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Jan. 5, 2017, 9 a.m.
Business Models

“Once-in-a-lifetime opportunity”: Local news could see a windfall from the FCC’s spectrum auction

The advocacy group Free Press is encouraging public broadcasters to invest their earnings back into local news and information.

Last year, the Federal Communications Commission launched an auction that will allow broadcasters to sell all or parts of their broadcast spectrum, which could then be purchased by wireless carriers looking to expand their reach.

Some analysts initially projected that just public TV stations could bring in as much as $2.3 billion, according to reported federal estimates.

Though New Jersey lawmakers have lowered their expectations for a potential windfall, the advocacy group Free Press last month launched a campaign to encourage New Jersey and other public station license holders participating in the FCC auction to invest at least a portion of the incoming revenue in local news and information.

“This is a once-in-a-lifetime opportunity,” said Mike Rispoli, the New Jersey director of Free Press. “There is a crisis in local news and how people get information now. This is a lot of money to infuse and support local journalism and information needs.”

The FCC auction proceedings are confidential and participants aren’t permitted to comment on them, but Free Press has determined that 54 public TV stations are participating in the auction and 87 stations decided not to enter. Forty other stations responded to Free Press’s inquiries, but declined to state how or if they were entering the auction. 104 public TV stations did not respond to the inquiries.

The auction is expected to wrap up in the coming months, and it’s unclear how much the participants will actually net. (The auction process is long and complicated. Current has a great explainer of how it all works.)

In New Jersey, where there is sure to be heightened demand for the influx of cash into the state’s strapped budget, it remains to be seen how receptive lawmakers will be to Free Press’s proposal.

“In the assembly, there are probably higher priorities. It’s probably an uphill battle, and that’s why Free Press is trying to build a grassroots campaign to put pressure on legislators,” said Ellen Goodman, an attorney and professor supporting Free Press’s effort.

Goodman said that because the state is selling off a public asset that is earmarked for information dissemination, it should reinvest those funds in the same area. Likewise: “If you sell off a public park because you no longer need the land, the proceeds, or a good chunk of them should be reinvested in public recreation,” she said.

Free Press is proposing a $250 million independent nonprofit grant-making fund that would support local journalism and community-based information projects.

Rispoli said the organization would like the fund to be overseen by an independent board that isn’t subject to the year-to-year budget demands of the state government.

“We want to be clear that we view this fund as having a mandate beyond journalism. It shouldn’t be viewed as a way for newsrooms that have significantly lost reporters to just hire people back,” Rispoli said. “This isn’t enough money to do that, and we don’t think that would be an appropriate use of the fund. It’s really about how you write stories and deliver information that’s in the public interest.”

The situation in New Jersey is unique. The state owns the broadcast licenses, but they are just being used to rebroadcast other stations. The state had previously run a PBS station on the network, but it disbanded in 2011.

And while estimates are less than some initially projected, license holders in bigger markets such as New Jersey are still expected to take in significant sums. According to Free Press, three Los Angeles–area public TV stations could be worth more than $1.5 billion, and a Chicago station owned by South Side community colleges could fetch up to $473 million.

Then there is WHUT, Howard University’s public TV station, which could be worth $460 million.

Last year, Howard said it planned to participate in the auction. While withdrawal is still an option, the University said that it is contemplating three options: “1) sell the spectrum and relinquish its broadcast license; or 2) move from UHF (ultra-high frequency) to VHF (very high frequency) spectrum; or 3) partner or channel share with another television broadcaster.”

Howard has struggled financially in recent years, and proceeds from the auction could help. Analysts at Moody’s say there is “limited immediate financial downside risk” to participating.

A group of Howard professors and alumni objects to the University’s participation in the auction. Last fall, the Howard Media Group, which is part of the school of communications, published a position paper outlining its objections to participating in the auction.

WHUT is the only black-owned public media outlet in the country, and the HMG emphasized the importance of diversity in public media:

We have examined the ongoing struggle by racial minorities to have a public voice that can only be achieved through the media. It is our position and concern that African Americans and other diverse populations that are able to be seen and heard through the station’s programming would lose substantially if WHUT were to cease to exist.

Howard decided to proceed despite the objections. Howard professor Carolyn Byerly, who leads the HMG, told me that she found Howard’s response to be “really discouraging.”

“Howard University is in a huge fiscal crisis and they’re just looking at the station as a cash cow,” Byerly said. “There’s no commitment, to my knowledge, for those funds to be converted to other uses. The money will belong to Howard University, and Howard will use it however it sees fit.”

It remains to be seen how Howard will proceed. In his letter announcing the university’s intention to participate in the auction last year, president Wayne A. I. Frederick said the university wouldn’t offer any further comment on the auction due to its confidentiality requirements.

About a quarter of Washington residents don’t have high-speed internet access, according to a 2014 U.S. Census bureau report, and Byerly said WHUT provides a public service. Additionally, she said, students gain invaluable experience working at the station.

“It’s part of this university,” she said. “It’s integral to what we do here.”

Though it’s initially focused on New Jersey, Free Press would ultimately like to turn to Howard University and other auction participants to support initiatives dedicated to providing news and information to underserved communities.

It’s waiting to see how much money ultimately comes in from the auction and who the final participants are, but Rispoli said Free Press is already thinking about how it can expand the effort.

“Chicago, Denver, L.A.,” he said. “But also places like Flint. You can imagine what good local journalism could do in a place like Flint right now.”

Photo by Adam Simmons used under a Creative Commons license.

POSTED     Jan. 5, 2017, 9 a.m.
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