The FCC this week issued a document called “Guidance Regarding Prohibition of Certain Communications During the Incentive Auction, Auction 1000.” That mouthful of a title identifies a document which clarifies the restrictions which apply during the incentive auction on communications by and between broadcasters (and wireless companies) that could influence the bidding in the auction. In other auction proceedings, these kinds of restrictions have commonly been referred to as “anti-collusion rules.” Here, the FCC talks about “prohibited communications” during the “quiet period.” The quiet period extends from the filing of applications evidencing an intent to participate in the auction (likely to happen in December of this year for TV broadcasters who are interested in offering their channel for surrender the FCC, see our article here about the auction timing and procedures, including a link to the slides from a presentation on auction issues that we conducted for several state broadcast associations), until the very end of the auction when the FCC announces the final results. Thus, this quiet period will potentially extend many months, especially if there are multiple “stages” of the auction where broadcasters offer their licenses for sale and wireless companies bid on the spectrum that has been surrendered. Many broadcasters and other industry participants – from programmers worried about being the conduit of information about broadcasters’ auction intentions, to noncommercial licensees worried about representations to their audiences that could be made during pledge drives – were concerned about the very strict rules initially adopted by the FCC, which prohibited almost any communications by broadcasters that would hint as to their intentions as to whether or not they would participate in the auction. The rules also threatened to bring station sales to a halt during this period. This week’s Guidance should alleviate at least some concerns, but significant restrictions remain, and the FCC demands that auction participants educate their employees about what can and cannot be said during the auction, as a disclosure of bidding strategy or tactics can result in severe penalties.
While the Guidance addresses both broadcasters participating in the Reverse Auction to sell their spectrum to the FCC to be repurposed for wireless uses, and the Forward Auction, where the wireless companies bid on the returned spectrum, we’ll focus on the broadcast issues. There were a number of significant clarifications that affect broadcasters. While we will briefly discuss some of the issues addressed by the Guidance, the penalties for the violation of these rules are so severe, and the rules so nuanced, that we feel the obligation to warn broadcasters not to rely on this summary or any other that you read in the trade press. This is one of those areas where getting legal advice from your own attorney about the ins and outs of these rules is crucial. Continue Reading