be playing tic-tac toe on his i-phone with Genachowski, while carting his share of spectrum selling lobbying funds to the bank. The broadcast industry has been surviving since the 1950's with competition, and would continue to survive without the spectrum auction. He is just a lobbyist and speculator, trying to fill his pockets with spectrum funds as soon as he can. I still have never seen a true spectrum audit done, this should have been done before any bill was ever introduced to congress. It's a known fact, that some cell and communication companies are sitting and hoarding on spectrum. Many in congress would pimp out their mother, so they could say to their constituents that they saved them a few bucks.
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    Ratings

    Overnights, adults 18-49 for September 27, 2016
    • 1.
      3.0/11
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      1.8/6
    • 3.
      1.2/4
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      0.9/3
    • 5.
      0.6/2
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      0.2/1
    Source: Nielsen

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