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Auction introduction Overview of the project 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. |
S T A T I O N R E S O U R C E G R O U P P U B L I C R A D I O C A P I T A L |
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FCC AUCTION PROJECT How We Help Stations Participate This memo provides an overview of SRG/Public Radio Capital's work concerning the FCC auction of FM frequencies and gives you some time frames for SRG/Public Radio Capital's work with you to pursue these allocations. The steps, activities and costs leading up to, and following the auction are: Target Auction Allocations We need a commitment from you concerning the specific allocations you plan to pursue as soon as possible. SRG must work with stations on a first-come, first-serve basis in order to avoid conflict-of-interest related problems. In the event a second station comes forward with an interest in a frequency that another station has already named, we will work with you to find another representative for the bidding process (and we can decide whether to contract with you for work leading up the auction on a case-by-case basis). Please tell us your list of target markets and channels as soon as possible (this will require an in-house review of the frequency by your engineering department). Auction Preparation SRG/Public Radio Capital will work with stations to prepare for and participate in the auction by providing thorough background information on the auction process and the following activities:
Analysis of the FCC auction held last year to highlight comparable markets and prices. A comparison of last year's opening bids compared to the final sale price. 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 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. Fee for the Above Work SRG/Public Radio Capital's fee structure is $5,000 for the licensee's first frequency and $2,000 for each additional frequency. Under this fee structure a station that pursues a single FM allocation, for example, will be charged $5,000. A station that pursues three allocations will pay a total fee of $9,000 to SRG. Public Radio Capital Option There is a scenario in which Public Radio Capital is the purchaser and you would execute, with Public Radio Capital, Management Operating Agreements for the stations in which you are interested. The operating agreement would cover all pertinent financial and legal obligations for the respective parties, including a timetable for payments prior to the auction that would roughly mirror the financial payments required if a station were to purchase the station itself, and an option to purchase the frequency or frequencies from PRC at the end of the five-year holding period required by the FCC to realize maximum bidding credits. The viability of the PRC option depends on several factors. There may be advantages to an aggregate purchase by PRC, including the capacity of PRC to leverage better financing for the borrowing required under this approach. These potential savings would have to be weighed against the costs of executing the Management Operating Agreements that would be required under such an approach. Under this scenario, purchase costs would be recovered by PRC through charges included in the operating agreements. Stations would receive all the services from SRG/Public Radio Capital, outlined above, except for SRG/Public Radio Capital's participation on their behalf in the bidding process itself. The operating agreements signed in advance of the auction would stipulate that PRC would not exceed the bidding ceiling indicated in the operating agreements with the individual SRG members. The operating agreements would also anticipate the possible outcome that PRC would not be successful in its bid for some or all of the frequencies. Additional Revenue and Expense Projections In addition to the market analysis to determine a price range for stations, SRG can produce a detailed revenue/expense projection for the allocation. We do not anticipate that most (or perhaps any) SRG members will require this kind of work. Any station that does decide it wants this level of business planning will be billed separately for this work. Please confirm via email whether or not your station continues to be interested in the FCC auction. We would also like to know when it would be best to talk to you about this in more detail over the next several weeks. Please respond to Marc Hand mohand@aol.com or call Marc at 303.781.5101. This is an exciting opportunity to expand the reach of public radio, and we look forward to working with everyone to insure that public radio has the best possible chance for success in the auction. Return to main auction page. |