Padden: Incentive Auction Is Like Gift Certificate to Tiffany's

Preston Padden, executive director of the Expanding Opportunities for Broadcasters Coalition, is planning to give an American Enterprise Institute audience this to chew on at a breakfast event Thursday morning in Washington: The FCC can't possibly be using the JSA crackdown to drive broadcasters to the auction.

AEI is previewing the FCC's March 31 public meeting, where the chairman has planned a vote on making JSAs above 15% of ad sales attributable as ownership, and give existing JSAs that would exceed ownership caps a couple of years to be unwound--or other stations sold.

Padden's members probably won't have to be driven to the auction, so long as the FCC puts the right price tag on their spectrum, but Padden is out to debunk what he says sees as a general myth that the FCC is forcing stations into the incentive auctions, according to notes for his planned presentation, which were supplied to B&C.

Padden says, for one thing, the auction is not a "bad thing" that broadcasters need to be forced into. "[T]he auction will be a golden opportunity for a limited number of TV stations to sell their channels for prices that reflect the much higher value that spectrum commands in the wireless industry," he says.

To buttress that, Padden cites a 2010 FCC spectrum analysis, which pointed to a "ten-fold disparity in economic value between spectrum used for mobile broadband and spectrum used for [over the air] TV broadcasting."

"So, saying that the FCC is trying to force broadcasters into this auction makes as much sense as saying that the FCC is trying to force people to accept free gift certificates to Tiffany’s," Padden says.

He says that even if broadcasters don't want to get out of the business, they still should want to get into the auction. "If you are lucky enough to sell a channel for 10 or even five times its value," he says, "you could take the proceeds and buy five or 10 stations to replace it."

As for the chairman's plan to make some JSAs attributable as ownership, Padden says that would be an ineffective, even stupid, thing for the FCC to do even if it wanted to force broadcasters into the auction. "JSAs exist almost exclusively in small and medium size markets," he says. "By contrast, the FCC will be buying spectrum almost exclusively in very large markets."

The FCC has said it is looking mostly at the top 30 or so markets. Beyond that, there will generally be enough unused spectrum so the commission will not have to get broadcasters to give it up, or in Padden's view, will not be giving those broadcasters a Tiffany's certificate.

"There will be very little overlap between JSA markets and spectrum buying markets," Padden says.

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.