Pre-Auction Repack Expenses May Be Reimbursed
Announcement clears up uncertainty, ideally encourages preparations that might move repack along faster.
If you're a broadcaster thinking about getting a head start on the incentive auction's relocation process, you may be in luck. The FCC has announced that some repack-related expenses will be eligible for reimbursement even if they are incurred before the auction wraps up.
We've known all along that "costs reasonably incurred" in the relocation process will be subject to reimbursement from the $1.75 billion TV Broadcaster Relocation Fund. But it remained unclear whether reimbursement would extend to costs incurred prior to the close of the auction. Now we know: you can go ahead and start your planning. According to the FCC, the Spectrum Act's reimbursement mandate does indeed encompass costs incurred prior to the close of the auction, although of course only if such expenses are otherwise reimbursement-eligible.
The Commission's announcement should help to resolve uncertainty that might otherwise have discouraged stations from undertaking pre-auction work that could go a long way to expediting the post-auction repack process. A "rapid, non-disruptive transition" is, after all, exactly what the FCC is striving for, so it makes a lot of sense to encourage - or, at least, not discourage - steps now that could smooth the repack down the line. (Concern about this uncertainty here was brought to the FCC's attention by a number of parties, including one repped by FHH's own Paul Feldman.)
The reimbursement process for pre-auction expenses will be the same as for post-auction expenses. As we described the process generally last November, eligible entities (i.e., stations that are reassigned to a new channel in their pre-auction band through the repacking process) will, following the close of the forward auction and the release of the Channel Reassignment PN, submit to the Commission an estimate of their eligible costs. The Media Bureau will then review the estimates based on the Catalog of Eligible Expenses the Commission has developed. The Catalog, which is technically embedded in FCC Form 2100, Schedule 399, sets forth categories of expenses most likely to be incurred by relocated broadcasters and MVPDs.
The Catalog is not a "definitive list of all reimbursable items", according to the Commission. Rather, it's a starting point. Items included on the list may not be reimbursable in some circumstances, while items not included on the list may be reimbursable. How will we know which is which? At this point, we don't. That will be up to the Bureau, which will review all claimed expenses to determine whether they're reasonable. (One cautionary note, though: the goal of reimbursement is to permit licensees to end up with facilities comparable to those they already have - i.e., replacing like with like. So don't get fancy ideas about using reimbursement bucks to upgrade your current ho-hum transmission system with some new whiz-bang distributed transmission set-up.)
For those expenses that pass the test, the Bureau will allocate funds to each eligible entity, and reimbursement will be available from the allocated funds as expenses are incurred. Prior to the end of the three-year reimbursement period, eligible entities will be required to provide information regarding their actual and remaining estimated costs, following which each will be issued a final allocation that will cover (ideally) the remainder of their eligible costs.
As it has repeatedly made abundantly clear, the Commission is determined to do everything it can to ensure the success of the Incentive Auction and repack. The announcement concerning the potential reimbursability of at least some pre-auction expenses is yet another step in that direction.