C-Band Relocation Lump Sum Option Could Be Popular for Many Broadcasters

Small broadcasters could be particularly attracted by the lump sum funds and often might not have big expenses for clearing the lower C band, said Mark Johnson, founder of broadcast tech consultancy LinkUp Communications. He said taking the lump sum is a little easier for small radio operators because the biggest issue most will face is installing filters, as long as their dishes are in decent shape.

The lump sum decision carries risks of unforeseen expenses tied to dish condition, Johnson said. Broadcasters with newer dishes or that are located in drier climates "will come out ahead," but many operators in the rest of the country have older dishes where bolts have rusted solid, meaning more expensive C-band clearing jobs. The $8,948 lump sum many broadcasters will claim was based on an average estimate, meaning many will face higher costs, Johnson said. "Everyone can't assume they're going to be lower," he said.

Routes that various earth station operators take will depend partly on broadcasters' size and resources, said Cindy Hutter Cavell of broadcast consultancy Cavell Mertz. Large MVPDs will lean toward doing the transition and repacking work themselves and submitting their costs to the clearinghouse for compensation, out of a reluctance to let a third party into their systems, she said.

It's less clear which way large broadcast groups will lean, though the safest route to take would be the same as big MVPDs, Cavell said. For small broadcasters, the lump sum option “is not a dangerous approach" if they're aware of the accompanying obligations and requirements that must be followed, she said.

The easiest route will be letting the satellite companies handle all the work, and broadcasters of different sizes will go that route if they don't want to worry about the hassle or installation issues, Cavell said.

The biggest factor in determining whether a broadcaster elects to request the reimbursement process or the lump sum is “a simple math equation,” said Gray Television Deputy General Counsel Robert Folliard. Gray will calculate the costs of moving facilities to fiber and upgrading or modifying equipment across its 90-plus markets, and if that number is more than the lump sum payment it would receive, it will choose reimbursement. If it’s less the company will take the lump sum, and might choose that as well if the numbers are close, he said.

A lump sum payment “avoids the extra entanglement” of dealing with the FCC and satellite companies in the reimbursement process, and gives broadcasters more control, he said, “We trust us more than we trust ‘not-us.’”

Picking the lump sum saves a broadcaster from the bookkeeping required for the cost process, said Cris Alexander, Crawford Broadcasting chief engineer. Alexander heard anecdotes from TV broadcasters of the FCC during the post-incentive auction repacking rejecting submitted expenses over small spreadsheet rounding errors, and the lump sum allows broadcasters to avoid that, he said. Also, the math works out for Crawford’s station WMUZ Taylor, Michigan, which has a simple setup, he said. WMUZ’s lump sum election shows a claim of $8,948. “There’s a convenience associated with the lump sum,” said Fletcher Heald broadcast attorney Peter Tannenwald. But broadcasters that have a more complicated arrangement or need complex changes to specific pieces of equipment might derive more benefit from the reimbursement process and having satellite companies perform some of the work. Ramar Communications General Manager Brad Moran said his company will better be able to cover the costs through the reimbursement process: “The lump sum wouldn’t be enough.”

The lump sum amount should be close to overing the costs of moving Desert Mountain Broadcasting's Montana earth station into the upper 200 MHz of the C band, said President Cameron Maxwell. It elected Friday (docket 20-205) for a lump sum. He said options other than lump sum might have made more sense if Desert Mountain hadn't moved and upgraded its earth station dish in recent years, so the C-band repacking work should largely involve filter installation.

Broadcast lawyer Paul Feldman of Fletcher Heald said clients are asking questions about such issues as the criteria to consider in making their decision. The lump sum amount "is very tempting" and many broadcasters and earth station operators will opt for that, though other costs could complicate that decision, he said.

The Sept. 14 deadline "is going to be challenging," Feldman said. He said a lot of decision-making won't happen until the deadline is much closer.

Intelsat emailed it's "trying to make the process as simple as possible for owners, whether they want us to manage their transition or want to opt out." That includes "an incredibly detailed Transition Plan" showing where programmers are moving, a joint agreement with SES to take responsibility for unclaimed incumbent sites "so no one is left behind and to coordinate our efforts for filtering at shared sites to minimize disruption," it said: "We are focused on ensuring the ecosystem is still functional after the clearing and owners have full transparency into our plans on this entire process." SES didn't comment.

Fiber won't be a realistic alternative to satellite-delivered C-band content for many small broadcasters, given their rural locations, Johnson said. "You're talking about stuff that's 18 miles up a mountain, or out in a cornfield in Kansas," he said. In small markets, even if fiber is nearby the fiber network operator often doesn't see business justification for doing a node nearby, he said.