Channel Sharing Draft Order Will Allow Sharing Deals Before, After Auction
An FCC draft order on reconsideration and accompanying Further NPRM on channel sharing could make the prospect of combining channel sharing with selling spectrum in the incentive auction slightly more attractive for broadcasters, said industry officials and an eighth-floor official. As promised by FCC Chairman Tom Wheeler in a speech at the NAB Show (see 1504150037), the draft order will roll back portions of the incentive auction order that required permanent channel sharing agreements to be set up before the incentive auction, an industry official familiar with the proceedings and the eighth-floor official told us.
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The channel sharing draft order will allow sharing agreements to be conducted both before the auction and in a window after the auction, and for set terms of years, the eighth-floor official told us. The May decision entered sharing arrangements into the FCC’s Television Table of Allotments, with the result that the host station permanently gave up its shared spectrum, industry officials told us. Broadcasters would be very unlikely to agree to a permanent sharing arrangement that had to be arrived at before they even knew what sort of money they were likely to receive in the auction, a broadcast industry official told us. By making the deal requirements more flexible, the draft order would make sharing agreements more attractive, the industry officials said. The draft order is not seen as controversial, and is likely to be approved by all commissioners, industry and FCC officials told us.
The draft order on reconsideration is a response to a recon petition filed against the incentive auction report and order by the Expanding Opportunities for Broadcasters Coalition. The petition came after members of the group tried to negotiate sharing agreements under the rules outlined in the May decision and were unable to do so, said EOBC Executive Director Preston Padden. “The Commission appears to have inadvertently erected barriers that could drive many broadcasters away from the auction at a time when the FCC needs to be enlarging -- not reducing -- the pool of interested broadcasters,” the recon petition said. According to FCC and industry officials, the channel sharing draft order closely follows the requests made in the EOBC sharing recon petition.
The FNPRM being circulated with the draft recon order seeks comment on how the FCC should handle situations where one sharing partner stops broadcasting, FCC officials told us. The incentive auction order had mandated that in some circumstances the shared spectrum would revert to the FCC, and the FCC could end up assigning a new sharing partner to a host station without the host’s consent, EOBC said. Though the recon order addresses some aspects of what happens when sharing partners cease broadcasting, other aspects of that situation are put out for comment in the FNPRM, FCC officials told us.
Despite the increased flexibility offered by the draft order, most channel sharing deals related to the auction will likely take place beforehand, said Drinker Biddle broadcast attorney Howard Liberman. Companies are unlikely to go into the auction with a plan to share channels without knowing who their sharing partner is, even with more flexibility, he said. However, Liberman agreed with EOBC that the changes in the draft order were likely to make channel sharing a more viable option for broadcasters