112 new FM channels will be available in the next auction for new FM channels (referred to by the FCC as "Auction 94") to be held beginning April 23, 2013. To participate, interested parties must file their "short form" applications – setting out information about the ownership of the applicant and the channels in which they are interested – by February 6, 2003. All of the procedures for the auction are set out in the order released late Wednesday, available here. The locations of the available channels, authorizing the winners to build new FM stations serving the named communities and the nearby area, are also set out in this attachment to the order. The notice adopts many of the same procedures set out when the Commission first proposed the auction back in September (see our article here). However, the Commission pushed the auction back the initially scheduled date for the auction by about a month to avoid religious holidays and the NAB Convention, ending up with the new starting date of April 23. The Commission also pushed back other dates associated with the auction, deleted a handful of channels that had been proposed for inclusion in the auction but had not been properly published in the Federal Register, and announced other decisions relating to the auction – all with many cautions for those who may be bidding about the possible pitfalls of the auction process.
The relevant auction dates are as follows:
Auction Tutorial Available (via Internet) …………………….January 28, 2013
Short-Form Application (FCC Form 175)
Filing Window Opens ……………………………………………….January 28, 2013; 12:00 noon ET
Short-Form Application (FCC Form 175)
Filing Window Deadline……………………………………………February 6, 2013; prior to 6:00 p.m. ET
Upfront Payments (via wire transfer)…………………………..March 18, 2013; 6:00 p.m. ET
Mock Auction ………………………………………………………….April 19, 2013
Auction Begins…………………………………………………………April 23, 2013
The most important dates for bidders are the deadline for the submission of the "short-form" application of February 6, the date for the Upfront Payments, and of course the dates for the start of the auction itself. The short-form lists the owners, any bidding agreements that the parties have with other bidders, and the channels in which the party is interested in bidding. The bidder can also submit specific proposed transmitter site coordinates for any channel in which they are bidding, which protects those named sites from moves by other existing stations that could otherwise preclude their use. The failure to meet this February 6 deadline means that a party cannot participate in the auction.
The upfront payment is the minimum bid for a channel. While a party need not submit upfront payments to cover all of the channels in which they are interested (on the assumption that they won’t necessarily win each channel on which they are bidding), they at least need to submit the amount necessary to cover the most expensive minimum bid among the channels that they are seeking to even participate in the process, and they need to submit enough to cover the minimum bids for all of the channels that they ultimately win in the auction – so if they plan to bid aggressively on multiple channels, they need to have an Upfront Payment sufficiently large to cover the minimum bid on all of the channels that they could win. If you specify interest in a great many channels, a limited Upfront Payment may limit the number of channels on which you can actually bid.
The Commission also talked in its order about several other issues about which potential bidders need to be aware. This includes the requirement that bidders do their due diligence on the value of the channels for which they are bidding – including issues such as the location of possible transmitter sites and any other technical limitations that may exist on those channels. Some channels, when allotted, also have a requirement that the ultimate winning bidder pay an existing radio station its costs to change channels (changes that are necessary to make the auction channel available). The Commission declined a request that it specifically indicate in its auction notice which of the 112 new channels has such a reimbursement requirement tied to the channel. Instead, the Commission requires that the applicant do its own diligence to avoid a nasty post-auction surprise of being hit with the extra cost of changing another station’s channel in order to build the new station. Applicants who are the winning bidder in the auction, and who later discover that their channel is not worth what they paid, in most every case will still be obligated to pay the amount they bid (potentially with late fees) and cannot get a refund if the channel’s value does not materialize.
The FCC also warned bidders that they cannot collude with each other by exchanging any information about bidding strategies or otherwise coordinating their bidding, unless such arrangements are set out in the initial short form application. So if companies with interlocking officers, directors or financing sources, and these companies may bid on any common channel, these relationships may need to be disclosed upfront in the initial application Form 175 application.
Once the auction is complete, the FCC will specify a date for the submission of "long-form" applications (FCC Form 301) where applicants need to set out their specific technical facilities – including transmitter sites for which they have "reasonable assurance" of availability. That will usually be a date only about a month after the auction closes – so those sites need to be secured and ready to go so that they can be plugged into the long-form applications and submitted on time. Payments of the remainder of the auction bids also need to be made promptly.
These and many other processes and procedures are set out in the auction notice. Anyone interested in participating in the auction needs to start thinking about these matters and doing its diligence now – as that February 6 short-form deadline will be coming quickly. While not every channel will yield a gold mine, there may be some gems among the channels, and some opportunities for existing broadcasters to widen their coverage area. So start your preparations now!