We now interrupt your regular programming: local TV signals on the block

You'll see a spectrum extravaganza that is going to be transformational.

Monday, August 27, 2012 Paul Groves, general manager of WTCI-TV and the new statewide head of the PBS station network in Tennessee, poses for a portrait in the control room at WTCI-TV.

The Federal Communications Commission wants Chattanooga's TV stations - and those around the country - to put their frequencies up for an auction that starts March 29 to make more room on the airwaves for use by an ever-growing number of smart phones and other wireless devices.

For Chattanoogans who watch over-the-air TV, the auction could mean they'll have fewer viewing choices - and they may have to re-adjust their TV antennas as channels change and stations are "repacked" into a smaller slice of the airwaves.

Only about 11 percent of U.S. viewers still get their TV from free, over-the-air broadcasts. But many of those who depend on traditional broadcast TV are not happy to see free, over-the-air TV airwaves reallocated to wireless companies.

"The people that are running the process don't really care about free TV for consumers," said Chattanooga entrepreneur Henry Luken, founder of Luken Communications, which offers networks of old TV shows including "I Spy" and "Fat Albert and the Cosby Kids" for sale to broadcast TV stations.

The auction is a chance for some TV broadcasters to cash in and take advantage of what FCC Chairman Tom Wheeler called a "once-in-a-lifetime game-changing financial opportunity," since stations that have been offered eye-popping opening prices to go off the air.

Nationwide, the highest starting price is $900 million for the airwaves of a metropolitan New York station. In Chattanooga, the FCC lists the opening price to go off the air at $174 million for public TV station WTCI Channel 45, $115 million for WTVC Channel 9 and $113 million for WRCB Channel 3. All told, the FCC's auction lists 13 Chattanooga stations that could be put off the air or switched to different frequencies, and the combined bidding price for all of the stations is more than $2 billion.

However, those staggering opening prices should drop dramatically, since the FCC will conduct a "reverse auction" in which the price the FCC offers TV stations to abandon frequencies drops until only a few stations are left willing to sell.

At $100 million, every station in a market like Chattanooga might stay in the auction, said Harry Jessell, editor and co-publisher of TVNewsCheck, a website that follows the free, over-the-air TV broadcasting business. But only a few broadcasters may be willing to give up their frequency, he said, as the FCC offer drops incrementally and reaches, say, $20 million or $10 million.

"[The FCC is] usually targeting two stations in the market," Jessell said, "They'll keep going down until somebody's willing to take $10 million."

WTCI in auction - but won't go off air

It's hard to know which of Chattanooga's TV stations will participate, because the process is shrouded in secrecy. The FCC won't disclose which stations are in the auction. Chattanooga broadcasters can say whether are not they're in the auction, but many are mum.

"I cannot comment," said Mike Costa, general manager of WTVC 9.1 ABC, 9.2 Fox Chattanooga and WFLI 53 CW Chattanooga.

WRCB Channel 3 won't participate in the auction, said President and General Manager Tom Tolar.

"No we're not," said Tolar, explaining that Channel 3's owner, Sarkes Tarzian, Inc., which also has a TV station in Reno, Nev., wants to stay on the air. "We would rather continue to be broadcasters than to give up our channels."

Paul Grove, president and CEO of WTCI-TV 45, confirmed the Chattanooga public TV station's board voted unanimously to enter the auction.

"We are participating in the auction," Grove said, adding that WTCI would never leave the airwaves. "We will not abandon our over-the-air viewers, ever."

Grove wouldn't provide any more details. WTCI does have a page on its website that addresses the spectrum auction in which it answers questions and promises it's not "'selling out' to wireless companies such as Verizon and AT&T to make a profit."

Stations could 'piggyback' to stay on air

Jessell said a station could sell its frequency and piggyback on another station's frequency. Or, if a company owns multiple frequencies in a market, it could pack all of its primary stations on one frequency and sell the other frequency or frequencies.

"You can share a channel ever since 2009. You can now broadcast multiple channels over one frequency," Jessell said. "What a lot of stations [plan on] doing - especially public stations - they find a partner to double up."

A potential drawback is that more subchannels usually means reduced signal quality. A station may be able to put high-definition TV on two subchannels but might have to go to standard-definition TV if it decides to use multiple subchannels.

Sinclair already has reshuffled some of its channels here.

"You saw what happened with WDSI and the Fox affiliation going over to Channel 9.2," Tolar said. "That's sort of what would happen if stations went away; you could still find partnerships, you could share the channel."

Sinclair paid $1.25 million in September to buy the assets and programming of New Age Media of Tennessee, which owned WDSI-61 and WFLI-CW Chattanooga (Channel 53). New Age Media still owns the Channel 61 airwaves, while Sinclair owns the airwaves for Channels 9 and 53. That's why Fox Chattanooga permanently moved in the fall of 2015 from New Age Media-owned Channel 61.1 to Sinclair-owned Channel 9.2. Channel 61.1 now broadcasts This TV while 61.2 carries Comet TV.

The Hunt Valley, Md.-based Sinclair Group, which calls itself "one of the largest and most diversified television broadcasting companies in the country," with 164 stations in 70 U.S. markets, could make $2 billion from the spectrum auction, according to the company's chief operating officer, David Amy.

In markets around the country, public TV stations, in general, are more likely to sell their frequency, Jessell said.

"They're probably willing to take less money," he said.

WTCI officials are mindful of the fact that many low-income, elderly, minority viewers and those with small children depend on antenna TV, Grove said.

"Whatever happens, we'll continue to broadcast the PBS programming that everybody's come to depend on," Grove said.

Religious broadcasters also are more likely to sell, Jessell said.

Over-the-air 'only growing part of TV'

Explosive demand from smartphones and other wireless devices is cited as the rationale for buying publicly-owned airwaves from TV stations and selling them to wireless companies. Wireless broadband spectrum is being swallowed up by demand for 4G speeds - and soon 5G - as users stream video and data for smartphones, tablets and other devices.

Some speculate that Google may buy up spectrum for such uses as controlling self-driving cars, or Amazon might bid on it to run its proposed fleet of delivery drones.

The FCC expects to make money on the spectrum auction. It will pay out of its own pocket to buy frequencies from TV channels. But then the FCC expects to come out ahead when wireless companies start to buy up spectrum. One analyst expects the TV spectrum auction that starts in March will generate $60 billion - and others think that estimate may be low. Companies bid more than $30 billion in 2014 when the FCC auctioned off a slice of the mid-range frequency spectrum.

Only about 11 percent of TV viewers rely on over-the-air broadcast, while the remaining 89 percent watch cable TV or satellite "dish" TV.

Luken Communication runs several digital broadcast networks targeted for low-power TV stations, including Retro TV, Jewelry Television and Family TV. Luken's company also owns about 80 low-power TV stations around the country, which aren't part of the spectrum auction, including WOOT TV Channel 6 in Chattanooga.

Luken bought thousands of TV antennas that he plans to give away free to Chattanooga-area residents to encourage them to ditch cable and satellite in favor of antenna TV. It's a growing trend, he says.

"It's the only growing part of TV," Luken said.

Contact staff writer Tim Omarzu at tomarzu@timesfreepress.com or www.facebook.com/MeetsForBusiness or twitter.com/meetforbusiness or 423-757-6651.