Despite FCC release of market-by-market price estimates for...
Despite FCC release of market-by-market price estimates for broadcaster licenses, it’s unlikely that “strategic commercial broadcasters” will participate “meaningfully” in the incentive auction, said Wells Fargo in an “Incentive Auction Guide” emailed to investors Tuesday. That’s because the estimates are…
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“highly variable” and could be too high, Wells Fargo said. Though there are stations in smaller and mid-sized markets “where the spectrum value perhaps could exceed enterprise value,” the auction’s unclear tax implications could be “a complicating factor for those broadcasters that have a large capital gain,” Wells Fargo said. The AT&T-based $1.50 per MHz POP estimate used to make the estimates is a “reasonable assumption,” but the amount of spectrum changing hands in the FCC model is “optimistic at this point,” Wells Fargo said. Wells Fargo said “$45 billion is a fairly hefty number for what is essentially a four player world (five, if we include DISH).” The lack of certainty about broadcast participation makes it hard to predict how much wireless companies could spend in the auction, a problem exacerbated by possible auction delays that could be caused by the court challenges to the auction from NAB and Sinclair, Wells Fargo said. “It is difficult to predict the financial flexibility of all four carriers two years from now, given the changing competitive dynamics."