We’ve all probably thought it. From the beginning, many had misgivings about the structure and integrity of the Federal Communication Commission’s Spectrum Auction for all parties involved, but has anyone actually considered what would happen if the auction fails?
Wells Fargo Analyst Marci Ryvicker has, and she has shared her findings to the public, according to a TV News Check article.
“The technical definition of auction failure is concluding Stage 9 (42 MHz cleared/ 20 MHz sold) with the Final Stage Rule still having not been met,” she wrote. “According to our math, we are still quite a ways away from this potential outcome. But with the forward auction going backwards in the two most recent stages, we did feel it time to gauge what might happen to our stocks should the previously unthinkable become our reality.”
Ryvicker found Sinclair Broadcast Group as the healthiest of the three broadcasters most ‘exposed’ to the auction and Tribune Co. as the interest with the greatest potential rick to its stock price. She also found that the auction was failing during Stage 3 because “another bidder may have dropped out as every formerly fully-subscribed market in the top 50 partial economic areas (PEAs) saw a reduction in demand — typically of exactly one block.”
She said that the problem with the auction wasn’t with the spectrum, but, rather, with the timing, and she does not believe this auction is an accurate assessment of all spectrum value.
Fortunately, Ryvicker’s findings on the potential results of a failed spectrum auction are rather uplifting. She does not believe a failed auction would spell disaster for broadcasters. She believes “the political environment is more of a game changer than the auction ever was.”
“In fact, we wouldn’t be surprised if some broadcasters think twice about participation — given reconsideration of potential station values,” she wrote.
She also dispelled any rumors about what Comcast might do once the auction reaches its finish.
“No longer will we hear concerns about what Comcast might do with the potential ‘gobs’ of broadcast spectrum. If the auction fails, it is over for everyone — there are no partial winners here.”
All in all, Ryvicker’s analysis is both cautious and practical. She did not play on people’s fears; she presented facts and dispelled rumors by predicting the most probable outcomes with deciding realism. The auction will not cripple broadcasters if broadcasters do not let it cripple them.