Latest Greenhill estimates incorporate more sophisticated procedures and analytics, results of AWS-3 auction.
[Blogmeister’s Note: Oops. It appears that the FCC and its pals at Greenhill may have attempted to goose broadcaster interest in the Incentive Auction by some fancy footwork in the latest Greenhill Report, and we here at CommLawBlog initially fell for it. In our post as originally published here, we mistakenly assumed that a table appended to the most recent report was intended to correspond to a similar table included with the October report. The differences in dollar values between the two certainly attracted attention, which may have been the point. But closer examination of the two tables indicates that they are quite different and not really comparable. As a result, while the numbers in the new table are indeed considerably higher than the October numbers, the fact is that the anticipated walk-away dollar values for auction participants do not appear to have changed appreciably. We have corrected our original post accordingly.]
Let’s say that you’re a TV broadcaster (full-service or Class A), and you’ve been thinking about participating in the Incentive Auction but, so far, at least, you haven’t been quite persuaded. Maybe the FCC’s new estimated opening bids will change your mind. Or will they?
The Commission has released an update to the now-infamous Greenhill Report released just last October. This updated version is revised to incorporate procedures and analytics currently out for comment at the Commission, including: elaboration on the options to go to high- or low-VHF; the proposed “bid hierarchy” of multiple bidding options and the “preferred” bid option; and additional fleshing out of the post-auction transition, payment of proceeds, and disbursement of relocation funding for repacked stations. It also incorporates consideration of the results of the recently-closed, wildly successful AWS-3 auction.
The result? Lots of cha-ching … or so it would seem until you look a bit closer.
The revised Greenhill Report implies that it has incorporated the results of the wireless industry’s generous response to the AWS-3 auction to increase the expected opening bid price per MHz-pop from $1.50 to numbers north of $2.00 per MHz-pop! A broadcaster might well look at the table of opening bids in this revised report and think, my goodness – numbers that were previously just ridiculous are now bordering on obscene! But pull back the Wizard’s curtain and you will see that these numbers are not the same as the previously-released figures. In fact, these opening bid figures are apples to the October Greenhill Report’s Estimated Auction Proceeds’ oranges.
In the October report’s Appendix, a table of Estimated Potential Auction Compensation listed the expected maximum and median end-of-auction proceeds for full power and Class A TV stations in each market. In the latest report iteration, however, the appended table has been replaced by one entitled “FCC Proposed Opening Bid Prices.” At first glance, for example, it would appear that the median opening bid for a full power New York City station is now $660M, up from the paltry $410M previously estimated. In fact, however, both numbers are in play: the new report simply tells us that the median opening bid for a full power NYC station is $660M, and that the median expected walk-away price a station in NYC will get is $410M.
We are a little disturbed that the FCC would pull such a sleight of hand in an apparent effort to goose broadcaster participation interest.