You got to know when to hold ’em, know when to fold ’em, know when to walk away and know when to run.
Kenny Rogers isn’t exactly public radio fare, but a handful of station managers might want to take those lines from “The Gambler” to heart. At least half a dozen broadcasters hope to land new frequencies in a rare FCC auction that starts Nov. 3 [2004].
Knowing they’ll face deep-pocketed religious and commercial broadcasters bidding for the same frequencies, they’re visiting banks, consulting with their boards and honing strategies to beat the odds.
The auction pool includes 290 non-reserved FM frequencies in 37 states, mostly in small towns. (Ever heard of Haiku, Hawaii; Dinosaur, Colo.; or Cannon Ball, N.D.?) The channels’ starting bids, set by the FCC, range from $1,500 to $200,000 and bidding could run up sale prices into the millions.
Noncommercial stations in the running include WUMB in Boston, angling to improve its coverage of Cape Cod with a signal in Brewster, Mass.; and Minnesota Public Radio, which could take its news or classical service to Lanesboro, Minn., if successful.
Radio Bilingue, the Spanish-language broadcaster based in Fresno, Calif., initially filed for nine channels in Texas and five other states. It’s not clear how many it will ultimately pursue—Radio Bilingue executives did not return calls seeking comment.
Nevada Public Radio in Las Vegas put in for 14 channels in Utah, Arizona, California and its home state but later narrowed its ambitions to two frequencies—one in the southern Utah town of Hurricane and the other in Elko, Nev.
“It’s part of our long-range planning to expand service to areas that are unserved or underserved,” says Lamar Marchese, Nevada Public Radio’s g.m.
Booted out—then let back in
Noncoms have never participated in such an auction. The FCC let them participate under controversial rules issued in April 2003. The commission had deliberated for three years how it would referee spectrum battles between commercial and noncommercial broadcasters.
Rules unveiled in 2000 that proposed auctions drew a lawsuit from pubcasters, and a federal appeals court struck down that plan in 2001. A year later, the FCC considered barring noncoms entirely from applying for nonreserved frequencies, but to the relief of pubcasters it stopped short of that. The commission did, however, return to using auctions.
The FCC threw a bone to noncoms by allowing them to make cases for reserving some of the FM channels initially slated for sale in the upcoming auction. Noncoms filed to reserve 65 channels, which were removed from the auction pool.
In the first step toward November’s auction, broadcasters filed applications expressing interest in their desired frequencies. Some filed for every channel up for auction just to get a foot in the door.
The procedure tripped up some noncoms who found themselves ejected from the auction when they declared their noncommercial status. The FCC bars declared noncoms from bidding but welcomes those who leave the noncommercial box unchecked.
A group of noncoms, most of them religious, complained to the FCC that instructions for completing the form confused them. The agency conceded Sept. 22 that its instructions were ambiguous and let them back in.
Capital Public Radio in Sacramento, Calif., one of the barred broadcasters, decided to drop out of the auction even after the FCC’s change of heart. Michael Lazar, CPR’s g.m., said his station lacked time to correct its application but also said the FCC was forcing noncoms “to intentionally lie, and that’s just wrong.”
Some broadcasters have seen it that way, says communications attorney John Crigler, but “I don’t think the commission intends it to be a moral question,” he says.
A game of educated guesses
To move to the auction’s next stage, broadcasters needed to submit minimum bids to the FCC by Sept. 24. It’s expected that most are now pursuing fewer frequencies. The FCC will soon release a revised list of frequencies and the broadcasters vying for them, possibly this week.
Money and geography have guided stations as they determine which frequencies to chase in earnest. Nevada Public Radio’s minimum bids for its 14 frequencies totaled $75,000. (The FCC refunds the money if the station ultimately loses the auction.)
WAMC in Albany, N.Y., at first filed for six frequencies. But, as often happens, engineering studies showed that some locations were inhospitable to new FM antennas. In other cases, piggybacking on an existing tower can be difficult.
One site fell within a park in the Adirondacks, says Alan Chartock, WAMC’s executive director. “Not only do you have to find the right place to put [the station] in an obscure wooded area,” he says, “you also have to convince the Adirondack park agency, which is hellacious on these matters, that something non-virgin should go into their territory.”
WAMC opted not to bid on any of the stations for which it filed.
Broadcasters who proceeded to the auction have only a vague idea of their chances of winning, in part due to the complexity of the bidding process.
Bidding will continue in several rounds over several days or weeks until a round passes in which no one bids. Participants can bid on multiple frequencies at the same time, and the FCC leaves all frequencies in play until all bidding is over. New bids on a channel can come in at any time and become the new high bid.
In the last FM auction, a 1999 sale open only to commercial broadcasters, stations sold for as high as $5.5 million, says Marc Hand, managing director of Public Radio Capital. Hand says commercial broadcasters are often willing to pay “significantly higher than market value” if they have strategic reasons for wanting to reach a certain market.
Torey Malatia, g.m. of Chicago Public Radio, is eyeing a frequency in St. Anne, Ill. “I doubt this frequency will end up being sold for $17 million,” he says jokingly. “But on the other hand, the prices that FMs have been going for everywhere in the country seem irrational, so I could be wrong about how much it’s valued.”
Stations have turned to Hand and Public Radio Capital for guidance in navigating the process. Hand wouldn’t name his clients but says he’s working with eight to 10 pubcasters bidding on more than 20 channels. PRC is helping them complete forms, estimate final sale prices and assess what they can afford to spend.
Come auction time, PRC staffers in Denver will bid on behalf of their clients, who can monitor their progress online.
Hand says pubcasters have the advantage of lower construction and operating costs than the many out-of-town bidders because their facilities are near the communities they intend to serve. But they may have a disadvantage against commercial broadcasters, who get discounts if they own fewer than four stations.
Winning is just the beginning. “You still have to build the damn thing,” Marchese says. If successful, his station must work out a business plan, balancing long-term expenses against the potential for underwriting and membership revenue.
“We have our work cut out for us,” he says.
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Pubradio initially finds interest in pursuing these FM channels Here are some of the public radio broadcasters bidding in November’s FCC auction, the locations of the frequencies they initially expressed interest in buying, and the minimum bids. Some may already have narrowed their choices: Minnesota Public Radio Nevada Public Radio New Hampshire Public Radio Radio Bilingue Vermont Public Radio WBEZ WUMB |
Web page posted Oct. 19, 2004
Copyright 2004 by Current Publishing Committee