Media Access Project President./CEO Andrew Schwartzman has a new proposed invention: The S Class television license. He sees it as a way to get more socially-disadvantaged businesses into the television broadcasting business. Essentially, the license would entitle the holder to lease time on a multiplexed digital television station. The S-licensee would be limited to no more than 50% of commercially-supported content, would be responsible for the normal public interest package, and would hold cable must-carry rights. The S-license would also be required to lease back up to six hours per day when the flagship station wishes to broadcast in high-definition.
Schwartzman describes the compensation package like this: “Compensation for use of the main licensee’s facilities (the “facilities charge”) would be determined by baseball-type auction with a reserve price that assures amortization of the main licensee’s equity. Compensation for main licensees’ use of Class S licensee’s spectrum for high definition transmissions would be based on the hourly cost of the facility charge weighted for the time of day of broadcast. The formula would allow for a reasonable rate of return.
RBR/TVBR observation: Multicast side channels have proven useful in smaller, signal-poor markets, where they may be used to provide network fare beyond the big four, or to broadcast foreign language fare where it’s appropriate. From what we’ve seen, few have any brilliant ideas for putting content on a multicast side-channel anywhere else (although 24/7 weather is a popular program stream, the outflow of content has yet to generate a significant inflow of revenue). The stations that engage in an S-license leasing arrangement would most likely be the same that will not be running heavy HD schedules, opening up a reliable revenue stream for the market’s most financially challenged sticks without putting a major cramp into the renter’s broadcast day. It’ll be interesting to see if this idea has any legs.