Spectrum speculator LocusPoint and KCSM licensee reach FCC auction deal

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As expected, the San Mateo County Community College District has entered into an agreement with a spectrum speculator owned by private-equity firm the Blackstone Group. The contract paves the way for public TV station KCSM to go dark if a wireless company buys its broadcast spectrum.

The district voted May 15 to approve the bid offered by LocusPoint, based in Belmont, Calif. LocusPoint will pay the district $900,000 a year to run the station for up to four years or until the auction is held. The two parties would then split auction revenues, with 63.5 percent going to the district and the remainder to LocusPoint.

LocusPoint is 99 percent owned by Blackstone through its Tactical Opportunities division. A pair of veteran telecom executives owns the remaining 1 percent. Companies such as LocusPoint have been acquiring licenses to commercial and noncommercial TV stations in deals betting on big payouts from the FCC’s upcoming incentive auction of television spectrum.

The district approved LocusPoint’s purchasing offer over those of three other bidders: Public TV Financing, an arm of Independent Public Media, a nonprofit working to preserve noncommercial spectrum; KMTP-TV, an independent public TV station licensed to Minority Television Project, Inc. in San Francisco; and the Oriental Culture and Media Center of Southern California, a nonprofit promoting communication among different cultures.

Ron Galatolo, chancellor of the college, recommended LocusPoint’s bid as the best option for relieving the district from the financial burdens of running a public TV station. In a memo summarizing the offers, Galatolo described Public TV Financing’s bid as “problematic” because it wouldn’t end the district’s ownership of a PTV station, which is an explicit goal of the board.

Independent Public Media’s bid was structured similarly to LocusPoint’s, but a clause in IPM’s bid would have kept the station on the air after the auction. Under the proposal, the district would find a broadcasting partner and split the auction proceeds with IPM while retaining broadcast spectrum. IPM’s bid included an $800,000 up-front payment and $800,000 a year to fund operations until the auction was held, according to John Schwartz, IPM founder.

In an interview with Current, Schwartz said his company’s goal had been to prevent the probable loss of a public television station.

“This is a permanent, irretrievable loss to the service area,” Schwartz said. “Not only will the station be gone, but there will never be another station occupying that spectrum.”

The district should have seen that its decision would affect more than just its bottom line, Schwartz said.

“I’m coming from a fundamentally different place then they are,” Schwarz said. “I wouldn’t want to second-guess the district’s decision, but public television to me is a service that goes beyond the entity that holds the license. When you hold a public TV license you have a responsibility that goes beyond the station, like the service area.”