Remember The Beverly Hillbillies? If you don't, here's the premise of the long-running sitcom, as explained in its theme song:
"Come and listen to a story 'bout a man named Jed,
A poor mountaineer, barely kept his family fed.
Then one day he was shootin' at some food,
And up through the ground come a bubblin' crude ...
Oil, that is ... black gold ... Texas tea."
It goes on to explain how finding oil gave Jed and his kinfolk the cash to leave the holler and move to Beverly Hills, where foolish hijinks involving movie stars and swimming pools would then ensue.
The Beverly Hillbillies, running nine seasons from the early '60s into the '70s, was a big hit for CBS during the shank of broadcast television's golden age. However, more than 40 years after The Beverly Hillbillies' oil well finally dried up, Jed's good fortune now mirrors that of the denizens of broadcast television's current backwoods -- the UHF television stations.
UHF station owners are sitting on the equivalent of newly discovered oil reserves in a world that's fighting for every last drop of crude. The valuable substance in this case is spectrum, the frequencies that the mobile operators covet as wireless broadband usage is driving the telecom industry.
The UHF channels are in the highest wireless frequency range allotted to broadcast television, and those frequencies are more useful to mobile communications than to the lower frequencies of the VHF channels used by the network affiliates and some independent stations.
Suddenly, UHF stations have become a valuable commodity -- not because of their programming, audiences, or facilities, but solely for their spectrum licenses.
Spectrum is the lifeblood of wireless communications, and the major mobile operators are willing to pay big bucks for it.
AT&T (NYSE: T ) tried and failed to buy T-Mobile USA and its spectrum in for $39 billion. Verizon (NYSE: VZ ) paid $3.9 billion to Comcast (NASDAQ: CMCSA ) and other cable companies for their cache of spectrum. Clearwire (UNKNOWN: CLWR.DL ) is currently being sought by Sprint Nextel (NYSE: S ) for its frequencies, and now in a bit of a turnaround, T-Mobile USA wants to buy MetroPCS (NASDAQ: TMUS ) and its airwave resources.
To take advantage of the need for spectrum, there is a UHF station buying spree going on, according to Variety. Like real estate speculators searching out run-down properties in changing neighborhoods, investors are scooping up UHF stations for later sale to the highest bidders.
The San Francisco Bay-area UHF station, KTLN, residing on channel 47, a religious-programming broadcaster, was bought for $8 million by OTA Broadcasting, a group headed up by computer impresario Michael Dell in 2011. OTA also owns three other stations: KFFV and MeTV in Seattle, and WEBR in New York City.
But UHF station owners are also facing a dilemma. If those in the higher channels don't sell voluntarily, they might face eviction from their current FCC-designated spectrums and be moved to a new home to share spectrum with another station on a lower channel.
That process is called "packing" and could be done so the FCC can engage in future auctions of contiguous higher spectrum ranges to mobile operators. If that happens, their new spectrum becomes less valuable.
The auctions are planned for next year, though the broadcasting lobby is fighting against it, with the National Association of Broadcasters' president, Gordon Smith, once calling it a "spectrum grab."
Nevertheless, a speculator's investment in airwaves could have a big payoff, with buyers hoping to sell for two or three times the purchase price, according to a television station broker Variety spoke to.
But there are still holdouts on the selling side. The broker mentioned one station that doesn't even get a half million dollars in annual revenue "turning down offers of 50 to 60 million," thinking it could eventually get $100 million.
Maybe so, but the window for getting that kind of money may be closing by the end of this year.
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