Look out below!! FM CP prices continue their long-term downhill slide in latest auction results
[WARNING! While Auction 93 has closed, strict federal anti-collusion rules remain in effect for several more weeks. Parties who were involved in any way in the auction – including folks who filed applications but then elected not to participate in the auction – should refrain from discussing any aspect of the auction with anyone who was similarly involved in the auction.]
Kiss good-bye to Auction 93 and color it gone. After eight days of auction action, on April 5 the FCC gaveled its 2012 auction of FM construction permits to a close. And while the results may not reflect any permanent trends in market values, one thing is clear: this year’s crop of FM CPs brought in less than half the total of auction proceeds generated in the 2011 Auction.
This year’s auction featured 119 permits, but only 93 of them got sold, with total winning bids amounting to a shade under $4.5 million. (Bean counters beware: the total the FCC will actually receive will come in under $4 million, thanks to bidding credits, a/k/a discounts, given by the Commission to more than half of the successful bidders.) By contrast, the 2011 auction, with a total of only 108 permits ultimately sold, netted $8.5 million (on total winning bids of more than $10.5 million).
That slump is consistent with an eight-year trend.
The 2007 FM auction raked in an impressive $21 million for 111 permits. But that was less than half the $54 million haul (for 163 permits) in 2006. And let’s not talk about the 2004 auction, in which the Commission struck gold, selling 258 FM permits for a whopping $148 million. This year’s bottomline is even worse than the 2009 auction conducted in the throes of the Great Recession. There the Commission still netted more than $5 million, 25% more than this year.
The considerable downturn in proceeds may be attributable to any number of factors, including the rough economic times and the fact that a number of the permits this year were re-treads that had already gone unsold (or, in some cases, sold but unbuilt) in previous auctions. Whatever the reason, the high rollers (and their bankrolls) stayed away in droves this year.
Only seven of the winning bids broke $100,000. The highest winning bid, by far, was $309,000 for a Class C3 in scenic Tishomingo, Oklahoma (about midway between Dallas and Oklahoma City). A Class A in Cloverdale, California (80 miles or so up the 101 from San Francisco), was the second highest at $261,000. Coming in third was a Class A in Culver, Indiana (halfway between Ft. Wayne and Gary) – winning bid, $200,000. By contrast, even last year’s auction saw six permits go for more than $500K each.
On the other end of the spectrum, nearly a third of this year’s permits were sold for the lowest possible bid, each attracting only one bidder. And we can look for more re-tread opportunities in future auctions, since more than two dozen permits had no bidders at all.
During the next few weeks the FCC will release a public notice formally announcing the winning bids and procedures that winning bidders must follow. That notice will trigger payment and paperwork deadlines, and will establish the date at which the anti-collusion restrictions will be lifted.