Local TV stations are often humble operations, sporting little-recognized call signs and staffed by a handful of people who coordinate the airing of infomercials, re-runs, and low-cost original programming. But suddenly, their owners are sitting on potential gold mines: the small slices of over-the-air broadcast frequencies coveted by data-hungry wireless carriers.
The Federal Communications Commission has set a Tuesday deadline for broadcasters to indicate if they will sell their frequencies to the government, which in turn will auction off the airwaves for tens of billions of dollars to wireless companies such as Verizon and AT&T.
The effort means Boston-area stations, including obscure broadcasters that run religious and educational programming with tiny audiences, could each net hundreds of millions of dollars if they agree to go off the air — a once-in-a-lifetime opportunity, the FCC has called it.
“These are folks who got a [low-power] license way back when because they were providing local niche programming,” said Kathleen Kirby, an attorney at Wiley Rein LLP who specializes in media law and is advising broadcasters on the auction. “Never in their wildest dreams did they imagine the prices in this auction coming up.”
For example, WYDN, a Worcester station owned by a Texas-based evangelical Christian network, could receive $396 million if it agrees to go off the air. WMFP, a Lawrence affiliate of Cozi TV that broadcasts classic series such as “Baywatch,” is worth as much as $436 million.
WMFP declined to comment. WYDN did not respond to requests for comment.
WHDH’s owner, Ed Ansin, whose Sunbeam Television also owns WLVI-TV (Channel 56), has said that he wants to sell WLVI-TV’s frequency to the FCC, which values it as high as $452 million. Ansin bought the station for $113.7 million in 2006. He has said he would use WHDH’s frequency to transmit both stations’ signals.
The FCC has set a maximum price it would pay for each station, but the actual payouts could be somewhat lower. The agency will use a “reverse auction” in which prices decline and broadcasters drop out until it has only the licenses it needs to effectively reorganize the airwaves around Massachusetts.
Still, the final price will almost certainly dwarf the value of a smaller station’s business, and many stand to make significantly more money selling to the FCC than to another broadcaster.
The auction format is a novel attempt by the FCC to use market forces to its advantage, said Justin Nielson, a research analyst at SNL Financial. So far, broadcasters seem impressed.
“You can rarely get all the broadcasters to be on the same page, but the vast majority are on board,” Nielson said.
“They see the potential untapped value of their spectrum, and realize this is an opportunity to monetize for well above what they could receive for it as a broadcast station.”
Broadcasters have several options in the FCC auction. They can relinquish their license and go off the air, give up just their frequency and share a channel with another broadcaster, or move to a lower channel to free up frequencies sought by the FCC. The agency will use some proceeds from the auction to help broadcasters pay for reconfiguring or moving their equipment for the new frequencies.
Kirby said many smaller stations are deciding whether to cash out or negotiate channel-sharing deals with larger broadcasters. Large broadcasters that operate two channels in one market, she added, are considering combining them on one frequency and selling the secondary frequency.
One broadcaster with two frequencies is WGBH: its flagship public television channel, and secondary station with the call sign WGBX, commonly known as Ch. 44.
“WGBH and its Board of Trustees have been carefully evaluating the FCC spectrum auction and how it may affect WGBH viewers and members,” a spokeswoman said in a statement. “We are committed to continuing [our] mission of public service for all audiences in any decision we make related to the FCC spectrum auction.”
Other Boston-area stations, including major players WFXT (Ch. 25), WCVB (Ch. 5), and WBZ (Ch. 4), and a bevy of minor broadcasters, declined to comment.
“A lot of broadcasters are holding their cards close to their vest about whether they’re participating,” Kirby said.
Part the reason for the secrecy, she said, is uncertainty. If wireless carriers do not submit high-enough bids, then the FCC would restart the auction with lower offers to broadcasters.
“There’s a lot of questions about which of the wireless companies will participate and how much they’re willing to spend,” she said, noting that carriers spent tens of billions of dollars just one year ago buying frequencies through another FCC process.
Some stations that don’t participate in the auction may have their frequencies changed anyway, as the FCC plans to move most broadcasters to the lower end of the spectrum. The agency intends to bundle narrow bands of frequencies into a wider, contiguous swath of airwaves that it would then sell to wireless carriers for billions of dollars.
Such frequency changes shouldn’t have a major impact on over-the-air viewers, who will need to instruct their televisions to rescan local airwaves for the new channel and frequency assignments.
However, some may broadcast in somewhat reduced quality after the switch, if they elect to share bandwidth with another station.
The airwaves in the United States are increasingly crowded, thanks in part to a ravenous consumer appetite for viewing high-quality video on mobile devices.