For Los Angeles’ KLCS, spectrum auction proceeds will relieve licensee of financial burden

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While some public TV winners in the FCC’s spectrum auction are thinking big about how to deploy their sizable windfalls, KLCS in Los Angeles faces a more modest set of choices.

“We see other stations with the money spent before they even have it,” said Thomas Taitt, broadcast compliance specialist for the PBS station and its point person on the auction. But as a service of the Los Angeles Unified School District, “we don’t have the luxury of doing that,” he said. “The ultimate goal for the station is to be self-sufficient.”

For KLCS, that will mean the school district will stop covering station operations out of its general fund. Last fiscal year, KLCS received 80 percent of its $4.7 million in revenue from the school district, a sum of $3.8 million. But the station will now draw from its $63.6 million in auction proceeds to replace that support, potentially seeing little change to its overall finances.

“I know other people have these grand plans,” Taitt said. “We’ve never lived that way in our level of reality.”

The school district’s eventual income from the auction is half of the total $130.5 million earned from selling KLCS’ spectrum. KLCS will continue broadcasting under a channel-sharing agreement with independent Los Angeles public TV station KCETLink, splitting its take evenly with its partner. Each broadcaster ends up with $63.6 million after technical costs.

It’s “still up in the air” whether the auction cash will be placed in an endowment or how it might be invested or structured, said KLCS senior financial analyst Charlie Chi. “We are exploring different alternatives,” he said.

An endowment, however, may not provide enough of an annual payout to support KLCS. If the spectrum had sold for $280 million — half of the projected opening bid in the auction — “we could have … lived off the interest,” Taitt said.

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