Sinclair Could Put $2 Billion of Spectrum in Auction

Thursday, Aug 06, 2015

TV station group owner Sinclair says that it could realize as much as $2 billion were it to put spectrum in the upcoming broadcast incentive auction with minimal impact, which it could decide to do while still being involved in the new ATSC 3.0 next generation transmission standard, which Sinclair has long promoted.

That is according to Sinclair COO David Amy on the broadcast group's second-quarter earnings conference call Wednesday.

"We continue to evaluate spectrum auction opportunities," Amy said, "and based on the Greenhill report on median prices, believe there could be opportunities for us to relinquish licenses with an aggregate value of approximately $2 billion ... and still participate in the potential business models that come with ATSC 3.0." He said that the ultimate outcome would "depend on the many auction variables that are unclear at this time."

The FCC is planning to vote on some of those Thursday, including the bidding structure for the reverse auction.

Sinclair has long been a proponent of broadcasters holding on to their spectrum to take advantage of new technologies that will allow them to be broadband players, and CFO Chris Ripley said its position has not changed regarding that, or its appetite for the auction. But he also said the company has a fiduciary responsibility to weigh auction participation (which can include moving channels or sharing as well as giving up spectrum entirely).

He said there is a market perception that the company does not want to participate, which Sinclair wanted to clarify.

What he said had changed recently was that more specifics have come out about the auction to allow Sinclair to quantify for investors what the potential for the broadcaster could be and help "solidify our optimal strategy," which is to maximize shareholder value" and "the auction is a means to do that."

Ripley said the $2 billion analysis does not "contemplate" the impact of channel sharing, though he said the company was in active discussions about sharing, "which could only make the outcome better," he added.