Last week, the FCC concluded “Auction 109,” a bidding contest that saw the government offer construction permits for 135 new FM stations and four AMs in St. Louis. As previously reported by RBR+TVBR the AMs attracted not even one single bid.
That said, some 38 FMs went unsold in the auction. For Wilkinson Barker Knauer attorney David Oxenford, this presents one big question: Does this result say something about the FCC’s local ownership rules?
As Oxenford points out, the FCC will have raised $12,344,110 from Auction 109. However, the bulk of the dollars are attributed to two properties. More than $6 million will go for a new Sacramento FM at 107.9 MHz, with iHeartMedia the company getting the chance to bring a station back on a signal once home to KDND-FM. The other big-dollar FM deal is one for just over $3 million, and involves a signal covering the northern portion of the Dallas metropolitan area.
Thus, the $12.34 million total could have been higher — if only those AMs in St. Louis and the 38 FMs were sold by the Commission.
What happened? Oxenford says, “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.”
Why did the FMs in New York and Colorado fail to get a bid? “[T]he prices were apparently deemed too high to justify for companies looking for a business return,” Oxenford says.
But, he also ties the lack of bids for the FMs and the zero interest in the St. Louis-area AMs, to the FCC’s local radio ownership rules.
“Many of the unsold channels are in communities where there are already local broadcasters,” he says. “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.”
Thus, the argument that deregulation can help the broadcast media industry along with the brokerage community and, most importantly, local listeners appears bolstered by Oxenford’s reasoning.
The timing could not be better for the broadcast industry, even though current FCC leadership is hardly open to further deregulation of AM and FM station ownership.
Oxenford points out that 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. “The results of this auction may well be instructive on the issues that the FCC will be considering,” he says. “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. The radio industry has significantly changed since the 1996 Telecommunications Act which set the current radio ownership limits. 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. 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.”