Kagan: Spectrum Aggregators Drive Up Prices

Says $345 million in station sales are likely tied to incentive auctions

By John Eggerton -- Broadcasting & Cable, 3/1/2013 10:42:21 AM

SNL Kagan estimates that through January of this year, companies it says are likely looking to aggregate and sell TV station spectrum at auction have spent almost $345 million on 39 TV stations since 2011.

Kagan says that speculation has driven valuations higher, but there is still plenty of room for profit. While the average price per MHz-pop paid by those companies for the stations has been about 25 cents, the price wireless companies pay could be a dollar or more. A MHz-pop is derived from multiplying the number of megahertz associated with a license (for a TV station that is 6 MHz) by the population of the license's coverage area.

The 39 stations comprised 14 full-powers and the rest class-A low powers. The biggest buyers have been NRJ TV at $234 million worth and Michael Dell's OTA Broadcasting at $52.8 million, together the primary buyers of full powers. The story also cites Locus Point's purchase of seven stations late last year.

A Kagan spokesperson said that while the groups mentioned have not identified themselves as seeking the stations for their spectrum, it made that assumption "due to nature of TV stations they are buying and the timing of the deals, as well as the fact that most of those mentioned are commonly thought of as buying stations for this purpose."

B&C's Mike Malone last month identified all those groups as likely aggregators.

The FCC has targeted 2014 for the incentive auctions in which broadcasters will be paid to give up spectrum that can then be re-auctioned.