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Forward Auction Bidding to Start Wednesday Morning - TvTechnology

Forward Auction Bidding to Start Wednesday Morning

Bidding to commence at 10 a.m. Eastern
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WASHINGTON—The Federal Communications Commission today confirmed that the fourth-stage forward auction will commence tomorrow, Wednesday, Jan. 18 at 10 a.m. Eastern. The fourth-stage reverse auction concluded Friday, Jan. 13, with broadcasters asking $10 billion for 84 MHz of TV spectrum from Ch.38 through Ch. 52 51.

Round one of the fourth stage forward auction will go from 10 a.m to noon, Eastern, with round two scheduled for 2 to 4 p.m. Eastern. The Stage 2 and 3 forward auctions both ended after just a single round of bidding, both of which failed to meet broadcasters’ aggregate asking price.

Auction observers, including Wells Fargo Senior Analyst Marci Ryvicker and Strategy& Principal Dan Hays, have noted that the auction is most likely to close at the 84 MHz clearing target for a couple of reasons: wireless providers are bidding on a higher proportion of the cleared spectrum than in previous stages, when more frequencies were devoted to guard bands, and when more TV stations had to be cleared.

Thus, broadcaster ask in the Stage 4 reverse auction was $10 billion compared to $40.3 billion in Stage 3, when the clearing target was 108 MHz, with 80 MHz leftover for wireless bidders. Wireless providers will be bidding on 70 MHz tomorrow.

Here’s Ryvicker’s Jan. 13 note: “We assume Stage 4 will be the end of this auction. Recall there were two parts of the final stage rule that had to be satisfied, the first being a reserve price' of $1.25/MHzPop for the top 40 markets, which equates to $15.9 billion of forward auction proceeds; and the second being the cost components, which are approximately $12 billion to $10 billion to the broadcasters plus $1.75 billion to cover the repack of the remaining stations, plus $225 million to cover auction-related costs. Using Stage 3’s forward auction bids, we calculate Stage 4 will generate a minimum of $17 billion—meaning it will satisfy both components of the final stage rule and the auction can conclude when the forward auction participants are done bidding.”

Hays also said that “at just over $10 billion we are confident that the auction is well within striking range of the budgets of mobile network operators. It could well close as early as next week...”

For more coverage of this issue, and the upcoming repack, see our TV Technologyspectrum auction silo.