The FCC has finalized the rules for its auction for about 130 new FM channels to be auctioned in July. The Order setting the rules for the auction is available here, and the list of channels to be sold, and the opening minimum bid for each such channel, is available here. The minimum bids also constitute the “upfront payments” which must be made before the auction in order to be able to bid on the channels in which you may be interested. We wrote about these channels here, when the FCC first proposed the auction. As can be seen by reviewing the list, while there are channels across the country, the greatest number of available channels, by far, is in Texas. As we noted when we first wrote about this auction, many of the channels cover small communities in rural areas, and some are leftovers that went unsold in previous auctions. But in every auction there are a few channels that may prove to have some value, so we expect that there will again be interest in many of those on the list. Such interest must be expressed through the filing of “short-form” Form 175 applications by May 28. The actual auction will begin on July 23.

The FCC also announced a freeze on the filing of FM construction permit applications for changes in existing stations from May 18 through May 28 to stabilize the FCC’s engineering database during the period when applicants will be filing their applications. As auction applicants can specify in their short-form applications transmitter sites to be protected, a minor change application by an existing station could end up mutually exclusive with a transmitter site specified by an auction applicant, meaning that the existing station could end up in the auction. To avoid that, the FCC has frozen minor change applications during the filing window.

There is more to filing for one of these channels than simply filling out the form. It is important that any applicant do its diligence to make sure that a station on a vacant channel can actually be built, and that the station will have the value that the applicant expects. That means researching engineering issues, to make sure that tower space is available in areas where the station can cover the audience that the applicant expects. If you apply for the station and win the auction, and then decide that you really can’t build the station, you are still on the hook for the full amount of the bid and penalties if no one pays more for the station in a subsequent auction. Even withdrawing a “standing high bid” in the middle of an auction can result in your owing the difference between your bid and what the channel is ultimately sold for, as was made clear by a recent FCC decision refusing to excuse an applicant from paying the difference between what it bid in one auction (a bid that it withdrew before the end of the auction) and the significantly lower amount that the channel sold for in a subsequent auction. So make sure you know the value of the channel that you seek before you start bidding on it.

Similarly, the FCC warns applicants that, once the auction begins, they cannot talk to other applicants for the same channel about the bidding process, or about their strategy for bidding, until the entire process has run its course and the new station has been granted. These are the FCC’s “anti-collusion” rules, which forbid such discussions as they may impact the price that the FCC will receive for any new channel. Beware of even casual conversations with bidding competitors, where an off-hand remark is made about your judgment of the value of a channel, or your intention to continue to pursue your indicated interest in a channel, as these can be considered to be collusion. However, before the applications are filed, certain conversations can take place as long as they are disclosed in the short-form applications. As there are significant penalties for collusion, applicants should look carefully at the rules set out in the order, and discuss them with counsel, to be sure that they understand what is permitted and what it prohibited.

There are a number of important dates set out in connection with the auction. They are, as follows:

  • Auction Tutorial Available (via Internet) ……………………. ………………………..May 18, 2015
  • Short-Form Application (FCC Form 175) Filing Window Opens ………………May 18, 2015; 12:00 noon ET
  • Short-Form Application (FCC Form 175) Filing Window Deadline……………May 28, 2015; prior to 6:00 p.m. ET
  • Upfront Payments (via wire transfer)…………………………………………………….June 29, 2015; 6:00 p.m. ET
  • Mock Auction ……………………………………………………………………………………..July 20, 2015
  • Auction Begins…………………………………………………………………………………….July 23, 2015

So if you are interested in one of these new FM channels, start planning now, so you are ready to file in the upcoming filing window, and have all your information in place before you start bidding in July.