Tuesday, December 20, 2016

Guest Blogger Stephan Sloan: Contest Rules

Few tournaments have rules for those no longer competing. The Incentive Auction does in the form of 47 C.F.R. § 1.2205(c), the Prohibited Communications Rule. For more than 800 stations not needed in Stage 1 the price of entering the tournament is the continuing burden of the Prohibited Communications Rule. Station owners interested in exploring the sale of their station are presently challenged to provide information to prospective buyers concerned that they will be thought to be communicating elements of their bidding strategy or outcome inthe auction. Buyers are dubious of the effort or resources they should expend to pursue a station which could be frozen in the auction. 

I have been pleased to support efforts to identify stations that should be waived from this rule as they no longer represent meaningful data for rational models of auction outcomes in the current and later Stages. I remain hopeful that recognition of the public good for the purposes of community service and repack as well as the negligible value to the remaining competitors will guide the FCC to a relaxation or limitation of the Prohibited Communications Rule. 

For those wishing to pursue the purchase of a station that elected to participate in the Incentive Auction I can offer data on the probability of a station being frozen. Good modeling provides buyers a rational understanding of the probability a station was frozen in the Incentive Auction and on that basis, decide if they should pursue it or not. Buyers can make their own assessment without input from the station owner, honoring the Prohibited Communications Rule.

We are clearly past halftime in the Incentive Auction tournament. Like in the final quarter of a game, I think the highest stakes calls are being made now in Stage 4. Notre Dame football coach Lou Holtz encouraged his players; “How you respond to the challenge in the second half will determine what you become after the game.” I hope I can assist some of you or your clients with successful answers to these challenges.

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