New sticks on the FCC block
CPs for four analog stations will be a 'capital' investment for the winning bidders
By Bill McConnell -- Broadcasting & Cable, 2/3/2002 7:00:00 PM
Four state capitals are due to gain new analog TV stations, thanks to an FCC auction that begins Tuesday.
Unlike most existing stations, the new allotments do not come with paired digital channels. That may be a blessing, though, because they also don't come with the obligation to meet the May 1 deadline for launching DTV broadcasts and can operate analog-only until at least 2006. Although the winning bidders may seem to be saddling themselves with the expense of financing a new analog station today only to build an entirely new digital facility a few years later, most applicants say they can make money on analog and delay most digital expenditures until there is a market.
Three stations—serving Albany, N.Y.; Columbia, S.C.; and Jackson, Miss.—offer rare opportunities to launch channels in sizeable markets. The stations could fetch more than $2 million each, brokers predict.
The other station, ch. 16 in Scottsbluff, Neb., will serve Cheyenne, Wyo. The market has only 50,000 TV households, and bids aren't expected to rise much higher than the $50,000 minimum set by the FCC.
Regardless of their size, the markets will be attractive to some buyers because state capitals are less susceptible to economic downturns, said media broker Frank Boyle.
One possible restraint on the bidding prices may be lenders' skepticism of broadcasting's future, Boyle said. "They look at buying a broadcasting property as getting leprosy or AIDS."
Twelve broadcasters have received approval to bid on construction permits for at least one of the allotments. Ch. 51 in Albany, which will be licensed to nearby Pittsfield, Mass., has the most potential bidders with 11 and the highest opening price at $420,000. But media brokers and others following the bidding process said the most desirable permits will be ch. 47 Columbia and ch. 34 Magee, Miss., which will serve Jackson.
"Albany is already a tough market with 16 stations," said Jesse Weatherby, of Media Services Group. "New stations in Jackson and Columbia have a better chance of making money and getting affiliations."
In Jackson, Fox is without carriage after Pegasus Communications' WDBD(TV) switched to The WB, although the winning bidder for ch. 34 might face competition for Fox from Natchez Broadcasting, which holds a permit to build ch. 51.
In Columbia, The WB needs carriage in a market with only five commercial stations.
The potential in Jackson and Columbia persuaded Grant Broadcasting to focus on those markets even though it is also eligible to bid in Albany, too.
Not everyone is skeptical of Albany's potential. Stephen Simpson, attorney for Memphis broadcaster George Flinn, said the value of any mid-market spectrum makes the city's allotment enticing. "We see this as a long-term play," he said. Flinn is eligible to bid in all four markets.
In Cheyenne, station owner Mark Nalbone is amazed that he could face as many as five rivals. "I'm not sure why some of these big groups are interested," he said. Nalbone's Wyomedia Corp. plans to pair the allotment as a satellite to the company's KLWY(TV), a Fox affiliate with UPN as a secondary affiliation.
"There are more people willing to leave the Cheyenne market than buy into it," adds an equally puzzled Weatherby. ABC, for instance, affiliated with a low-power station, primarily so that limits on network non-duplication won't prevent the local cable franchise from importing Denver ABC affiliate KMGH-TV.
A wild card in the bidding may be religious network Trinity Broadcasting, which is eligible to bid for the Columbia and Albany markets. Because Trinity, which controls a network of 300-plus full- and low-power stations, doesn't aim to turn a profit and won't incur any additional expense for developing programming, it may be able to bid up the price.
Trinity attorney Colby May dismisses suggestions that his client will drive up the price. "We usually operate on a much smaller scale than most commercial groups."
The other eligible bidders are Equity Broadcasting, Powell Meredith, Roberts Broadcasting and Terrill Weiss, which have approval to bid on all four licenses; Venture Technologies for all but Cheyenne; and Innovative Television, Knoxville Channel 25 and Pegasus Broadcasting for Columbia only.
|Though in smaller markets, state capitals attract buyers|
|Town of license||Market||Ch.||DMA||Min. bid||Bidders|
|Magee, Miss.||Jackson, Miss.||34||88||$295,000||7|
|Scottsbluff, Neb.||Cheyenne, Wyo.||16||198||$50,000||6|
|Pittsfield, Mass.||Albany, N.Y.||51||56||$420,000||8|
|Columbia, S.C.||Columbia, S.C.||47||85||$295,000||11|
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