NJ Windfall from Sale of Public Airwaves Likely Smaller Than Projected

Analysts once estimated that selling off public bandwidth in New Jersey could raise more than $2B, but signs now point to a more modest haul

tv transmission tower
More than a year after state officials decided to put New Jersey’s publicly owned airwaves into a nationwide auction of broadcast spectrum that’s being led by the federal government, hopes that the state could generate a multibillion-dollar windfall appear to be fading.

A complicated and lengthy federal-auction process is finally winding down, and it’s still not clear exactly how much revenue New Jersey can expect to receive from the auction and when the money could arrive.

But Gov. Chris Christie’s recent budget proposal for the next state fiscal year provided a small clue with the inclusion of a $325 million revenue placeholder under the heading “asset sales.” Christie also told reporters recently that a portion of the $325 million is linked to the Federal Communications Commission’s broader effort to free up broadcast airwaves currently being used by television stations in favor of wireless providers who are trying to meet an increasing consumer demand for streaming video and other content that’s viewable over wireless broadband.

That means New Jersey’s auction proceeds will almost certainly fall well short of the $2.3 billion estimate that experts originally floated as the potential combined value of the airwaves controlled by the state’s four public TV stations, which are all located in the highly desirable broadcast market sandwiched between New York and Philadelphia.

Maybe a few hundred million dollars

Still, with the possibility that a few hundred million dollars in new revenue could eventually be generated for the cash-strapped state through the auction process — which is due to be wrapped up later this month — media-advocacy organizations are pressing lawmakers to use at least some of the expected auction proceeds to give a boost to public-interest journalism.

The state has for decades owned public TV stations in Camden, Montclair, New Brunswick and Trenton, the result of lawmakers growing frustrated with paltry coverage of New Jersey issues by commercial TV stations in New York and Pennsylvania. The state-owned stations are currently used to provide public programming by NJTV under a five-year deal with the nonprofit Public Media NJ, an affiliate of WNET, New York City’s flagship public station.

But after the federal government announced in 2015 that it would be conducting an auction to free up bandwidth to meet growing demand for wireless providers, the New Jersey Public Broadcasting Authority decided to explore entering the sale to see if it could generate a windfall without significantly affecting programming since many viewers now get their NJTV shows via cable or online. The broadcasting authority announced in January 2016 that it would be participating in the auction, but state officials have said very little since, citing strict anti-collusion rules associated with the federal auction process.

In fact, state Treasurer Ford Scudder only briefly addressed the auction during a budget briefing with reporters that was held last month as Christie released his overall $35.5 billion spending plan for the 2018 fiscal year, confirming only that the state was “anticipating a certain amount of revenue in asset sales” during new the fiscal year, which begins in July.

State can’t sell all four broadcasting licenses

The first hints that the state was unlikely to receive anywhere close to the $2.3 billion estimate that was floated by the analysts came from Scudder last year during an appearance before lawmakers. He detailed the federal government’s use of a “reverse” auction format that was designed to lower sale prices by pitting airwave owners against each other in rounds of bidding. By contrast, in a traditional auction format, the purchase price is bid upward in a competition between potential buyers.

Scudder also said at the time that New Jersey law prevents the state from selling all four of its broadcasting licenses.

Last week, Christie talked about the auction process while speaking to reporters about his proposed budget following an event in Englewood Cliffs. The second-term Republican confirmed that part of the $325 million placeholder that’s in his fiscal 2018 budget is connected to the federal auction, but he declined to say exactly how much of the total is directly linked to the auction. “That could wind up being in part, but not in whole, the spectrum sales that are happening at the federal level,” Christie said.

He also said it’s too soon to say when the state would receive the revenue from the auction even it finds out within the next few weeks that it will be receiving a significant haul. To be safe, he said the state anticipates the revenue would come in after July 1, meaning it would be available for the 2018 fiscal year.

“We tried to do the responsible thing, which was to not assume it for (fiscal year) 2017, the year we’re in, so that if you get the money in 2017, whatever amount it turns out to be, it will be a windfall for the state in 2017 because the budget is already balanced in 2017,” he said. “We anticipated it in (fiscal year) 2018.”

Christie did not say how his administration plans to spend any auction proceeds outside of using the revenue to support the budget’s general fund or surplus.

Calls to use money to aid local media

But the timing is important because lawmakers — who have authority under the state constitution to appropriate revenue — would likely have more say in how the money can be spent if it is received before the new spending plan is finalized in late June. And if receipt of the revenue is delayed even longer, it could come in after Christie is due to leave office in early 2018 due to constitutional term limits.

No matter when the potential windfall is collected, media advocates say they want to see at least some of the revenue used to provide a boost to the struggling New Jersey press.

Late last year, a New York Times opinion piece written by Christopher J. Daggett, president and chief executive of the Geraldine R. Dodge Foundation, suggested that state lawmakers should pass legislation to “create a permanent fund to support a new model for public-interest media, financed by a significant portion of any auction revenue.”

“This approach could serve as a model for other states, universities and communities seeking to sell their spectrum,” wrote Daggett, who mounted an unsuccessful bid for governor in New Jersey in 2009.

During a recent public hearing convened by the Assembly Budget Committee, Mike Rispoli, a former State House reporter, asked lawmakers to consider establishing a new consortium using $100 million from the anticipated auction proceeds.

The New Jersey Civic Information Consortium would be led by four public universities from across New Jersey — Montclair State University, New Jersey Institute of Technology, Rowan University and Rutgers University — said Rispoli, who now leads the News Voices: New Jersey project for Free Press, a nonprofit organization aimed at protecting press freedom. The consortium could help nurture new, locally focused online news sites, fund tools to help citizens search public data, and combat the spread of so-called “fake news,” he said.

“Across the state, we’ve heard from countless people that they want better information and more coverage of where they live,” said Rispoli, who went on to detail recent cutbacks and consolidations occurring at newspapers throughout New Jersey.

“Investing this money to promote informed and engaged communities could not come at a more urgent time,” he said.

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