FCC Plans Auction in April for the Rights to Build New FM Stations

It has been many years since the FCC conducted an auction of new FM channels, principally due to its preoccupation with the TV incentive auction. But that is about to change as the FCC announced yesterday that it is planning a new FM auction starting on April 28, 2020, and issued a request for comment on the procedures to be used for the auction. The FCC is taking comment on the proposed auction procedures through November 6, with reply comments due by November 20. 130 vacant channels will be available for bid. The list of vacant channels is available here. Channels will be available across the country, with Texas and Wyoming having the most vacant channels in this auction list.

Working backward from the anticipated April 28 start date and using prior auctions as a guide, initial filings for the channels would likely be due early in the new year. “Upfront” payments equal to or greater than the minimum payments for the channels that an applicant ultimately wins in the auction will probably be due a month or so before the start of the auction. To protect the allotments during an auction, the FCC typically imposes a freeze on the filing of FM modification applications. So be on the alert for an announcement of such a freeze.

If you are interested in starting a station from scratch, look through this list of channels to see if there are opportunities for a construction permit for a new station in an area of interest. If you find a channel that looks interesting, you need to start your due diligence on the channel now, as bidders are responsible for ensuring that the channel for which they are bidding can be built and will serve the intended audience. If you win the auction and decide that you can’t find a usable transmitter site at a reasonable price, or have other problems in building the station, then you may well be on the hook for the full amount of the bid even if you don’t build the station. And, if you are successful in the auction, you will need to have an available transmitter site to specify in your “long-form” application submitted about a month after the end of the auction – an application that will specify all of the technical details of the new station. So look at zoning issues, FAA considerations, coverage questions, “reasonable site assurance” from the tower owner, and even whether technical details like those set out in the rural radio order limiting move-ins of FM stations from rural to more urban areas may limit the potential economic value of the channel in which you are interested.

While there may be opportunities in the list of available channels, in recent FM auctions there have been a number of channels for which no one has submitted bids, even after the channels were available in several auctions. In the channels listed for this new auction, many are leftovers from previous auctions, either from having been left unsold in a previous auction or cases where the winning bidder defaulted on their post-auction payment obligations. If channels are made available in multiple auctions and not purchased, the FCC will eventually delete these channels.

So potential opportunities for new FM stations are on the horizon. Take a look for channels that might be of interest to you and start preparing now to file your initial application to participate at some point in the next few months.

Courtesy Broadcast Law Blog