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Analyst: FCC May Have Already Ponied Up $40B in Auction

Stephan Sloan, executive director of station broker/appraiser Media Services Group, estimates that the FCC may have had to "freeze" some 115 TV stations' $40 billion worth of spectrum—pay the FCC's initial top bid price—at the outset of the spectrum auction, with still much more spectrum to buy.

If so, that would be more than some estimates of what the FCC would pay for all the spectrum in the auction and raise the likelihood that the FCC would have to lower the clearing target—it is currently 126 MHz—and extend the auction, unless it could get forward auction bidders to cover that amount, plus the cost of conducting the auction and $1.75 billion to repack TV stations afterwards.

Sloan is basing that on the presumption that there would be "scarce" participation in the largest markets by the most valuable stations. He estimates that could mean freezing some $10 billion worth of bids in the Northeast and $16 billion in the mid-Atlantic and Southern California alone.

"I appreciate that this estimate of the first round of the auction exceeds the total value of the Reverse Auction published by many respected entities," Sloan said in a LinkedIn post last week, "however, I have confidence in this estimate as I believe it to be the natural result of the function of the auction algorithm and the legislation causing the entire Reverse and Forward Auction spectacle."

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.