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Kagan: Spectrum Aggregators Drive Up Prices

SNL Kagan estimates that through January of this year,
companies it says are likely looking to aggregate and sell TV station spectrum
at auction have spent almost $345 million on 39 TV stations since 2011.

Kagan says that speculation has driven valuations higher,
but there is still plenty of room for profit. While the average price per
MHz-pop paid by those companies for the stations has been about 25 cents, the
price wireless companies pay could be a dollar or more. A MHz-pop is derived
from multiplying the number of megahertz associated with a license (for a TV
station that is 6 MHz) by the population of the license's coverage area.

The 39 stations comprised 14 full-powers and the rest class-A
low powers. The biggest buyers have been NRJ TV at $234 million worth and
Michael Dell's OTA Broadcasting at $52.8 million, together the primary buyers
of full powers. The story also cites Locus Point's purchase of seven stations
late last year.

A Kagan spokesperson said that while the groups mentioned have not identified themselves as seeking the stations for their spectrum, it made that assumption "due to nature of TV stations they are buying and the timing of the deals, as well as the fact that most of those mentioned are commonly thought of as buying stations for this purpose."

B&C's Mike Malone last month identified all those groups as likely aggregators.

The FCC has targeted 2014 for the incentive
auctions in which broadcasters will be paid to give up spectrum that can then
be re-auctioned.

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.