J.P. Morgan: CBS, Fox in Best Position to Cash in Duopolies

In a note to investors, J.P. Morgan says it expects Fox and CBS to be in the best position to monetize duopolies in large markets in the upcoming incentive auction, followed by Comcast and Sinclair, as "cash proceeds could range from $1 to $3 billion for major broadcasters from consolidating licenses alone."

It is basing that on a projection of the FCC clearing between 70 and 100 MHz of spectrum and auctioning that for $25 billion-$35 billion.

It provided quite a range of those cash proceeds for each of the top duopoly prospects—opening bid prices are just that, and will go as low as competing stations in a market are willing to go.

The estimated range for Fox in pre-tax proceeds is $381 million-$1,157 million for its duopolies; Comcast (NBC) at $300 million-$1,001 million and CBS at $355 million-$876 million. Sinclair tops estimates of independent local station groups at $172 million-$276 million in a potential duopoly sale.

The analyst predicts broadcasters could get their money by late 2016 or early 2017. The auction begins March 29, or at least that is the deadline for stations to declare what spectrum they are putting in the auction and what options they are opting for—giving up spectrum and getting out of the business, giving up and sharing (say with the other station in a duopoly) or moving to a lower channel if that is an option,

J.P. Morgan says it expects AT&T, Verizon and T-Mobile to be the top bidders, but that Comcast, which has applied to be in the auction, could partner up with other cable companies and bid for $3 billion-$5 billion worth. J.P. Morgan said it did not expect Google or Amazon to bid, though did not rule them out.

(Photo via Ervins Strauhmanis's FlickrImage taken on Sept. 19, 2014 and used per Creative Commons 2.0 license. The photo was cropped to fit 3x4 aspect ratio.)

John Eggerton

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.