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TV stations feel 'squeezed' by airwave auction

Saturday - 4/13/2013, 2:10pm  ET

RYAN NAKASHIMA
AP Business Writer

LAS VEGAS (AP) -- As the federal government tries to encourage companies like AT&T and Verizon to create bigger, faster mobile networks, TV broadcasters are feeling like the farmers of yesteryear who were asked to sell their land to make way for the nation's highways.

Broadcasters own a valuable swath of invisible real estate on the airwaves and just like farmers, their livelihoods depend on cultivating that fertile space. But the FCC believes clearing new lanes of over-the-air bandwidth will ease mobile network congestion, which leads to dropped calls, stuttering video and hanging emails.

Broadcasters say they are already feeling the pinch after giving up precious airwaves in the transition to digital TV in 2009. They are worried that their businesses may be in jeopardy as the government embarks on an unprecedented auction. They fret they'll be short-changed in a complex process that is expected to rake billions of dollars into federal coffers.

"We've already been squeezed once," said Gordon Smith, president of the National Association of Broadcasters, on the sidelines of the industry's annual gathering, NAB Show, which wrapped up Thursday. "We're being squeezed twice now. There's no more juice in that squeeze."

Dozens of stations nationwide are expected to sell voluntarily -- and go out of business -- to make way for these new mobile data highways. The process relies on a complicated "reverse auction" that involves multiple steps, each fraught with the potential for confusion.

The government wants to clear 500 megaHertz of spectrum by 2020, with 120 mHz coming from TV stations. That's the equivalent of 20 TV stations in each market across the country. Not every market has that many TV stations, so the FCC will likely clear the path it needs merely by shuffling broadcasters around.

In February, the FCC outlined how its plan would work. Starting in late 2014, TV stations will submit bids detailing how much they would accept for either going off the air, moving to a lower channel number, or sharing a channel with another station.

Mobile phone carriers will then submit bids for how much they would pay to use potential new airwaves. The FCC hopes to match buyers to sellers, and "repack" the airwaves as much as possible to give wireless companies the use of singular bands across the country.

The repacking could result in some TV stations being forced to relocate their broadcast towers and change channel numbers on the dial. As the auction gets closer, TV station owners' anxiety is growing.

"You could get bamboozled here," said Mark Fehlig, an industry consultant in Lawrenceville, Ga.

Station owners don't know which stations might sell -- the process will remain anonymous until the last minute -- and sellers don't know if their bids will be accepted and for how much. Moving TV stations along the U.S. borders will require cooperation from Canada and Mexico so any changes don't interfere with signals in those countries.

Meredith Corp., which owns 13 TV stations, is concerned about its CBS affiliate WNEM in Flint, Mich. The FCC's repacking could have an effect on its signal in its own market and in nearby Detroit. Meredith also has to consider that it competes with signals coming from the Canadian city of Sarnia, Ontario, just 70 miles east. Most people receive local TV stations feeds through pay TV providers like cable and satellite companies, but if any homes that rely on antennas lose service, it could result in some angry phone calls.

"There's so much uncertainty about how that might work," said Paul Karpowicz, president of Meredith's local media group, who added that the company has no intention of selling out. "Our issue is simply the collateral damage as it relates to repacking."

Fears aside, the entire process could result in a big windfall for the U.S. government.

In the nationwide transition from analog to digital over-the-air TV signals in 2009, the government created new space on the airwaves by packing broadcasters closer together, and it raised $20 billion by selling off about 50 mHz to wireless carriers. The goal of this auction, to sell more than double that, could raise even more.

The government expects to profit handsomely from the difference between what wireless carriers are willing to pay and what struggling TV stations would accept for closing up shop.

Some industry players believe the government is meddling in what would better be left to the private market.

Preston Padden, executive director of a group of interested TV station sellers called the Expanding Opportunities for Broadcasters Coalition, is worried that the government's profit motive could result in the sellers receiving less money than they could by negotiating the sale of their broadcast licenses on their own.

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