CPB Board hears forecast of financial strain in auction repack phase

Print More

WASHINGTON — An attorney told CPB Board members Monday that the FCC spectrum auction could cause a financial strain for public broadcasting as TV stations bear repacking expenses in coming years.

The FCC is covering $1.75 billion in expenses for repacking channels after the auction, which ended in February.

Meg Miller, a partner at Gray Miller Persh in Washington, D.C., said stations will estimate by mid-July their costs to move to new channels, which could include moving or installing new antennas.

The FCC will hold money in accounts for public TV stations to cover 90 percent of the costs estimated by stations. The commission decided against providing all the money up front to avoid overspending on the repack.

Stations will draw on their accounts for approved repacking expenses, Miller said. But that means that some stations will need to carry forward 10 percent of their costs for up to three years before getting their final portion of FCC money, Miller said.

At the end of 39 months, the FCC will settle up with stations, either covering the rest of their costs or recovering unused funds.

“Many stations will have to carry that last 10 percent until the true-up,” Miller said. “For some public TV stations, it’s hard to carry any amount of expense without reimbursement, let alone over a three-year period.”

The costs could create “a terrific amount of stress on the public TV system,” Miller said.

State budget cycles based on a June fiscal year further complicate the process, as state networks could be hit with expenses both this fiscal year and next. Also, “even with the best estimates possible” for the complex repack, Miller said, “cost overruns are likely” and will need covering.

Miller said that in some of her firm’s client state networks, “every single station is being repacked. It’s an incredible burden.”

Furthermore, the FCC’s repack funds don’t cover the cost of moving translators. A large but unknown number of public TV’s 629 translators will be displaced during the actual repack, Miller said. Most are in remote and rural areas. About 50 translators will be displaced at the end of the repack, and 136 will be displaced after wireless deployment.

Consulting engineer Dennis Wallace of Meintel, Sgrignoli & Wallace told the CPB Board that the repack presents daunting technical challenges as well.

Stations will be assigned rolling transition dates across 10 phases. Stations in Phase 10 will have the entire 39 months for repack work. Those in Phase 1 get only 16 to 18 months for the complex project, Wallace said.

The FCC tried to “evenly distribute” about 120 stations in each phase, Wallace said, with Phase 1 stations in more geographically isolated markets. Stations in early phases will be in markets that are not interference-linked to other stations.  That would leave stations in later phases, with more interference,  more time to complete work due to demands for tower riggers and other labor.

The FCC is expected to announce results of the auction by mid-April.

Correction: An earlier version of this post reversed the timing of Phase 1 and Phase 10 of the repack.