Now that television stations can openly discuss the results of their participation in the Incentive Auction, it is an appropriate time for all television stations to assess their market position and think about what comes next. In this space, we will discuss how stations with various auction outcomes should approach their post-auction transaction. Today, we begin with stations that submitted a successful bid to relinquish their spectrum.
The first two questions on the minds of many broadcasters that submitted winning bids are: (1) when will I receive my money; and (2) how much should I publicly say about my auction results?
Winning reverse auction bidders will receive their proceeds from the FCC only after the Commission issues licenses to winning forward auction bidders. The earliest that the FCC can issue those licenses is approximately one month (and likely 2-3 months) after it releases the Closing and Reassignment Public Notice. We estimate that the FCC will start releasing payments to broadcasters in late Q2 or early Q3 2017, although those dates are subject to change depending on the length of the forward auction. If the FCC does not process all of the forward auction licenses at one time, it will make payments to broadcasters on a rolling basis. The FCC will issue a public notice explaining how it will distribute auction proceeds and the steps each winning station must take to receive those proceeds. The person responsible for managing the receipt of auction proceeds must create a username and password in the new CORES. That website is found here: https://apps.fcc.gov/cores/userLogin.do.
With regard to what to say and to whom about a station’s Incentive Auction results, that is going to depend on the individual circumstances of each broadcaster. Although stations are now permitted to publicly discuss the results of their Incentive Auction participation, that does not mean they are under an obligation to do so. The FCC eventually will release information about winning reverse auction bids, including the type of bid and the price at which each station was frozen; however, the Commission is prohibited from releasing this information until after both the clock phase and the assignment phase of the forward auction are complete, which will not be for at least another 1-2 months. In the meantime, some broadcasters may choose to keep their results to themselves. Stations with reporting obligations to investors will need to determine whether the end of the quiet period triggers a reporting obligation. It is worth noting that the FCC’s staff is of the view that the results of the auction are not official until it releases the Closing and Reassignment Public Notice.
A station that submitted a successful “Go Off-Air” bid must cease operations within 3 months of receiving payment if did not indicate an intent to channel share on Form 177, or within 6 months of receiving payment (with up to two 3 month extensions) if it did indicate an intent to channel share.
Stations that want to go off the air before receiving payments should consult with their attorneys to discuss the logistics. As a minimum, before ceasing operations, stations must provide both on-air notice to viewers and written notice to MVPDs. Stations ceasing operations should also develop a plan to address programming agreements, tower leases, personnel management, and other issues that may arise from winding down operations.
Wiley Rein is prepared to assist television stations with all of their post-auction needs. You can view a list of our post-auction services here.