Wells Fargo takes a fresh look at incentive auctions


Wells Fargo SecuritiesAnalysts at Wells Fargo, led by Marci Ryvicker, have taken a look at the “intensely complex” packet of information sent to television stations in the run-up to auctions, and made a few points about the information contained therein.

For starters, WF joins the chorus of observers, including RBR-TVBR, who would not be surprised to see a delay in the actual auction beyond the summer 2015 target. Suffice it to say that the reasons for such a belief are numerous.

On the tax implications of receiving payment for spectrum, WF said that other than it being “sort of clear” that there will be taxes, it still has no idea how the “…IRS is determining the cost basis of broadcast spectrum.” So without that clarifying information, there is no way to make any kind of accurate analysis.

However, WF could determine which groups have the greatest value under the terms of the announced incentive auction reserve prices.

The companies with the greatest median spectrum portfolio as a percentage of enterprise value:
52% Sinclair
49% Nexstar
27% Media General

The companies with the greatest hidden spectrum value
$11/sh Nexstar
$4/sh Media General
$3/sh Tribune