auction-block-150x140Earlier this week, the FCC opened the filing window for the Reverse Auction, setting the clock ticking for broadcasters considering whether and how to participate in the Incentive Auction.  Broadcasters have until 6:00 p.m. EST on January 12, 2016 to complete the Form 177 application.  Just as importantly, broadcasters have until the application deadline to complete any business discussions with other broadcasters before the “quiet period” kicks in.

If you have not done so already, you should begin collecting the information needed to complete Form 177.  Although commercial television stations recently completed their biennial ownership reports, the information sought on Form 177 differs in three key ways: (1) the information should be current as of January 12, 2016 (not October 1, 2015, as with the biennial reports); (2) a licensee must report any party with a 10% or greater voting or equity interest in the licensee, without regard for whether the party has been insulated pursuant to the FCC’s media ownership rules; and (3) a licensee does not need to report its officers and directors unless they are otherwise reportable (i.e., because they hold a 10% or greater voting or equity interest in the licensee or are a “real party in interest” controlling the licensee).

For stations interested in channel sharing, time is of the essence.  The “sharee station” (the station bidding to relinquish its spectrum to share with another station) must upload the executed, unredacted channel sharing agreement(s) with its application to take advantage of the exception to the FCC’s anti-collusion rules.  Otherwise, the parties will not be permitted to continue talking about “bids or bidding strategies,” which likely includes finalizing their agreement, after the application deadline.

What should broadcasters do who still are working on their channel sharing agreements?  First, try to finish your business discussions as soon as possible.  A channel sharing agreement is a complex document that must plan for a number of contingencies, so it is important to allow sufficient time for drafting and negotiations.  Given the length of these agreements and the number of agreements being negotiated, it is unrealistic to wait until January 1 to send the agreement to your attorney and expect to have a finalized deal by the application deadline.  Second, complete your Form 177 application(s) concurrent with your negotiations.  It is very easy to amend a Reverse Auction application to add a channel sharing agreement, so you are better off having the application on file early.  Third, if all else fails: simplify.  Under the FCC’s rules, a channel sharing agreement is only required to have certain key provisions: (1) defining each licensee’s rights and responsibilities; (2) affirming compliance with the auction and channel sharing rules; and (3) requiring that each licensee will retain sufficient spectrum usage rights to provide at least one Standard Definition channel.  As long as an agreement has these provisions and is a binding, enforceable agreement, the parties can continue to negotiate terms collateral to the agreement after the application deadline (subject to applicable antitrust laws and any required internal firewalls).

Finally, make sure you keep your attorney apprised of your plans well in advance of the application deadline.  With more than 1800 stations eligible to participate in the Reverse Auction, resources will be taxed as the deadline approaches.  Communicating early and often will help ensure that everyone receives the counsel they need prior to the application deadline.

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