Private equity gobbling up public TV stations: what does the public get?

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Public stations in Connecticut and San Mateo may be at the leading edge of a mass sell-off of public media assets in next year’s FCC spectrum auction. These stations have entered into agreements with LocusPoint Networks, a subsidiary of the private equity firm Blackstone Group, whereby LocusPoint shoulders the stations’ operating costs until the auction and then takes a significant share of the auction revenue after the station has sold its spectrum to wireless bidders. These deals have to be disclosed to the FCC, but their details do not.

Goodman

Goodman

When the spectrum is auctioned, stations  may receive tens of millions of dollars for their spectrum, especially in congested coastal areas. This money is unrestricted and can go back into community-based digital media, or into university gyms, or into a city’s general treasury. Right now, there is no transparency and no public input as to the fate of the liquidated public media asset.

What’s the issue? The FCC set aside this spectrum — about 20 percent of all TV spectrum — in 1952 to advance the public interest in diverse and locally responsive noncommercial media. Think of this spectrum as parkland. It was set aside and given away to universities (58 licensees), state and local governmental bodies (26 licensees), and nonprofits (87 licensees) as stewards of this park, on the condition that they use it for noncommercial educational (loosely defined) purposes. There’s no question that these stewards wouldn’t be allowed to sell the stations to a commercial entity; LocusPoint could never buy the stations. But an investment in anticipation of liquidation is legal.

There has been no public scrutiny of the issue of what happens to the liquated public media asset, and this is understandable. Public interest organizations are focused on retrieving spectrum for white-space unlicensed use. The more broadcast spectrum that can be refarmed for other uses, the better. Public broadcasting groups are focused on ensuring that broadcast licensees are treated well and that the public broadcasting system emerges from the auctions intact. The potential beneficiaries of new funds for local digital media (such as new journalism ventures, like NJ News Commons or the many Knight News Challenge winners) are a diffuse group that have not coordinated their interests and are not focused on potential auction revenue.

Given where interests lie, it is not surprising that the only real scrutiny of the sale of public TV spectrum has focused on the survival of public broadcasting in certain communities after the auction. This, for example, was the question raised by CPB in its September 2014 report, Facing the Spectrum Incentive Auction and Repacking Process.

The details of the future of public broadcasting, with reduced spectrum, will be worked out. There are enough stakeholders to make sure of that. But what of the value of the spectrum lost and the possibilities for future investment in digital platforms? What of the half-century investment in local media that has been made by individuals, foundations, and the government? We have local boards of stations that want to continue with their mission of local noncommercial media after the auctions.

We have a desperate need for investment in local news and other media coverage, as well as digital access and literacy. We have new digital start-ups trying to fill these gaps, not to mention the public stations that are left post-auction. Wouldn’t it make sense to get all the stakeholders together and see what can be done to forge ahead with a new digital public media? At the very least, shouldn’t the terms of these spectrum deals be made public?

Ellen Goodman is a professor of law at Rutgers University. This commentary was originally published on the website of the Rutgers Institute for Information Policy and Law.
  • dccajun

    Thank you Ellen.

    This is a critical issue. The assets that non-commercial license holders are liquidating were not only granted for public service purposes by the FCC, the stations were built, operated and modernized over the years with a combination of state, federal and, importantly, community donor funds, without which there would be no asset to sell. Funds raised by the sale of these assets need to be recycled back and utilized for the purposes the money was appropriated or donated in the first place. The decision of how these funds are used needs to be made in consultation with the community at large, and not just at the whimsy of management, who are really only trustees. Most important, use of these funds needs to be transparent and subject to independent audit.