Auction of Two TV Stations May Draw Mild Interest
Broadcaster interest in buying construction permits for two DTV stations that the FCC allocated to the Northeast (CD March 18 p5) may be limited by the markets’ small size and the channels’ location in the VHF band, which has had problems with digital signal propagation, engineers said. Auction No. 90 for channel 4 in Atlantic City, N.J., and channel 5 for Seaford, Del., will begin Feb. 15, the commission said. The Wireless and Media bureaus proposed minimum bids of $200,000 each for the construction permits, said a public notice issued Wednesday afternoon. Comments on bidding procedures are due Sept. 30, replies Oct. 15.
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"If commenters believe that these minimum opening bid amounts will result in unsold construction permits, are not reasonable amounts, or should instead operate as reserve prices, they should explain why this is so and comment on the desirability of an alternative approach,” said the notice, http://xrl.us/bhypgw. “In establishing the minimum opening bid amounts, the Bureaus particularly seek comment on factors that could reasonably have an impact on valuation of the broadcast spectrum, including the type of service and class of facility offered, market size, population covered by the proposed VHF commercial television station and any other relevant factors.” The Media Bureau recently amended the DTV table of allotments to add the channels, so Delaware and New Jersey will each have the commercial VHF channel that Section 331 of the Communications Act says a state should have if technically possible, the notice said. Only Nave Broadcasting said it will bid for either market, on Atlantic City (CD Feb 4 p12).
Auctions such as No. 90 are rare, industry and commission officials said. Of almost 80 auctions the past 16 years, only two, in 2002 and 2006, allowed participation by anyone, as this one will, said lawyer Raymond Quianzon of Fletcher Heald, who specializes in auctions. In the 2006 auction, a VHF construction permit went for $1.37 million, 16 times the first bid, he said. “The majority of the permits in Auction 64 had winning bids which were between 8 and 12 times the opening bids.” The permit for channel 3 in Apalachicola, Fla., went to Word of God Fellowship, commission data show.
The ability of the future broadcasters in Atlantic City and Seaford to get FCC-required carriage on nearby cable systems has value, though it can’t be estimated without knowing what the must-carry area will be, said engineers that consult for TV stations. “That must-carry is worth a lot, just by itself,” said Charles Jackson of Jackson Telecom Consulting. “The disadvantages for the low VHF are sort of wiped out” by that, he added. “It seems like several people would bid, and once you get multiple bidders, it seems like it would be worth more than $200,000,” Jackson said. “There are a lot of smaller places in the United States that have TV stations. There must be a pony in there somewhere.” A new Atlantic City station could get some “weak coverage” in Philadelphia and suburban Camden, N.J., if its transmitter is west of the city of license, judging from KYW Philadelphia’s reach to the Jersey shore, he said.
"It’s doubtful they will get into Philadelphia” with “a competitive signal,” one that’s of good quality in the market, said President Donald Everist of Cohen Dippell. Philadelphia is ranked No. 4 by Nielsen. Seaford and Atlantic City aren’t Nielsen designated market areas by themselves. Salisbury, Md., near Seaford, is ranked 144. “Experience for the past 16 months has shown that in most instances low-VHF DTVs have not replicated their previous low-band analog service” areas, Everist said. “There is not yet anything on the horizon that fully satisfies or compensates for the shortfall,” he said, and “anyone looking at the facility for auction purposes should keep this in mind.”