The end of the incentive auction is expected to bring a flurry of broadcast dealmaking, from licensees that didn't get what they wanted from the auction, pent-up demand, and the likelihood of ownership deregulation, said broadcast attorneys, analysts, broadcasters and brokers in interviews. “A confluence of events” will drive the coming rush of broadcast M&A, said Patrick Communications broadcast broker Gregory Guy Friday. When that dealmaking occurs likely will depend on when the auction and the accompanying anti-collusion quiet period end, said Wiley Rein broadcast attorney Ari Meltzer. The quiet period could potentially be partially or fully relaxed before the auction is complete, attorneys and FCC officials suggested (see 1701190041).
With the final stage rule satisfied and the incentive auction's end in sight, broadcasters need to start getting ready for the repacking, and a relaxation of anti-collusion rules and accompanying quiet period would be a big help, said broadcasters and their lawyers in interviews Thursday. Though the FCC already may be calculating optimized new channel assignments and letters announcing them are expected to go out in weeks, the assignment amounts to “an empty suggestion if you can't talk to anyone,” said broadcast attorney Jack Goodman. Broadcasters also are waiting on the FCC to issue its transition plan, which went through the notice and comment process in the fall (see 1610170063).
Commissioners are seen as likely to approve an industry-supported FCC draft item at their Jan. 31 meeting, the first under a President Donald Trump, that would eliminate the requirement that broadcasters keep hard copy correspondence files accessible to the public in their stations, said industry and agency officials. The action is opposed by public interest groups Free Press and the National Hispanic Media Coalition (NHMC). They said (see 1611180060) eliminating the required hard copy will prevent segments of the public that don't have broadband access from seeing the files of viewer correspondence with broadcasters. Commissioner Mike O’Rielly and broadcasters said eliminating the correspondence file will remove the last FCC-mandated requirement that broadcasters allow the public into their stations, allowing them increased security. The draft item would also eliminate a similar requirement for cable headend information.
The reverse auction portion of Stage 4 of the FCC incentive auction concluded Friday, as expected (see 1701100060), at a cost of $10.05 billion to clear 84 MHz, said the agency's Public Reporting System. That's a more precipitous drop from Stage 3's approximately $40 billion clearing costs than many analysts had predicted, they told us, and could indicate the auction may reach its final stage during the upcoming forward auction.With the cost of the repacking reimbursement fund and the auction added, the forward auction will need to raise a total of $12,011,676,822, according to the Incentive Auction Task Force. "I would expect that there will be enough interest among wireless bidders to close the incentive auction," said BIA/Kelsey Chief Economist Mark Fratrik, saying he was only “cautiously” optimistic. “If there is a God, Stage 4 closes,” said Preston Padden, an auction consultant to broadcasters.
It will take roughly two years, until Q4 2019, for the FCC's new home at Sentinel Square III at 45 L St. NE to be constructed, an official connected with the project told us. Former FCC Chairman Reed Hundt keeps a swatch of the carpet that lines the agency's current Portals headquarters in his office as a memento of his involvement in that building's interior design, and it could be an interim chair or the commission's next permanent chair who will oversee the design of the work spaces in the new building.
The FCC approved Nexstar’s request for a waiver allowing it to buy Media General for $4.6 billion despite the ongoing incentive auction, and approved the deal, said an order released Wednesday by the Media Bureau and Wireless Bureau. The moves were expected (see 1701030054). The Media Bureau and Wireless Bureau granted the waiver allowing the deal to proceed because of the unusual circumstances that Media General was still enmeshed in negotiations with unsuccessful prospective buyer Meredith when it reached the deal with Nexstar, a situation that caused the deal to be filed too late to be approved before the auction. Nexstar certified it will be bound by Media General’s decisions over its stations in the incentive auction, the order said. Stocks of both companies rose Wednesday.
Restoring the UHF discount is expected to be an early target of the next iteration of the FCC, several broadcast industry officials and an FCC official told us. Reversing the order doing away with it is seen as relatively simple and having wide Republican support, and as a priority for sitting Republican Commissioners Ajit Pai and Mike O’Rielly, the officials said. Though the item isn’t seen as likely to be taken up this month, it could be soon after, said numerous industry officials. Reconsideration petitions against the item already have been filed, and comments were due Tuesday. The recon proceeding will wrap up Jan. 23, a week before commissioners' first meeting under the new administration.
The FCC Media Bureau admonishment Friday evening of Scripps Media and several other broadcasters for violating political advertising disclosure rules is likely to lead to other broadcasters taking care to more closely follow the rules, though no fines were levied, said broadcast and public interest lawyers in interviews. The admonishment orders included clarifications of bureau expectations for how forms disclosing the sources of funding for political ads should be filled out. Georgetown Law Institute for Public Representation Senior Counselor Andrew Schwartzman said that would make it harder for stations to use “evasive legal arguments” to avoid following the rules going forward.
Broadcasters and public interest groups are fighting over whether the upcoming transition at the FCC and the recent holiday season are good enough reasons to extend comment deadlines on petitions to reconsider broadcast ownership rules, in several filings posted in docket 14-50 Friday. “Even in the unprecedented circumstance that every FCC staff person who has previously worked on broadcast ownership reviews accepts an assignment to a different Bureau . . . there is absolutely no reason that FCC staff newly responsible for broadcast ownership would not benefit from a fully briefed docket,” said NAB in opposition to the one-month extension requested by Prometheus Radio Project and Media Mobilizing Project. Nexstar also filed against the public interest request. The opposition filings are “ungracious posturing,” said Georgetown Law Institute for Public Representation Senior Counselor Andrew Schwartzman, who represents the public interest groups.
The FCC incentive auction Public Reporting System and its Electronic Comment Filing System experienced outages Wednesday that prevented users from accessing the auction bidding system or reading documents filed with the commission. Though ECFS' difficulties persisted into late afternoon according to several users of the system, the problems with PRS were cleared up less than 15 minutes after the Incentive Auction Task Force announced them, according to time-stamped announcements on the PRS system that have since been removed. The PRS announcement blamed the issue on internet connectivity problems. An FCC spokesman told us the problem affected about 80 documents, and was resolved by Wednesday afternoon, though it could take more time to provide access to the documents. The FCC said it is exploring the cause of the internet outage with its vendors. The spokesman said the issues are believed to be unrelated.