TV Spectrum Worth More than Broadcasting?

[jon]

Barron's
Feature
SATURDAY, SEPTEMBER 21, 2013
Boom Time for Broadcast Stocks
By ALEXANDER EULE | MORE ARTICLES BY AUTHOR
Local broadcasters control valuable spectrum that could be leased to wireless operators. Why Sinclair and Nexstar could be worth as much as twice their current quotes.

..."Right now spectrum is valued at zero,"...AS WIRELESS CARRIERS grapple with maxed-out networks, there's a strong policy argument behind repurposing the TV spectrum. "This is grossly underused spectrum," says Martin Sass. He notes that just 10% to 15% of Americans receive their television over the air.

In 2010, the FCC published a 376-page National Broadband Plan, responding to Congress' call to expand Internet access across the country.

Repurposing some TV spectrum to improve broadband service isn't a hypothetical concept. The 2008 auction stemmed from spectrum that the broadcasters once held for analog broadcasts. (They relinquished those assets in exchange for spectrum that was better suited to digital TV.)

Blair Levin, a senior FCC staffer during the Clinton administration, oversaw the national broadband report. He points out that America's leadership in 4G wireless services is a direct result of the aggressive plan the FCC made in the 1990s to repackage analog-TV spectrum.

The FCC's latest plan, which stems from Levin's report, is to hold an incentive auction that would encourage broadcasters to return their spectrum in exchange for large one-time payments. The auction would essentially have the government acting as a broker between broadcasters and wireless operators.

That voluntary auction is scheduled for 2014, but it's likely to be delayed. And some big players may choose not to participate, anyway. Sinclair, for example, says it would rather lease spectrum directly to wireless carriers, while continuing to operate their TV stations. That go-it-alone approach would require industry agreement around a new standard known as ATSC 3.0. The upgrades, which Sinclair says are gaining momentum, would allow data streams, not just broadcasts, to be sent over TV spectrum. The government, based on current license agreements, would get 5% of this "ancillary revenue."

However the spectrum shakes out, for the broadcasters the sky may be the limit.