Published in Breaking News

FCC auction presents potential windfall for TV broadcasters

BY Sunday, January 10, 2016 10:47pm

Television stations around Michigan and nationwide are considering auctioning off valuable broadcast spectrum for potentially tens of millions of dollars to make room for mobile wireless development.

Across the state, colleges in particular — including Michigan State University — are at least considering the revenue in exchange for reformatting their local public television channels or moving the content online.

The potential changes have some viewers worried about shake-ups in how local broadcasting is delivered and who could access it.

Grand Valley State University, which services stations in Grand Rapids and Kalamazoo, will not participate in this year’s auction hosted by the Federal Communications Commission because its stations are not in the same frequency band as stations that qualify for the auction, according to WGVU-TV General Manager Michael Walenta.

“Grand Valley State University remains committed to PBS and to public broadcasting,” Walenta said in a statement. “It is one of the university’s most visible and important public services. Our stations also provide important training and employment opportunities for students in the GVSU School of Communications as well as other programs.”

Commercial broadcast stations can participate in the FCC auction if they choose. At least one station, WZZM-TV of Grand Rapids, will not participate in the auction, according to General Manager Janet Mason.

But broadcast experts say TV viewers won’t see much of a difference, except for a few small-market stations that may choose simply to go off the air by giving up their spectrum space.

If larger-market stations participated in the auction, they would likely do so in ways that give up some space on the spectrum or move to a different channel, says Karole White, president of the Michigan Association of Broadcasters.

“The nation needs more spectrum. That’s clear,” White said. “Broadcasters are all located on — let’s call it lakefront property, the best spectrum out there. The FCC has said, ‘We’re going to buy back the spectrum that the broadcasters have built their businesses on.’”

White said a key component to the process was making participation voluntary. It’s unclear which commercial stations are participating ahead of the auction, but White said there are likely “eight to 10 statewide that are even thinking about it.”

“Some, not many, may choose to just plain go off the air,” she said. “This would probably be mostly the very, very small low-power TV stations. A major network station isn’t going to do that. I expect that if we have very many stations in the market that ultimately take the FCC’s buyout, they will negotiate with other stations in the market to stay on the air. The deals will be cut every which way to Sunday.

“Almost every station — whether public or commercial — would have to at least take a look at it. We’re talking big bucks.”

In October, the FCC issued a list of values that each station would be worth at opening bid prices. Estimates were given based on the entire value of the station’s spectrum space, or just a portion of it if a station decides to move to a different channel. In West Michigan, those overall values range from $265 million (WOTV) to $44 million (WOKZ).

“The broadcaster may or may not get the full amount the FCC says it’s worth,” White said.

The MSU Board of Trustees in December gave President Lou Anna Simon permission to decide ultimately whether the university should participate in the process and auction space for WKAR-TV. The university holds the operating license for the station. A decision either way needs to be made by Jan. 12, said MSU spokesman Jason Cody.

“Obviously, this is something we need to look at,” he said. “I think we have to take a long look at both the function of WKAR, the purpose of WKAR and how it helps the university complete its mission. Whether we’re in the broadcast business or not, community engagement is part of that at MSU.”

The FCC will hold an advance auction to raise money from wireless providers in order for the agency to then buy back space from broadcasters.

The FCC auction is the culmination of a years-long process to try to free up space on the broadcast spectrum. Those most interested in buying the space are wireless providers.

The auction is a “once-in-a-lifetime opportunity to expand the benefits of mobile wireless coverage and competition to consumers across the nation, offering more choices of wireless providers, lower prices and higher quality mobile services,” FCC Chairman Tom Wheeler said in a statement in June 2014. “The auction will also provide a game-changing financial opportunity to broadcasters. … New channel-sharing technologies offer broadcasters a rare opportunity for an infusion of cash to expand their business model and explore new innovations, while continuing to provide their traditional services to consumers.”

The extent to which viewers might lose local programming is unclear. But overall, White of the Michigan Association of Broadcasters doesn’t anticipate major changes for viewers of public or commercial stations.

“Conceivably, it will mean there are a few different channels, but all the major ones will be there,” White said. “Meanwhile, the FCC and the nation will have more spectrum to build out new technology. Everybody wins.”

Read 3260 times Last modified on Monday, 11 January 2016 13:01