Auction introduction

How we work with stations

List of frequencies

Legal memo on procedures

"Discount" for public radio stations in the auction

Contract for SRG services

About SRG

 CPB will cover half the fees charged to licensees that contract with SRG and PRC for direct assistance with the auction process.
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P U B L I C   R A D I O   C A P I T A L

FCC AUCTION PROJECT
An Initiative to Extend the Reach and Service of Public Radio

Public radio licensees have a rare and limited opportunity to extend their reach to unserved and rural areas and to add additional services in communities across the country by acquiring commercial FM frequencies in a special FCC auction. The Station Resource Group and Public Radio Capital are working to inform the field of these opportunities and to assist individual stations as they prepare for and participate in the auction process.

The principal outcome of this initiative will be to extend the programming services of existing licensees to listeners that cannot now receive their broadcast signal. In some cases the result will be first-time availability of public radio. In others it will be the first opportunity for multiple program streams in rural areas. In all cases, stations will be able to leverage existing programming assets to wider audiences, increasing the long-term efficiency and productivity of their operation.

Background
In late 2001 the Federal Communications Commission will auction 359 FM channel assignments. This auction is intended to "clean out the inventory," providing the final opportunity of this magnitude to secure remaining unoccupied channels on the commercial FM band. These frequencies can be used for commercial or noncommercial broadcasting at the licensee's discretion. While the identified channels are quite literally all over the map, the preponderance would serve rural areas and smaller communities. The opening bids set by the FCC for channels SRG believes will interest public broadcasters range from $1,500 to $400,000. Based on prior auctions, final prices may be close to these amounts or several multiples of them.

How can public stations compete against commercial broadcasters in this auction? For starters, all noncommercial stations will be eligible for a "bidding credit" of 25-35 percent. While first time commercial buyers will be eligible for similar credits, the credit truly levels the playing field.

As important, the scarcity of spectrum for public service requires public stations to consider more aggressive strategies to build out their delivery pipeline. Employing economic models specific to public radio that SRG has worked with its members to develop, it is possible to ascertain spectrum's public service marketplace value—often more than licensees first imagine—and to compete with commercial owners on a business-like basis.

Among the factors that favor public stations are eligibility for tax-exempt bond financing, long-term expectations of ownership, the premium public service value associated with extending programming to under-served rural areas, and the wide-area networking models that many state and regional public radio licensees have already created.

The Station Resource Group has built substantial expertise in the area of broadcast spectrum acquisition for public service outcomes. That expertise can now be tapped to help public radio stations participate fully in the auction process as informed and skilled competitors.

PHASE I: INFORM LICENSEES AND IDENTIFY TARGETS

The first critical step is to create awareness and understanding of the auction. Most public radio licensees pay scant attention to the commercial spectrum in general and the spectrum auction process in particular. In addition, the Commission has adopted a timetable that requires immediate attention and decisions. SRG/Public Radio Capital is:

    Contacting all CPB-supported public radio licensees to familiarize them with the overall opportunities and the auction process.

    Highlighting the frequencies in question, identifying frequencies of potential interest, and providing guidance for licensees concerning how to evaluate the value of the frequency to their organization.

PHASE II: AUCTION PREPARATION AND PARTICIPATION

SRG/Public Radio Capital will contract with stations to prepare for and participate in the auction through the following activities:

    Preparation of memos that detail the auction process, final minimum opening bids established by the FCC, definitions of attributable interest that trigger and define bidding credits, and other information stations need prior to the start of bidding.

    Analysis of the FCC auction held last year to highlight comparable markets and prices.

    Analysis of comparable FM station sales in the area of the target auction allocation to ascertain what existing stations are being sold for in the open market.

    Develop a target price range for the desired channel(s) based upon the information gathered from past FCC auction sales and existing station sales, as well as any bidding credit available.

    Outline financing options for each station's bid(s). SRG/Public Radio Capital will inform stations concerning the schedule of the initial FCC deposit, the minimum opening bid, and when payments will be due for winning auction bidders.

    Represent stations in the bidding process. All of the frequencies will be auctioned simultaneously. The bidding process, based upon past experience, should take about ten days.

This phase will move forward on a first-come, first-serve basis. In the unlikely situation a station expresses interest in a frequency that has already been identified by another public radio licensee, SRG will refer the second licensee to other counsel to avoid conflict of interest. SRG does not anticipate that there will be many, if any, situations of this nature.

ADDITIONAL REVENUE AND EXPENSE PROJECTIONS

In addition to the market analysis to determine a price range for stations, SRG/Public Radio Capital can produce a detailed revenue/expense projection for the allocation. We do not anticipate that most stations will require this kind of work.

TIMELINE

Here are the FCC's revised dates for the auction.

September 24 through October 5. Short Form 175 must be filed by all parties who want to participate in the auction. The filing must be done electronically.

November 5. Upfront Payment amount must be wired to the FCC.

December 5. Auction bidding begins

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