No obvious blockbuster items in latest list; Question: how will new restrictive “move-in” policies restricting affect prices?

With several months still to go in 2011, the FCC is already looking ahead to Spring, 2012 – it has announced that, come March 27, 2012, 123 new FM construction permits will be trotted out on the auction block. You can find a list of the available allotments here.

While the Commission refers to 123 “new” permits, watch out. Of the 123 permits, 16 are actually unsold left-overs from Auction 91, conducted earlier this year, and one goes back to Auction 70 (in 2007). (That last item was sold in Auction 70, but the buyer defaulted.)

If you’ve followed the Commission’s auction process, you know that there’s plenty of paperwork to get out of the way before the bid paddles start going up on March 27 and the gavel starts coming down some time later. The first step? A request for comments on proposed procedures, upfront payments and minimum opening bids. Comments are due by October 7, 2011, replies by October 17, 2011.

Except for some tinkering with some really granular stuff (e.g., the auction activity requirement and similar minor items), the procedures the Commission has put out for comment don’t contain anything different from past FCC broadcast spectrum auctions. Perhaps most notably, the FCC’s notice includes the standard four-paragraph disclaimer warning potential bidders that the government cannot guarantee that the spectrum at auction will actually work. While such disclaimers are regrettable – hey, if the government’s going to sell you spectrum to use for a broadcast station, shouldn’t you be able to assume that the spectrum will in fact serve that purpose? – caveat emptor is the way to go here: you don’t want to end up like the guy in Auction 37 who spent more than $4 million on a permit in scenic Pacific Junction, Iowa, only to discover that the spectrum couldn’t be used because it would interfere with nearby FAA communications. Oops. (Happy Ending, sort of: The Pacific Junction applicant ultimately got his money back, about six years after he paid it to the Commission.)

Given the FCC’s bold-faced disclaimer, potential bidders should take the time and make the effort now to investigate thoroughly any permits they may have their eye on. The Commission suggests that prospective bidders watch out for “anomalies such as site restrictions or expense reimbursement requirements”, and that they also check out the availability of potential sites. Oh yeah, and bidders should for sure be familiar with the rules regarding the National Environmental Policy Act, which can throw a monkey wrench into the best-conceived of plans.

Proposed starting bids go all the way from $750 to $100,000 — although the Commission is inviting comments on the opening bid levels it has come up with. The vast majority of proposed openers come in at $25,000 or less, and 14 of the permits are priced to move at a low, low $750. The priciest allotment – a Cloverdale, California Class A – will kick off at $100K.  Don’t assume, though, that the final bids will necessarily be in the same ballpark as the opening bids: it only takes two determined bidders to goose the price of any permit skyward. 

One thing to watch for this time around: the possible effect of the revisions to the “move-in” rules that kicked in earlier this year. Historically, an FM auction provided an opportunity for creative folks to figure out how an up-for-grabs channel in some obscure and distant community might be leap-frogged or hop-scotched into a more populous, and thus lucrative, situation. Last Spring the Commission sought to slam the door on such things. As a result, Auction 93 is likely to be a “what-you-see-is-what-you-get” affair, with little if any post-auction jockeying of channels and communities. It’s probably a good guess that that will drive the ultimate dollar values of these channels down, but you never know.

The FCC’s release doesn’t mention bidding credits for new entrants, but in any FCC auction you must figure that such preferences will be available. Generally, a 35% bidding credit is available to bidders who own no other broadcast stations and a 25% credit is given to bidders who own three or fewer stations (provided that none of those stations is in the same market as the target auction permit).

Check back with CommLawBlog for updates.