Chicago’s Second Public TV Station Sold for Over $100 Million Less Than It was Worth
The frequency of Chicago’s second public TV station has been sold in a Federal Communications Commission (FCC) auction for a bargain-basement price, an investigation has learned--one-eighth to one-tenth as much as a similar bandwidth went for in the recent auction.
The channel in question, full power WYCC-TV/Channel 20, is controlled by the City Colleges of Chicago (CCC), a group of public community colleges owned by the city. WYCC airs the First Nations Experience (FNX) and MHz Worldview channels, the daily Democracy Now! independent news program, and has aired PBS fare and local shows highlighting justice, race relations, and local music, and more.
The FCC’s Television Incentive Auction results, announced April 13, revealed that the winning FCC bid for WYCC’s frequency ended up at $15,959,957--or more like $6.3 million, if its antenna lease obligation is figured in. Similar bandwidth in Chicago and in comparable metropolitan areas sold for $126.1 million to $160.7 million in the auction. CCC’s inexplicable failure to accept repeated offers of more competitive prices means that Chicago education will see little gain in return for the loss of an irreplaceable outlet for noncommercial TV programming.
Several months after the FCC’s announcement, WTTW-TV, Chicago’s primary PBS outlet, approached City Colleges to negotiate for the distribution rights to WYCC’s program catalog and the WYCC broadcast license, although those talks were terminated over an inability to agree on a price. Channel 20 is currently airing announcements that it will go dark November 27th and is airing a 24/7 feed of the MHz Worldview international news channel on the main channel. The television facilities, located at Kennedy/King College in the South Side community of Englewood, are slated to be mothballed or used for internal CCC production thereafter. After November, the expansive Chicago area will be without an alternative Illinois based public television provider.
The City Colleges could have used a $125 million-plus auction windfall to provide raises for its grossly underpaid instructors and restore cuts imposed in recent Chicago Public Schools budgets. It could also have built a new local journalism and independent media trust for the Chicago area and continued independent operations for WYCC by sharing the channel of another broadcaster.
Instead, then-CCC chancellor Cheryl Hyman and general counsel Eugene Munin sold a TV station on the cheap while the school system was still under an expensive contract for antenna rights that are now useless. This separate 15-year lease for antenna rights, with a $9.3 million obligation remaining, was signed just a year before auction registration began. If it can’t be reworked, the channel’s effective sale price will be $6.3 million.
There is no evidence that City Colleges ever sought out another organization to take over the license for Channel 20. Had it put in place a channel-sharing agreement (CSA), as it indicated it would try to do in its auction application (see page 3), and as almost every other public station participating in the auction has accomplished, it could have continued operations with its $1 million-plus Corporation for Public Broadcasting (CPB) grant and other funding, using part of WTTW’s frequency.
The situation is fluid. A Change.org petition seeking to keep WYCC alive is being circulated by Dutch-born artist Bert Menco. A coalition, including unions with contracts at the City Colleges, such as the Cook County Colleges Teachers Union, the Service Employees International Union and the International Union of Operating Engineers (the latter two part of the Chicago Sun-Times newspaper’s new ownership), could work out a deal for the WYCC license, auction money, equipment and facilities, and negotiate for space on WTTW’s channel. It could also protect CCC radio station WKKC-FM which must now feel like it is in the crosshairs. With key foundation and public support, even the idea for a new local media trust is still possible.
The Chicago Newspaper Guild represents media workers, court reporters, teamsters and teachers. When informed the WYCC license is in play, its head, Craig Rosenbaum, said excitedly, ”Great!”. Craig Aaron, a former Chicagoan and president of Free Press, a leading national media and democracy advocacy organization, noted that he was “thrilled that the Sun-Times didn't end up in the hands of [Chicago Tribune parent company] Tronc,” adding that “it would be great to see more of that, and anything that can counteract the runaway consolidation the FCC is pushing with Sinclair, etc. We need local media in local hands.”
Without quick action, however, the WYCC license is headed for the dumpster due to the CCC’s unaccountable top-down decision making process. Munin (who was the official auction contact), the mayor’s office and City Colleges refused opportunities to answer questions. Associate City Colleges general counsel James Reilly said, “City Colleges of Chicago did retain the services of outside legal counsel and an economist in this matter.”
