December 12, 2012
If an incentive spectrum auction is carried through as the FCC envisions, broadcasters can receive substantial financial rewards and continue
to operate in a post-auction era.
Financially stressed public television stations have a new financing option to support their operations. A new program announced by Independent Public Media (“IPM”), a non-profit initiative dedicated to preserving local public TV stations, offers operating funds to at-risk stations to stay on the air until they realize proceeds from the FCC’s forthcoming incentive spectrum auction. The idea is not for public TV stations to sell out. Rather, IPM’s financing program allows non-commercial licensees to divest a portion of their current spectrum, while retaining the remainder and staying on the air. Auction proceeds can provide an endowment to support future station operations.
“The FCC auction will be a globally unprecedented event that may offer significant financial rewards for participating broadcasters. Though it’s currently projected to begin in mid-2014, such a complex undertaking could take longer to get off the ground. Our goal for this program is to provide enough funding to bridge struggling public television stations to the auction,” explained Ken Devine, IPM’s chief operating officer.
This year, the FCC issued a proposal that would permit multiple stations to share a single TV channel. The effect of such an arrangement is equivalent to allowing stations in to divest some, but not all, of their spectrum. Specifically, under the new financing program, IPM and its financial affiliate Public TV Financing would lend struggling stations monthly working capital to address their current shortfall until the stations volunteer spectrum for the auction. In such cases, IPM also will help stations secure spectrum sharing agreements with neighboring TV broadcasters to ensure their ability to operate after the auction is completed.
Proceeds would be used first to repay the station’s expenses in participating in the auction, then the loan principal and interest. If the auction proceeds exceed the loan amount — which is likely in most cases — the licensee will split the further proceeds with IPM. Stations would continue to be operated and controlled by the owner under their current FCC authorizations.
“Our objective is to help ensure that public television stations are afforded every opportunity to continue to serve their communities,” said Devine. “Unlike those parties who are interested only in the exploitation of the market value of spectrum, IPM is dedicated to preserving nonprofit public television. When financially stressed licensees look to liquidate all of their holdings for a hoped-for payday, it further threatens the underpinnings of public television. But our financing option is an avenue for licensees to secure the funding they need to fulfill their community mandate.”
In addition to the financing program, IPM is continuing a program it launched last year for public TV licensees that wish to divest their stations in the immediate future. Under this model, IPM will assist local station buyers to implement sustainable operating models for those stations, with an eye toward maintaining the core principles of public media.
“Despite the gloomy forecast for the future of legacy media, commercial television viewership is up across all demographics. Our goal is to bring an infusion of new energy and ideas to the struggling public television sector,” explained Hamilton Fish, chief development officer of IPM and a long-time steward of independent media. “IPM is the ideal partner for stations seeking access to entrepreneurship and investment. In the long term, we want to help develop the new public media paradigm – a trusted multi-platform source of information, news and culture predicated on the values of independence and service to the community.”