TV Stations’ Class A Status on the Chopping Block

This morning the FCC released copies of 16 Orders to Show Cause sent to licensees of low power TV stations that have Class A status. Class A status protects such stations from being displaced by modifications to full-power stations and, with the recent enactment of the spectrum auction legislation, qualifies them to participate in the auction (for a share of the auction revenues) while protecting them from being spectrum repacked out of existence as part of the auction preparations.

Each of the Orders is surprisingly similar, noting that the FCC sent letters to the licensee in March and August of last year asking why it had not been regularly filing its FCC Form 398 Children’s Television Reports with the Commission. The Orders note that the licensees failed to respond to either of the FCC letters, and that the FCC is therefore demanding they now tell the FCC if there is any reason why it should not relieve them of their Class A status, making them regular LPTV licensees with attendant secondary status.

It is possible that these are just the beginning of a tidal wave of FCC orders aimed at thinning the ranks of Class A stations. First, given that these stations were told they had not filed all of their Children’s Television Reports and they then failed to respond to the FCC, these are the “easy” cases for the FCC, since it can assert that the licensee effectively defaulted by not responding. Presumably, for each licensee that did not respond at all, there were several that did respond to explain why their Children’s Television Reports might not be showing up in the FCC’s database. These cases will have more individualized facts, requiring the Media Bureau to write more detailed and diverse responses. Drafting those types of responses will take FCC staff more time than this largely cookie-cutter first batch, and that is why there likely will be more Show Cause Orders being sent to Class A stations in the not too distant future.

Beyond proving once again that “you don’t tug on Superman’s cape, you don’t spit into the wind, you don’t pull the mask off that old Lone Ranger, and you don’t fail to respond to an FCC letter” (Jim Croce as channeled by a communications lawyer), the Orders are a bit surprising since the FCC had previously taken the position that, like full-power TV stations, the penalty for a Class A station failing to comply with a rule is typically a fine, not the loss of Class A status. While the licensees that failed to respond to the FCC letters in March and August certainly did themselves no favors, it is likely that loss of Class A status is going to be the FCC’s favored enforcement tool going forward.

Why? Well, as I explain in a post coming out later this week on the new spectrum auction law, unlike Class A stations, LPTV stations were given no protections under the auction statute, leaving them at risk of being displaced into oblivion, with no right to participate in spectrum auction proceeds and no right to reimbursement for the cost of moving to a new channel during the repacking process (assuming a channel is available).

However, because the statute gives Class A stations rights similar to full-power TV stations, every Class A station the FCC can now eliminate increases the amount of spectrum the FCC can recover for an auction, reduces the amount of spectrum the FCC must leave available for broadcasters in the repacking process, and increases the potential profitability of the auction for the government (since it can just displace LPTV stations rather than compensate them as Class A stations).

That the FCC seems to now be moving quickly to cull LPTV stations from the Class A herd just a week after Congress cleared the way for a spectrum auction is likely no coincidence. Instead, these Orders represent the first of many actions the FCC is likely to take to simplify the repacking process while reducing the costs inherent in conducting an auction for vacated broadcast spectrum. For the FCC, LPTV stations and “former” Class A stations are the low-hanging fruit in conducting a successful spectrum auction. The question for other television licensees is how much further up the tree the FCC is going to climb to make more spectrum available for an auction at minimal cost to the government.