Entrepreneurial Gold Rush In Low-power Tv

 

The Federal Communications Commission's recent proposal to permit low-power television stations to originate programs has prompted a rush of applications from enterpreneurs, many of whom are drawn to an industry they believe offers the possibility of a huge return on a small initial investment, in a relatively short period of time.

"At least half of the 5,000 applications the FCC has received so far have come from small companies, or first-time broadcasters seizing the opportunity to get into television in their own home towns," says Rodger Skinner, president of TRA Inc., a communications consulting firm based in Hollywood, Fla. "You can build a low-power television station for as little as $100,000, compared to $2 million for a full-power station." And because of the scarcity of channels available and the limited number of broadcast facilities, radio and television stations often sell for two or three times the amount of the original investment, Skinner says.

Low-power television stations can cover about a 5-to-7 mile radius in a city, and 10 to 15 miles in rural areas with fewer competing signals. Currently they are licensed only as "translator" stations that rebroadcast programs originating elsewhere. The FCC proposal would allow them to originate their own programming. Operators are likely to offer a blend of local events coverage and nationally syndicated programming.

The catch in this investment opportunity is that only a limited number of licenses will be issued because only a few frequencies are available. Caught off guard by the interest shown in low-power TV, the FCC imposed a temporary freeze on applications in large markets, including most cities, but it expects to lift the freeze in January.

Interest in low-power TV isn't limited to smaller entrepreneurs. A subsidiary of Sears Roebuck & Co., Ted Turner Broadcasting of Atlanta, and two of the major networks are also seeking licenses for one or more stations, says Molly Pauker, an FCC attorney. The prospect of revenues in the neighborhood of $400,000 annually in the medium-sized markets and $1 million in the major ones has generated the intense competition, says Skinner, whose firm aids clients in the preparation and submission of their applications for low-power stations and on developing business plans for station operation.

The FCC generally requires a full-power station not to sell its license for at least three years, but that rule will not apply to low-power operators. On the other hand, the FCC plans to screen applicants carefully to weed out those who have no intention of operating a station.

FCC regulations governing program content and other aspects of station operation have not been announced. The commission's objective, says Pauker, "is to impose as few regulations as possible."