117 FM construction permits now available for inspection on the showroom floor . . . but the bidding action won’t start until next March.
If it’s September, it’s time to gear up for the next FM auction. In keeping with that recent tradition, the FCC has announced that, come March 26, 2013, 117 new FM construction permits will be up for grabs through the usual auction process. Heads up, though: March 26, 2013 also happens to be the first day of Passover, and the Tuesday of Holy Week, and maybe even the probable day before regular season Major League baseball begins. So there’s at least a chance that the date might move some (and if you’d support some such movement, you can file comments letting the FCC know). But one way or another, the gears have begun turning for the next FM construction permit auction.
You can find a list of the available allotments here. While the Commission refers to 117 “new” permits, that’s not an entirely accurate description. Of the 117 permits, 26 are re-treads from earlier auctions: 22 are back again from Auction 93 (conducted last spring), two are from 2011’s Auction 91, one hearkens back to Auction 70 (vintage 2007), and one goes all the way back to Auction 62 in 2006. The last two were sold back when, but the buyers defaulted. The other 24 didn’t move off the lot when they were first put up for grabs.
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 26 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 10, 2012, replies by October 24, 2012.
It appears that the procedures the Commission has put out for comment don’t contain anything different from past FCC broadcast spectrum auctions. Still, true auction aficionados should take a close look at the fine print to make sure that they’re on top of the details. Also, if one or another permit on the list catches your eye but you think the minimum opening bid for that permit is too pricey, you can let the FCC know in your comments. (Be prepared to support your thoughts with “valuation analyses” and don’t forget to include in your comments suggested amounts or formulas for reserve prices or minimum opening bids.) The FCC has created a special e-mail address — auction94@fcc.gov — to which comments or reply comments should be sent in addition to the standard FCC filing procedures.
True to form, 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. As it has in previous, similar, notices, 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. A word to the wise: bidders should also 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 $500 (for Channel 240A in charming Dickens, Texas) to $75,000 (Channel 262A in scenic Lake Park, Florida). Gone, apparently, are the days of the six-figure opening bid. The vast majority of proposed openers come in under $10,000, and 14 of the permits are priced to move at a low, low $750. 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.
Exactly one-third of all the permits are located in Texas or Oklahoma. But the remaining permits spread from Alaska to Florida and from California to Erie, New York (sorry, Hawaii and New England, no markets this time).
In assessing the potential of any of the CP’s on the block, don’t forget the possible effect of the revisions to the “move-in” rules that took effect last 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. But in its “rural radio” decision in 2011 the Commission sought to slam the door on such things. As a result, FM auctions nowadays tend to be “what-you-see-is-what-you-get” affairs, with little if any post-auction jockeying of channels and communities.
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.
