The Federal Communications Commission (“FCC”) has announced that on April 28, 2020, it will offer for sale at auction 130 FM channels that are currently vacant.  These are channels formerly occupied by stations that lost or cancelled their licenses, channels sold to bidders who failed to pay their bids, channels that were offered but drew no bidders, and channels that have never been opened up to applications.

You can read the FCC’s Public Notice here and view the construction permits in Auction 106 here. They are spread throughout the country, but mostly in smaller communities.  The largest market is Sacramento, CA, where applications will be accepted for the channel formerly occupied by KDND – a station that relinquished its license as part of a settlement of an FCC investigation.

By statute, if more than one entity applies for a given channel, the FCC must award the license by competitive bidding, i.e., in an auction.  The first step will be a time window for filing “short form” applications on FCC Form 175.  A short form includes an expression of interest, detailed ownership information, and some basic technical parameters.  If only one short form is filed for a channel, the filer will be invited to file a full “long-form” with all of the usual legal and engineering details of its proposal, along with the filing fee for an application for a new station.  If more than one short form is filed, the FCC will hold an auction; and only the high bidder will file a long-form.

The FCC has invited comments on proposed up front deposits from prospective bidders (which are refunded to losing bidders) minimum opening bids, and how the auction should be conducted in terms of things like activity requirements and when the auction should end.  Proposed opening bids range from $100,000 for Sacramento to only $750 for Essex, CA, Yakutat, AK, San Isidro, TX, and Wamsutter, WY.   Comments are due November 6, 2019, with Reply Comments due November 20.  If past is prologue, there will be multiple bidding rounds, the FCC will step up the pace by having more rounds per day as the auction proceeds, and when bidding activity falls below a certain level, the FCC will end the auction; but if enough people file comments saying that the system should be changed, you never know what the FCC might decide to try.  It is unlikely that the FCC will change its policy that entities that make bids and then withdraw them, or that place a winning bid and fail to pay on time, should expect to be fined significant amounts.  If you play, you have to play for keeps.

A critical aspect of FCC auctions is the anti-collusion rule.  Once short forms are filed, no one who filed an application is permitted to talk to any other filer about anything relating to the auction in any community, not just the communities for which the two parties filed applications.  You can’t go to dinner, meet at a bar, post on Facebook, launch a blimp, or figure out some other way to let another applicant know your auction plans.

Assuming the FCC applies their existing anti-collusion rules unchanged, those rules will also affect the ability of the attorneys at Fletcher, Heald & Hildreth to communicate with more than one applicant for a given community regarding their bid or bidding strategies at any time after the short-form filing deadline.  Any individual attorney will likely be further limited to representing a single auction participant, regardless of the channels for which that participant is bidding.  Throughout the auction, we remain able to provide general regulatory and legal advice unrelated to the auction.  We encourage any clients who are considering filing to participate in the auction to let us know at the earliest possible date.  We will also be happy to answer any questions about auction procedures and to assist clients in preparing comments on how to make the auction effective, efficient, and reasonably accessible to entities of all sizes.