The federal government will kick off a massive, nationwide auction this week in which it plans to buy millions of dollars-worth of television spectrum from broadcasters — including, maybe, the Los Angeles Unified School District.
L.A. Unified officials have committed to officially enter the government's spectrum auction, hoping to sell off their rights to the airwaves currently used to transmit district-run public television station KLCS.
The auction, designed to free up space in the airwaves for the explosion in wireless communications, might generate enough money to take a significant bite out of LAUSD’s projected three-year budget deficit of $72.2 million.
Or it might not. It’s hard to say — the Federal Communications Commission has never held an auction quite like this before, making projections of the results difficult; and the school district will have to split whatever proceeds it receives with another public broadcaster.
“The good news part of the equation is that it is a high-demand market — a station in Los Angeles is more likely to get … acquired in the auction," said Marc Hand, founder and CEO of the consultancy Public Media Co. "The prices are likely to be higher than they would be in a lot of other markets, so I think the odds are good for KLCS."
But how much money could L.A. Unified make off the sale? That depends.
The FCC is acquiring the spectrum through a nationwide “reverse auction.” The agency set opening bid prices for every station in the country, and those who choose to participate in the auction will bid against each other at progressively lower prices — the government wants to free up spectrum at the lowest possible cost.
The government set the opening bid price for KLCS at $549 million. But at auction, few stations are likely to command anywhere near their initial prices, Hand said.
"If I was sitting at the school district — one, I wouldn’t plan on the money; and two, if we aren’t lucky and something happens in the auction, let’s plan for substantially less than what the opening bid price is,” Hand said.
Hand gave an example from an analysis his firm conducted, pointing to one public television station with an opening bid of $320 million located in a “bigger market” in Florida, though he declined to mention the station by name. That analysis found this station could auction for around $24 million — not even one-tenth of its opening bid price — depending on how much spectrum the FCC determines it needs to buy.
An LAUSD spokesperson declined to comment for this story, citing the FCC’s strict confidentiality rules around the auction. (Public comments might also tip their hand about their bidding strategy.)
Even if the district succeeds in selling off its spectrum in the auction, KLCS — a PBS member station as well as the channel on which the district broadcasts all school board meetings — will remain on the air.
In September, L.A Unified School Board members approved a channel-sharing agreement with KCET. Since technological advancements in broadcasting now allow stations to squeeze more content into smaller bands of spectrum, KCET has agreed to share its spectrum space with KLCS. In exchange, the district will pay KCET half of what it makes for the sale of KLCS’ spectrum space in the auction.
In a Sept. 2014 memo, KLCS general manager Sabrina Fair Thomas told school board members the sale would "provide off budget funding for KLCS for the foreseeable future while maintaining the District’s control of a television channel for educational purposes."
KLCS has an operating budget of $2.8 million, according to the school district. The station's most recent financial report shows it received more than $633,000 in Corporation for Public Broadcasting grant money in 2014.
The auction process could last anywhere from a few weeks to several months, according to the FCC.