Ellis Joins Chorus Urging Incentive Auction Changes

Broadcasters tell FCC upping opening bids and changing pricing formula could boost revenue
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Ellis Communications is among a group of incentive auction-interested broadcasters who have told the FCC they support the Expanding Opportunities for Broadcasters Coalition's (EOBC) effort to get the FCC to up its opening bid prices and change its pricing formula, changes that could boost opening prices by billions of dollars.

In comments to the FCC on the incentive auction framework Friday, a coalition of 140 auction-eligible stations calling itself Broadcasters for Fair Auction Pricing (BFAP) submitted reply comments encouraging the FCC to follow EOBC's lead. According to a source familiar with the makeup of EOBC, none of the BFAP stations are members of EOBC, which itself has most of a hundred interested stations. That means there are well over 200 stations seriously considering the auction in those two groups alone. In addition (though there could be overlap with either coalition) Fox, Tribune, Ion and Univision have all signaled they could be interested at the right price.

The BFAP stations do not have to identify themselves in the filing, and most did not. But Ellis Communications Group CEO Bert Ellis Jr. put his name to the document representing the coalition. He said Ellis' decision about whether to put up spectrum for auction — it owns KDOC-TV Los Angeles, for example, a market where the FCC is likely going to be paying big bucks — will depend in large part, not surprisingly, on the FCC's "pricing policies."

Ellis told B&C/Multichannel News that he is negotiating a channel sharing deal for KDOC so that he can both give up spectrum for auction and stay in the broadcasting business. "I am not exiting stage left," he said.

That was the message from all 140 stations, which the filing suggested ran the gamut of commercial and noncommercial entities, citing "network affiliates and independents; commercial, noncommercial, and religious stations; stations located in DMAs of all sizes, including several in the top-25; and members of both the National Association of Broadcasters and the Association of Public Television stations."

Given that the incentive auction is a "how low will you go" reverse auction, where prices drop and low bid wins, the stations argue that the FCC "must start from prices that are as high as possible and allow competition to establish the market price for broadcast spectrum," BFAP said.

They pointed to the success of the AWS-3 spectrum auction (almost $45 billion), saying after that upping the opening prices on the incentive auction "should be obvious." Not only did the AWS-3 auction far surpass pre-auction estimates and reserve prices — signaling just how valuable new wireless spectrum is — but it relieved any pressure on the FCC to depress broadcaster payments to make sure the auction would cover the $7 billion of FirstNet, the first responder broadband network. AWS-3 has already covered that and then some.

"The Joint Broadcasters believe that the EOBC Compromise Proposal serves the FCC’s goal of attracting widespread broadcaster participation and strongly encourage the Commission to adopt this proposal," Ellis and his colleagues told the FCC in reply comments that were due at the commission Friday.

The EOBC also represents stations eyeing the auction at the right price, and has taken the lead on advocating for higher starting prices, which it argues better reflects a station's value in the repacking process, which it argues should be the key pricing factor.

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