By: David Oxenford,
Wilkinson Barker Knauer LLP
On August 12, the FCC announced the end of Auction 109, which offered for sale construction permits for 139 new stations – 4 AM stations in the St. Louis area whose licenses were surrendered by the prior licensee, and 135 new FM channels. 97 of the channels were sold, but 42, including all of the AM stations, went unsold in the auction. The full auction results can be seen on the FCC’s auction site here. The FCC will raise $12,344,110 from the auction – though over $9,000,000 of that is to be paid for two channels – over $6 million for a Sacramento FM and over $3 million for an FM to be licensed to a community just north of the Dallas metro.
The 42 channels that were unsold range from channels allotted to small communities in states like Wyoming or Alaska that were predicted to serve very few people, thus having opening bids as low as $750 that no one was willing to meet, to channels in somewhat bigger communities including channels in New York state and Colorado that had opening bids of $75,000, indicating that they would serve a substantial number of people, but the prices were apparently deemed too high to justify for companies looking for a business return. The 4 St. Louis area AM stations, which each had opening bids of $50,000, appear to be in that same category. This lack of interest may also say something about the FCC’s local radio ownership rules.
Many of the unsold channels are in communities where there are already local broadcasters. In some cases, I have been told that parties would have been interested in bidding on channels that went unsold but, because of the FCC’s ownership limitations, they were precluded from owning those stations. So instead of providing new service to the public, these channels will lie fallow providing service to no one. Comments on whether changes should be made to the FCC’s radio ownership rules are due to be filed at the FCC on September 2, 2021, and the results of this auction may well be instructive on the issues that the FCC will be considering. In comments filed in 2019, parties talked about stations in their smaller radio markets that are essentially nothing but a transmitter and a computer – providing no real local service – when local owners who do cover the issues of importance to local communities are precluded from using these channels to provide new services, as the ownership rules do not permit such ownership. See this article about FCC Commissioner Carr’s visit to one such station.
The radio industry has significantly changed since the 1996 Telecommunications Act which set the current radio ownership limits. We have written before about competition from digital media giants that are real competitors for local radio both for audience and advertising revenue (see, for instance, our articles here and here). No longer is owning a local radio station the dream of every amateur DJ or kid with an interest in electronics – many of those dreams are now fulfilled by digital channels. But there are still broadcasters who want to serve local communities, and as recent Congressional activity has suggested (see our articles here and here), a recognized need for such local services. Perhaps the result of this auction and the other comments filed on September 2 will inform the Commission on the realities of the current audio marketplace – realities that can impact their assessment of whether the current radio ownership limitations remain in the public interest.
David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).
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