Does Recent Station Sale Show Doubts Over Spectrum Auction?

By Kevin Eck 

Private Equity firm Blackstone Group LP may be expressing its doubts about the upcoming spectrum auction by selling off three of its stations.

Blackstone owns Locus Point, which had been buying up stations across the country to cash in on the FCC’s spectrum sell off to wireless carriers starting March 29.

“There’s a general agreement among broadcasters that the opening bid prices that you see registered are high and that you won’t be getting that,” Dr. John MacKerron, a Towson University professor who manages one of the three stations sold by LocusPoint, told Reuters.

Reuters says industry watchers wonder if Blackstone’s sale “may foreshadow uncertain returns for some selling TV airwaves and lower wireless demand.”

[I]n late November, shortly before the FCC began accepting applications from TV stations to sell spectrum, Blackstone’s LocusPoint agreed to sell three stations in Baltimore, Detroit and Buffalo, New York, for about $24 million, according to FCC filings reviewed by Reuters. The deal closed late last month.

That’s five times the $4.8 million Blackstone BX -1.11% paid, but just 5% of the government’s $477 million stated opening bid prices for the three stations’ spectrum licenses.

Its acceptance of the deal for $24 million implies Blackstone lowered its expectations for the auction, even as the government’s $477 million opening bid was not realistic, analysts said.