Tuesday, June 7, 2016

Guest Blogger Stephan Sloan: The $40 Billion Blink

Tuesday quietly marked a most remarkable day in television station trading history. From models developed with my own assumptions, I believe the initial moment of the FCC Reverse Auction saw approximately 115 stations frozen at a valuation in excess of $40 Billion. 

For reference, if one sums all of the television stations sold from 2003 through 2014, inclusive of merger activity, it approximates the value of that one first moment of the auction. I appreciate that this estimate of the first round of the auction exceeds the total value of the Reverse Auction published by many respected entities; however, I have confidence in this estimate as I believe it to be the natural result of the function of the auction algorithm and the legislation causing the entire Reverse and Forward Auction spectacle.

With the requirement of the FCC to attempt the clearance of the maximum bandwidth for which there is participation by broadcasters, we were nearly certain to set the auction algorithm to solve a scenario where there was scarcity of participation among the most valuable stations in the nation. In this initial moment of the auction that scarcity required the freezing of stations at their opening bid with a swath of the northeast consuming $10+ Billion and the mid-Atlantic as well as Southern California taking $8 Billion each.

In terms of the Reverse Auction model, as I see it, we have accomplished the “head” of this freezing activity and will next set about the much more time consuming business of defining the long tail.

Stephan Sloan 
Director, Media Services Group