Channel Sharing Station Deal Could Go Before Full FCC
An FCC public notice singling out a proposed sale between two channel sharing stations indicates the commission sees such transactions as different from other station deals, and may mean the transaction is headed for a full commission vote, attorneys told us. The PN designated Meruelo Television’s proposed buy of Hero Licensco’s KBEH Oxnard, California, as permit but disclose docket for ex parte purposes. KBEH sold its spectrum in the incentive auction and reached a channel sharing agreement to be hosted by Meruelo’s KWHY-TV Los Angeles, and that makes it novel, the Media Bureau said in the PN in Tuesday's Daily Digest. “This application is the first to propose the sale of a winning relinquishment bidder in conjunction with the implementation of a Channel Sharing Agreement.”
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Some attorneys believe the FCC may be disinclined toward transactions involving “zombie” stations -- those that have sold their spectrum in the auction but are still operating through channel sharing. Others said they see the PN as merely due care for a unique situation. Several said more such deals are in the pipeline. Fletcher Heald's Paul Feldman, who represents seller Hero in the deal, said the bureau’s singling out of this sale was unexpected. “This action surprised me given the commission’s stated goals of moving the broadcast transition forward quickly.” Petitions to deny are due June 2. The FCC didn’t comment.
“No one at the FCC has told me that they are opposed to the transferability” of channel sharing stations, said broadcast auction consultant Preston Padden. A vocal supporter of channel sharing rules in the leadup to the auction, Padden called sharing stations “nomadic licenses.” The issue with the KWHY/KBEH deal is that it “will be an issue of ‘first impression’” and should be approved by the full FCC, Padden said. At no time did auction rulemakings “even hint” that licenses taking advantage of the sharing rules wouldn’t be “transferable,” Padden said. “Mergers, estate planning and myriad other factors require that they be transferable -- just like any other license.”
Some lawyers speculated the commission may be concerned about the must-carry implications of such deals. The effects on must carry of post-auction channel sharing were a particular concern of the cable industry when the sharing rules were being created (see 1703140062). KBEH and KWHY are must-carry stations, but the deal wouldn’t create any new such obligation, since must-carry stations that channel share keep their must-carry rights, said broadcast attorney Jack Goodman. Though the deal would mean Meruelo would be operating two must-carry stations, several large groups, such as NBC, have combined what were duopolies into single-station channel sharing agreements; commonly owned channel sharing partners already exist.
“The whole idea of the incentive auction was that a license and its spectrum are separate,” Goodman said. Channel sharing rules don’t and shouldn’t limit the owner of a license from selling it, lawyers said. The flexibility of channel sharing was a major inducement for broadcasters to participate in the auction, Padden said. Ninety-two percent “(133 of 145) of all Stations that exited the auction without spectrum are planning to channel share,” he emailed. “Without the authorization of Nomadic Licenses the auction would not have gotten off the ground.”