FCC won’t shrink bid penalties


Six broadcast companies withdrew bids during FM Auction No. 37 on seven CPs and watched as the sticks-to-be languished into Auction No. 62 where they were claimed at drastically reduced prices. Under FCC auction rules, they are all required to make up the difference, a rule the FCC takes very seriously in order to discourage various underhanded bidding strategies. The bidders included College Creek Broadcasting, hit for bids on two stations, and singleton bids from Cumulus, Nassau Broadcasting, Connoisseur Media, Barry P. Lunderville and Kemp Communications.

The six argued that they had no way of knowing the market would collapse to the extent it did between the two auctions, that they had legitimate reasons for withdrawing the bids, and that the withdrawal payments are excessive. The FCC did reduce a $4M payment in the past, plus only rarely has a payment exceeded $600K.

The FCC replied that the reason for the penalties was sound and that it did not consider the payments to be excessive at all and denied all requests for reductions.

College Creek is liable for payments of $794K (Windsor NY) and $665K (Blue Lake CA); Cumulus for $1.337M (Cannon Ball ND); Nassau for $626K (Whitefield NH); Connoisseur Media for $609,750 (Flasher ND); Lunderville for $244K (Groveton NH); and Kemp for $112,250 (Nanakuli HI).

RBR/TVBR observation: The lesson here is to be sure of your plan before you start submitting bids, since there is no telling what will happen once you’ve pulled out. The FCC has made it amply clear it is not going to bail you out just because the market for sticks went sour, and it is going to strictly enforce its rules to thwart license speculators and the like.

Cumulus’s Cannon Ball was the single biggest miscalculation – the town is about 30 miles south of Bismarck, and Cumulus’ #37 high bid was $1.461M. The winner at the closing gavel of #62 got it for a mere $124K. You’d think the station would be close enough to the North Dakota state capital to eventually be a force in the radio market, but apparently nobody wants to take a stick into competition with the market powers that be, at least not at the price Cumulus was almost ready to pay. Were surprised the stick went so cheap too. We’ve been watching downs, downers and downests of the domicile real estate market with the morbid interest of a participant – but we haven’t seen anything devalue quite as fast as the FM CP in Cannon Ball ND.