LIN Media Considers Sharing of Spectrum - Broadcasting & Cable

LIN Media Considers Sharing of Spectrum

Station group suggests to the FCC that loosening media ownership rules would sweeten pot for broadcasters
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LIN Media has signaled it is at least considering getting in on the incentive auction mix and could put some spectrum from its three-dozen stations into the pot, depending on how the FCC decides to sweeten it.

We don’t know whether LIN president Vince Sadusky was a Mr. Rogers fan, but his executive team’s visit to the FCC two weeks ago was all about sharing—spectrum and services that is, according to commission documents confirmed by LIN’s attorney.

In a meeting with members of the Incentive Auction task force earlier this month, LIN VP and chief technology officer Brett Jenkins suggested the company was at least considering the option of giving up a portion of its spectrum.

He gave the FCC a list of information points the company would need to “analyze auction scenarios,” including auction design, the timing of a next generation transmission standard, whether there would be flexible waivers for spectrum use by broadcasters— potentially for data as well as traditional broadcasting— and how stations would be priced. That includes how the FCC will “score” the stations— value them for determining bid prices.

The scoring question has been much on the minds of the Expanding Opportunities for Broadcasters Coalition, a group of broadcasters who are interested in putting spectrum in the auction at the right price. Per FCC rules, potential bidders do not have to identify themselves, so the coalition’s membership remains a carefully guarded secret. According to a source familiar with the company, LIN is not among their ranks.

But while Jenkins suggested LIN might be interested in channel-sharing—essentially giving up a portion of a station’s spectrum, but not all, to the auction— LIN also indicated that the FCC would need to allow some other sharing to seal such a potential deal.

“We did note that one way the FCC could incentivize broadcasters regarding the auction would be to offer ownership relief, such as converting sharing arrangements into ownership,” said Joshua Pila senior counsel at LIN Media.

Pila said LIN had not made any commitment on that front. But according to FCC documents, Sadusky, in a separate meeting with FCC commissioner Jessica Rosenworcel, made a strong pitch for why such sharing arrangements should be allowed.

Not Ready to Just Let It Slide

Sadusky came armed with a slide show about how sharing arrangements were in the public interest and how they offered the scale necessary to provide localism and diversity, not to mention competing with less-regulated distributors such as cable and satellite operators.

LIN has a total of seven sharing arrangements—two grandfathered local marketing agreements (LMAs) in Providence, R.I. and Austin, four shared service agreements/ joint sales agreements (SSAs/JSAs) in Dayton, Oh., Topeka, Kan., Savannah, Ga., and Youngstown, Ohio and an SSA in Albuquerque, N.M.

All were necessitated by FCC duopoly rules which limit TV station ownership and would prevent LIN from owning those stations outright—rules LIN argues are outdated and in need of reform.

The America Television Alliance (ATVA), a coalition of cable and satellite operators pushing the FCC to tighten its rule on sharing agreements, was having none of it. “LIN argues SSAs are good for consumers. It’s one thing if they share news trucks, but they shouldn’t be allowed to collude in a market,” said ATVA spokesman Brian Frederick. “LIN owns two of the four network affiliates in some markets. How is that a good thing for consumers? Further, TWC and DISH, for example, can’t jointly negotiate in a market.”

The FCC has not been leaning in that direction, however. Instead the commission under previous chairman Julius Genachowski proposed further limiting some sharing arrangements by making them attributable as ownership interests, and the FCC under new chairman Tom Wheeler disallowed a JSA in St. Louis as part of its approval of the Gannett/Belo deal. While the JSA comports with FCC rules, the commission decided it was not in the public interest and signaled it would not approve JSA-related transfers without a case-by-case public interest review.

STUDY: WINDFALL, SHMINDFALL

Broadcasters, channeling Rodney Dangerfield, believe they deserve more respect when it comes to charges they got their stations in a windfall that the government should be free to redistribute to wireless carriers. And they recently provided themselves with some new ammunition in this argument.

The National Association of Broadcasters stated that said spectrum has been paid for through public service and public interest obligations, such as political airtime, children’s programming and more, to which they add that competing distributors do not shoulder the same load.

But the NAB has also maintained that most broadcasters paid market prices for their spectrum, a point it is trying to drive home with a new study.

According to the study, commissioned by the NAB, from Navigant Economics managing director Jeffrey Eisenach, virtually all TV station owners paid market value for their spectrum in private transactions. The study also points out that some wireless carriers urging the FCC to move broadcasters off their spectrum did not pay the government for their spectrum.

While the FCC did assign TV station licenses without collecting any money for them, the study found that 92% of those original stations have been bought and sold since then.

“As an initial matter,” said the study, the “windfall” argument “overlooks the fact that broadcast television licensees are not unique in the sense that they hold licenses originally granted without direct payment to the government. Prior to the congressional grant of auction authority to the FCC, all spectrum licenses were issued for nominal payments of application fees.”

“This definitive study puts to rest the myth of a ‘spectrum giveaway’ to broadcasters,” said NAB spokesman Dennis Wharton.

LIN Media has signaled it is at least considering getting in on the incentive auction mix and could put some spectrum from its three-dozen stations into the pot, depending on how the FCC decides to sweeten it.

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