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Incentive Auction Applications Due Tomorrow

WASHINGTON—The incentive auction application window closes tomorrow. Broadcasters who wish to participate must file a Form 177 with the Federal Communications Commission by 6 p.m. Eastern time Tuesday. While it’s one of the major deadlines in the incentive auction process, Washington, D.C. media attorney Scott Flick said it won’t determine final participation.

“While signing up channel-sharing agreements by Jan. 12 is a big deal, the number of Form 177 filings may be unknown, since they are confidential,” he said in an email exchange with TV Technology. “However, they are also not particularly helpful as an indicator of the likelihood of a successful auction. They do not commit a station to the auction, and can be withdrawn prior to March 29.”

Consequently, he said the only thing that can be revealed involves stations that did not file a Form 177, that will not participate in the auction, but may be participating in a channel-sharing arrangement.

There is one particularly significant aspect to tomorrow’s deadline, according to Dennis Wharton of the National Association of Broadcasters.

“The Tuesday deadline triggers the ‘quiet period’ for broadcasters under the commission’s rules—meaning that certain communications are now prohibited. Broadcasters will not be permitted to convey bids or bidding strategies of any applicant to other broadcasters or to wireless carriers participating in the forward auction. This quiet period will run until the FCC announces the final auction results.”

Flick further noted that stations filing a Form 177 can select all three participatory options: Going off the air, moving from a UHF to a high VHF, or to a low VHF. Each option incorporates a percentage of the opening price: full price for going off the air; 40 percent for going high V and 75 percent for going low V.

The pricing formula for the opening bidsis based on a maximum value of $900 million divided into 1 million units of interference-population volume, or a “$900 base clock price.” The $900 million is the top figure among opening base prices, applied only to WNJU, the Telemundo affiliate located in Linden, N.J., serving the New York market, and transmitting on Ch. 36, which will be within any clearing target of more than 84 MHz.

The clearing target and the associated band plan will be determined after March 29, 2016, the deadline for Form 177 modifications.

As for opening bid prices, the numbers are binding for participating stations that get offered those amounts, but the FCC is not bound to offer them. Also, of 2,022 auction-eligible TV stations, the FCC has determined it will not need around 324, including KVME-TV in Los Angeles, five stations in Phoenix, the No. 12 market. None of the eligible stations in No. 40 Las Vegas are needed, and just two of 25 in market No. 48, Albuquerque-Santa Fe, N.M.

“With regard to opening bids, they are just that, and in nearly all markets the bids will drop from there until too few stations step up to relinquish their spectrum for the then-current bid,” Flick said. “In a few key markets like New York and Philadelphia, the bids may well freeze early, but in less spectrum-congested markets, the ultimate bid will likely be a lot lower than the opening bid. Until a station has its bid accepted by the FCC, it is free to walk away from the auction at any point.

“In addition,” he said, “even where the FCC accepts a station’s bid to sell its spectrum, that station will need to wait to make sure that the forward auction is sufficiently successful in raising money to cover the reverse auction bids before it can start planning how to spend its proceeds. If the forward auction comes up short, then the FCC will need to reduce its spectrum clearing target and start the reverse auction over again.”

The extent of probable station participation is unknown. Several station groups—including Sinclair, Nexstar and Media General—have confirmed their interest, but the total number of the nearly 1,700 stations offered an opening bid price by the FCC has not emerged, even speculatively.

Flick said much remains unknown.

“There are a lot of moving parts, and the FCC’s auction plans continue to evolve as each day passes,” he said. “As a result, broadcasters are planning for as many scenarios as they can, because no one knows with any great certainty how the auction process will ultimately unfold. To paraphrase Rilke, this will be a year full of things that have never been.”