Through the FCC’s FOIA response, we now know that the nonprofit media law specialist Gray Miller Persh LLP briefed the mayor’s office on how the auction worked. In her email thread on setting up a conference call between FCC auction officials and Christine Koronides, Mayor Emanuel’s director of federal affairs, firm partner Margaret L. Miller declared that
WYCC participated successfully in the spectrum auction, but the mayor’s office has concerns about the ‘discrepancy’ between the winning bid price for WYCC as compared to other broadcast stations in the Chicago market, including, in particular, ($304,250,040) Station WWTO.
WWTO’s winning bid was the highest in the entire auction.
The City knew there was a big problem with the WYCC price, but its only public response so far has been to direct the curious to get lost in a bunch of FCC auction website URLs.
How did the auction work?
The FCC auction fetched $1.9 billion for 34 educational television licensees. The FCC’s television incentive auction included two separate but interdependent processes brokered by the FCC--a reverse auction, which determined the price at which broadcasters would relinquish their channels; and a forward auction, which determined the price wireless companies were willing to pay for broadband use. The FCC’s publicly announced opening bid of $473.4 million for Channel 20 was a high offer to get the ball rolling that was roughly on a par with the $425 million paid on the regular market for a Chicago UHF channel in 2002. Initial estimates of the value of the spectrum in the $20 billion auction ranged from $25 to $80 billion.
Descending bids were made in the reverse auction by the FCC in deliberate 5 percent decrements over a period of months. Broadcasters could cease their participation in the auction without selling their channels at any time. The auction ended when an algorithm determined that the needs of sellers, buyers and the FCC--which took a portion of each sale for the federal budget--were met.
The $16 million winning bid for WYCC does not stack up well locally at all. Chicago station WXFT’s “interference-free population”--a measure of signal reach, the most important factor in a station’s value--is 9.6 million vs. WYCC’s 9.3 million. Its “interference”--a measure of the impingement of other signals--is a touch better at 110 vs. WYCC’s 111. The opening bid made by the FCC for WXFT of $478.5 million compared to WYCC’s $473.4 million, makes the two stations appear quite similar--but WXFT was ultimately sold for $126 million, not $16 million that WYCC was sold for.
Another comparable station in the auction is KLCS, a channel auctioned by Los Angeles Unified Schools, which went for $130 million, but probably could have sold at a somewhat higher bid. KLCS had a better interference rating (88) and a larger “interference-free population” (15.7 million). The opening bid made by the FCC for KLCS was $548.7 million. (Note: KLCS was in a 2014 channel share pilot test, and has worked out a share with LA’s independent public TV outlet, KCET.) San Jose pubcaster KQEH accepted the FCC’s $95.5 million bid. Its interference-free population was 6.6 million, its interference factor 138 and the FCC’s opening bid for it was $444.7 million.
Comparing the full-power and low-power stations in the auction is an apples-and-oranges issue. The FCC has acknowledged that the auction and channel reorganization may negatively affect an unknown number of the 2,063 LPTV and 3,660 translator stations. The usually low winning bids of the low power stations permitted into the auction, the roughly 400 separate “Class A” channels such as Chicago’s WOCH-CD (see Table 1), reflect widely held uncertainties about the future of the LPTV industry, as documented in a December 2016 independent Government Accountability Office report.
(Current magazine’s chart detailing 34 public television channel auction results can be found here. For true FCC nerds, here is a link to all of the reverse auction opening bids and technical ratings and another link to all of the winning bids.)
City Colleges of Chicago’s leap to a tiny winning bid in the third-largest US TV market is inexplicable. As Charlie Meisch, contact for the FCC Incentive Auction Task Force, stressed, City Colleges had numerous chances to sell at a higher price. Meisch said he has no idea what happened in Chicago, and suggested that we “ask WYCC.”
Meisch pointed out the FCC offered “auction training, preparation opportunities and other assistance for sellers.” Sue Sterner, an auction process and procedures contact at the FCC, explained in a phone call that the FCC did not help sellers determine their prices.
The sale of the valuable WYCC channel 20 frequency privatized a scarce resource at an extremely low level of compensation to its public owners. One can only speculate on the reasons that the public officials involved dropped the ball. It remains for the public itself to pick it up.
Scott Sanders has co-founded seven Chicago-based media and democracy groups and coalitions. He is the only local organizer linked by the FCC to a fine of a major public television broadcaster for airing commercials. mail.ssanders@yahoo.com
Margaret Anderson and others contributed editorial suggestions to this article.
