FCC Ponders Selling Spectrumless Must-Carry Rights

Los Angeles station’s move could cause others to follow suit

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The FCC has asked for some help in deciding whether it should allow a Los Angeles television station that agreed to give up its spectrum in the incentive auction, and by extension other similarly situated stations, to be able to sell its license and must-carry rights.

If the FCC approves the sale of the spectrumless station, it could trigger similar sales by stations that initially signaled they’d stay in the business, which was virtually all broadcasters that sold spectrum in the auction.

The National Association of Broadcasters pointed to that fact to suggest broadcasting is still the best use of spectrum.

Spanish-language station KBEH sold its spectrum for $146.6 million, saying it planned to strike a sharing deal and continue in the business; the FCC allowed stations to share rather than turn in their licenses, and said that must-carry would still apply.

KBEH owner Hero Licenseco still has a sharing agreement as a backup, but has petitioned the FCC to allow KBEH to sell that license and assets, including must-carry rights, for $10 million.

An FCC spokesperson confirmed that winning bidders still have a license until they turn it in, so “to the extent we receive an application for transfer of such licenses we’ll consider them as they’re filed.”

Absent an extension, KBEH and similarly situated winners must relinquish their licenses by 180 days after receiving their auction winnings, which they will likely get in about three months.

Given the potential precedent of approving such a sale, the FCC has put it out for comment.

Preston Padden, who was involved in the auction and post-auction framework, said the expectation had always been that licenses and rights could be sold.

“At no time did the FCC even hint that these licenses would not be transferable,” he said.“ Mergers, estate planning and myriad other factors require that they be transferable.”

Padden noted that following a petition from his group, the Expanding Opportunities for Broadcasters Coalition, the FCC liberalized its initial channel sharing rules, including the right of channel-sharers to move from one host station to another. The creation of those nomadic licenses was a key to getting broadcasters into the auction, he said.

“These Nomadic Licenses do not increase the must-carry obligations of the cable industry,” Padden said.

The FCC’s Media Bureau has given anyone opposed to the transfer until June 2 to file petitions to deny.