That’s a very real possibility, as Sinclair Broadcast Group CEO David Smith explained when he got the inevitable question from a Wall Street analyst about proposals to have television licensees return more spectrum for voluntary auctions – sharing proceeds with the federal government.
Smith questioned why any broadcaster with a viable TV business would be interested in participating. In his view, it is unlikely that the would-be purchasers from the wireless telecom side would be willing to bid so much money for the spectrum that it would be an offer the current licensee would be unable to refuse. (And Smith didn’t even mention that the broadcaster gets only an as-yet-unspecified percentage of the proceeds after splitting with the US Treasury, as opposed to getting 100% of the proceeds from simply selling their station.)
Sinclair may be cautious about Q3 trends, but the company isn’t even close to worrying about the viability of its business.
But because of the issue being front and center in Washington, the Sinclair CEO said it is creating some overhang for the TV industry. He didn’t speculate on how much it is holding down station prices or the values of publicly traded stocks.
So you can list David Smith as a skeptic of voluntary spectrum auctions being workable, even if the FCC gets the go-ahead from Congress.
RBR-TVBR observation: We would think it’s a safe assumption that participation in the New York, Los Angeles and Chicago markets will be zero, with considerably more interest from TV licensees in remote, rural DMAs where there is already plenty of underutilized wireless spectrum. That won’t open up much spectrum and it won’t generate much cash.
The big numbers – such as the $15 billion in Treasury proceeds cited in Sen. Harry Reid’s (D-NV) original debt limit bill, but dropped from the one which passed – are just pie in the sky. The actual pie is likely to be nothing but a few crumbs.