Media Bureau Holding Up Channel Sharing Deals, Say Broadcasters
The FCC is holding up transactions by treating a proposed sale between two channel sharing stations as new and novel, said the owners of 43 stations in joint comments filed Wednesday in docket 17-121. The docket concerns Meruelo Television’s proposed buy of Hero Licensco’s KBEH Oxnard, California (see 1705090067). KBEH sold its spectrum in the incentive auction and reached a channel sharing agreement to be hosted by Meruelo’s KWHY-TV Los Angeles. By putting that deal out for comments instead of approving it, the Media Bureau created uncertainty for similar transactions, the filing said.
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“Failing to process applications” of winning channel share bidders “in the normal course of business, the Media Bureau is disrupting the allocation of licenses through free market mechanisms,” said the filing from OTA, Latina Broadcasters, the WGBH Educational Foundation and others. The bureau should process the Meruelo KBEH application on delegated authority, and “clarify that licenses subject to successful channel sharing bids are freely assignable,” they said.
The holdup for deals involving sharing is bad because licensees have only six months after receiving their reverse auction payout to implement channel sharing deals, the filing said. Reverse auction payouts are expected in roughly a month, leaving a short time for transactions that include channel sharing to happen, especially if they're delayed by the bureau, said a broadcast attorney. A delay for such deals also could lead to holdups in the repacking, said broadcast consultant Preston Padden. “I don’t know anyone who wants to slow down the repacking.” If deals involving channel sharing aren’t processed quickly, those involved may choose to go dark instead, the joint filers warned. “Without the ability to assign their licenses, many licensees that submitted winning channel sharing bids might simply surrender their licenses.”
The filing and attorneys said deals between channel sharing stations aren’t new and novel. FCC rules say stations are allowed to channel share within six months of receiving their reverse auction payout, and licensees can sell their station and channel sharing agreement at any time after channel sharing, the joint filing said. Some FCC staff may see selling spectrum in the auction and then selling a license as “double dipping,” some attorneys suggested. The incentive auction did away with the idea that a license and its spectrum are linked, said broadcast lawyer Jack Goodman.
It’s unusual but not impossible the bureau would change its mind and approve the deal, attorneys said. Petitions to deny the transaction are due Friday, and attorneys said it's likely the commission would wait to see what comments come in. If the comments support the agreement and don’t uncover unexpected issues, the agency is more likely to allow this transaction and similar ones to proceed, said Covington & Burling broadcast lawyer Ann Bobeck. Broadcasters are “very interested” in the precedent the FCC establishes with the Meruelo/KBEH deal, Bobeck said. Meruelo, the Incentive Auction Task Force and bureau didn’t comment.