Broadband Plan: More speculation on the fate of LP, independent stations


It appears from our sources that the LP TV stations are pretty much going to be forced out into the cold by the proposed broadband plan.

Amongst what were formerly Class A stations with local programming and content, a  significant portion are Spanish-language. As you get to markets smaller than 100 (some say even markets 60 and smaller) many markets do not have full-powered Spanish-language stations, and the Spanish-speaking population is served by low-power stations.  While some obtain cable carriage, virtually none are on satellite – there is no obligation to carry them.

It’s odd that the Hispanic broadcasters are not being too vocal about this. So it appears there will be a fair amount of closeouts on the LP TV frontier as this whole thing progresses.

Now, some other points to be made on the broadband plan:

* Wireless spectrum is normally valued on the basis of at metric of Value/MHz/per-person. In the 2007 auction of 700 MHz spectrum (former TV channels 52-69) for wireless, prices varied as a function of market size, with the larger markets commanding higher prices than smaller markets.

* In the largest markets (more than 2,000,000 population), prices generally were in the range of $1.50 per-person/MHz.  In a few cases, large, contiguous frequency blocks sold for metrics as high as $4.00.

* In smaller markets (population around 250,000) overall pricing was about $0.75

* TV channels are 6-MHz wide.

*  Among current OTA TV channels, 32-51 are the highest frequencies (575-695 MHz) and the most desirable for wireless (receiving antennas are smaller)

* In December 2009, the assets (including licenses) of bankrupt, Independent stations in Dallas (KLDT, ch 39), and Houston (KNWS, ch 47) were sold for $24,800,000.  The stations had minimal audience and revenue, and the buyer likely will convert them to Spanish language. Both KLDT and KNWS have full-power (1-MW) DTV transmission facilities, and transmit from the main antenna farms in their markets.  Their OTA signals cover the vast majority of their market’s population. Dallas and Houston have combined DMA populations of 12,670,000. The $24,800,000 sales price of the two TV stations is equivalent to only $0.33 per-person/MHz.

“During the past several years there has been relatively little buyer interest in struggling independent TV stations.  As a result, station values have plummeted, as evidenced by the $24.8 mil price for the stations in Dallas & Houston,” David Schutz of Hoffman Schutz Media Capital tells RBR-TVBR. “The recent sale of the Dallas and Houston stations, which occurred before the release of the FCC’s wireless broadband plan, suggests that the financial markets have not considered their value in terms of broadband reuse.”

While the highest and best use of the spectrum used by most stations likely remains for OTA television, there may be cases where marginal stations have greater value in some type of sharing-of-proceeds in an auction of their channels for broadband.

The FCC’s broadband plan is likely to raise the value, and create buyer interest for struggling independent TV stations, which previously couldn’t find any buyers. On a hypothetical basis, if the government compensated TV station owners with a 25% share of broadband auction proceeds, the values of many struggling independent stations might double, from what we’ve heard.