WASHINGTON (Reuters) - Television stations around the country will be hearing from the U.S. Federal Communications Commission in coming months as the regulator on Wednesday launches a push to sway reluctant broadcasters to sell their airwaves in an upcoming auction.
The FCC is planning a so-called incentive auction for mid-2015, a complex sale of highly valuable low-frequency radio airwaves currently used by broadcasters to clamoring wireless carriers.
The success of the auction hinges on TV stations first volunteering to relinquish airwaves, for example going off air or sharing frequencies with another station. As broadcasters bid to sell their spectrum, wireless companies would bid to buy it, determining how much TV stations get paid.
Many TV station owners have been leery, unsure of the value of the sale or its risks. The National Association of Broadcasters has challenged the FCC’s auction plan in court, concerned about its impact on stations whether or not they participate.
On Wednesday, the FCC will send all eligible TV stations a packet that for the first time offers specific FCC-authorized financial estimates of what broadcasters in each geographic market can expect from participation, senior FCC officials said.
Most notably, the FCC’s projections show that compensation for TV stations in small and medium markets could be comparable to those in top-10 markets, where spectrum is deemed to be most valuable for wireless carriers.
In the coming months, FCC staff and representatives from investment bank Greenhill & Co, which created the financial packet, will also hit the road to meet with broadcasters and explain the pitch in person, the officials said.
“I believe the incentive auction is an unparalleled business opportunity for broadcasters,” FCC Chairman Tom Wheeler wrote in a letter to broadcasters.
Senior FCC officials concede the presented estimates are high-end, based on an “optimal” scenario where broadcasters give up 126 megahertz (MHz) of spectrum, which would mean 100 MHz ultimately would be sold to wireless companies to raise $45 billion.
Other evaluations have estimated that 84 MHz of spectrum would be cleared for the auction, though FCC officials argue that may not necessarily mean less money raised depending on the size of the bids to buy that spectrum.
The FCC staff estimate, for example, that a station in the Wilkes Barre-Scranton, Pennsylvania market could receive up to $150 million or a median of $140 million, more than one in Washington, Boston or San Francisco. A station in New York could get a maximum of $490 million or a median of $410 million.
Wilkes Barre-Scranton is the 54th largest U.S. television market and New York City is No. 1.
The values are based on how many people the TV station serves and how much its coverage overlaps or interferes with other stations, possibly in bigger markets.
The wireless industry association has reassured the FCC that its members will bid strongly, though for now only AT&T Inc and satellite company Dish Network Corp have publicly pledged to participate. AT&T said it plans on bidding at least $9 billion.
Reporting by Alina Selyukh