Want a New Radio Station? FCC Proposes Procedures for a July 2021 Auction, Lists Channels to be Sold, and Imposes a Freeze on Certain Applications

The FCC yesterday announced plans to hold an auction to award construction permits allowing the winners to build new radio stations. The auction notice includes 136 FM channels and, in a new wrinkle, 4 AM opportunities, for which bids will be able to be placed once the auction commences.  The list of channels to be auctioned is here – with many channels being in the state of Texas, with an assortment of others around the country. These channels are mostly those that had been included in an auction scheduled for last July which was cancelled because of COVID-19 (see our articles here and here).  In addition, a few newly available FM channels have been added to the list, as well as 4 AMs in the St. Louis area that are available because a licensee surrendered those licenses after a license renewal challenge.

The notice released yesterday asks for comments on the auction procedures to be used in awarding these channels, proposing procedures that are generally familiar to those who have participated in FM auctions in the past.  The auction is tentatively scheduled to begin on July 27. Working backward, that would mean that the initial “short-form” applications required for parties who want to participate in the auction would likely be due sometime in May.  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 in June. 

To protect these allotments, the FCC also imposed a freeze on the filing of FM applications that could affect applications for these channels.  The FCC’s freeze on applications that could impact these new stations is in place until the winning bidders file their post-auction applications specifying the exact facilities that they plan to build. No applications or rulemaking proposals can be filed that would request a change in one of these channels, or which would be short-spaced to one of the reference coordinates for these allocations.

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 something that you might consider, you need to start your due diligence on each channel now, as any bidder is responsible for insuring that the channel for which they are bidding can be built and will serve the audience that you expect. But Buyer Beware — if you win the auction and decide that you can’t really find a transmitter site, then you are likely on the hook for the full amount of the bid even if you don’t build the station during the three years allowed under the construction permit.

If you are successful in the auction, you will have to have an available transmitter site to specify in your “long-form” application submitted soon after the end of the auction – an application that will specify the technical details of the new station, including the specific location at which the station will be built. So look at zoning issues, FAA considerations, coverage questions, site availability, 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.

The Commission asked for public comment on its proposed auction procedures. If adopted as proposed, these procedures will be used for this upcoming auction, which the FCC refers to as Auction 109.  Comments on these proposed procedures are due by March 15 with replies due by March 22, 2021.

While there may be opportunities in the list of available channels, in recent FM auctions there have been 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, there are a number of leftovers from previous auctions, either left unsold in a previous auction or 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.

This announcement signals that there are potential opportunities for new radio 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