FCC auction could make billions for station owners
On Tuesday, the Federal Communications Commission closed participation in its upcoming reverse auction of TV station spectrum. Instead of TV stations bidding for more bandwidth, they are bidding for the FCC to pay them to go off air. The federal agency wants that space on the airwaves to stream video to your phone.
One surprising potential winner in all this: billionaire Michael Dell. Since 2011 his company has been quietly buying up TV stations around the country, which now looks like a pretty savvy investment.
Increasing use of mobile devices means we’re running out of bandwidth to go around. Howard Symons is vice chair of the FCC’s incentive auction task force.
"The demand for wireless spectrum is immense and continually growing," Symons said. "That’s why Congress told us to use this market mechanism essentially to re-align the TV band to better meet today’s consumer demand between TV and wireless."
Congress told the FCC to pay traditional TV stations to go off air, making more room for wireless companies to stream data. Suddenly, teeny tiny stations playing Catholic mass or Roseanne re-runs were potentially worth millions. Blair Levin is a non-resident senior fellow with the Metropolitan Policy Program at the Brookings Institution.
"There were several groups...that made a very conscious effort to buy a number of broadcast stations that would be particularly valuable in this auction and are now intending to resell them," Levin said. "That’s actually exactly what the FCC and government policy including Congress and the White House wanted people to do."
Michael Dell’s investment firm owns one of those groups, and now stands to make billions. Other companies gobbled up stations, too, taking a pretty significant risk at the time. Robin Flynn is a senior analyst with media research firm SNL Kagan.
"In many cases," Flynn said, "they bought these stations very early on before we were really certain the auction was going forward and what way it was going to go forward."
Flynn said most of the stations trying to sell bandwidth aren’t necessarily cancelling their programming.
"They’re looking at many ways to share spectrum, do channel sharing, multicasts and other ways in which they can actually still remain in business and have the transition be almost invisible to consumers," Flynn said.
The auction is scheduled to begin on March 29.