EOBC Formula Would Boost FCC Opening Bids By Billions

Argues FCC incentive auction methodology lowballs value of stations in repacking
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The Expanding Opportunities for Broadcasters Coalition has offered up alternative opening incentive auction bid prices that are billions of dollars higher than the FCC's proposed opening bids.

EOBC, which represents stations interested in participating in the auction at the right price, has recalculated opening bid prices for every station based on an alternative formula, one that takes into account a  station's impact on other stations (in the repacking after the auction), an impact EOBC argues goes "far beyond its protected contour." To check out the different between the FCC and EOBC prices, go here.

According to EOBC's analysis of the value of all the stations of major group operators, top owner Sinclair's stations would be worth $15 billion more, Media General's $13 billion and Ion's almost $9 billion. 

By that measure, 2,165 stations see a boost in their starting bids and only eight stations would experience a "slight" decrease, but all are owned by station groups that, on balance, would see an overall opening bid gain, says the coalition.

"A single station in New York City can interfere with other broadcasters or wireless operations from Boston to Baltimore," it says. "Our reweighting of the FCC formula gives broadcasters the credit they deserve for the spectrum they occupy beyond their own service area — spectrum that the FCC wants to buy at a discount using its proposed formula."

EOBC concedes that the starting prices will go down as stations compete for the money, but choice is to "go down from a high price or from a low price."

It points out that the higher prices will attract more broadcasters and increase the odds of a successful auction, so it should be in the FCC's interest as well as broadcasters.

"[G]iven the record-breaking prices in the AWS-3 auction, the FCC easily can afford to raise its starting prices above what they were planning before the AWS-3 auction went through the roof," the coalition says.

EOBC wants other broadcasters to join its call for a new formula. Reply comments to the FCC are due March 13. "[A]ll broadcasters may want to support higher prices for those broadcasters who do wish to sell.  Higher exit prices will enhance the value of all broadcast assets," the coalition says.

In comments to the FCC last month, EOBC argued that the FCC's justifications for its price, that higher starting points would result ion "many hundreds of rounds" or that the FCC is bound by statute to limit payments to broadcasters, are "fabricated" and "unacceptable," and the number of rounds a red herring. The recently completed, wildly successful — at least financially — AWS-3 auction went 341 rounds.

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