The broadcast airwaves, which give TV networks the ability to reach nearly every American television household without a wire, have long been considered the most powerful and lucrative asset for media companies.
Now there is serious talk among the biggest media players about selling off those airwaves.
The government wants to buy the radio frequency spectrum from broadcasters to help handle exploding demand by wireless companies for mobile broadband services. The Federal Communications Commission has set a 2016 auction of the spectrum that’s used to air television signals.
CBS Corp. Chief Executive Leslie Moonves and 21st Century Fox co-Chief Operating Officer James Murdoch say they want to take a closer look at what the government might offer.
“Spectrum presents a very great opportunity for us,” Moonves remarked at the 42nd Annual Global Media Communications Conference presented by Swiss banking giant UBS in New York.
“We own 27 television stations — 13 are CBS and the rest are CW or independents. When you see the numbers being thrown out there for the spectrum of a local television station — in the $200-million range — suddenly that looks pretty attractive to a CW duopoly,” Moonves said, referring to markets where CBS owns two stations.
Murdoch, who spoke earlier at the conference, also said selling some spectrum from the 28 stations owned by Fox Broadcasting Co. could happen at some point.
“If it makes sense to broadcast [only] over wires, then we’ll do it,” he said. “But right now there are too many unknowns.”
Although some stations could be shut down if broadcasters took the government bids, station owners could have their properties assigned to other frequencies.
Murdoch noted that local over-the-air TV stations are “still a good business for us.” Stations in New York and Chicago can command significant dollars for National Football League games when the local teams play. Local news is also a moneymaker.
CBS-owned TV stations are very profitable as well for those same reasons, and Moonves noted other considerations.
“For CBS stations it may be tougher because taking away spectrum may take away some of the HD quality of some of our sporting events,” he said. “But with some of the independents and the CW stations, there are other ways of doing it without totally throwing your ability away to broadcast. I think we can have our cake and eat it too and make a lot of money.”
With the huge amount of money that TV stations have made, the discussion of closing them once would have seemed unfathomable. Broadcast TV stations still deliver higher ratings than most cable outlets.
But the proposal to sell off TV spectrum is the latest acknowledgment that the majority of what the American public watches comes through wire-delivered cable channels or broadband Internet service. Pulling their signals from the airwaves was considered by several broadcasters last year in response to upstart tech company Aereo, which sold a package a streaming over-the-air channels via the Internet.
More than one company looked at business plans of turning into a cable-only service if the courts did not deem Aereo illegal due to copyright infringement. The U.S. Supreme Court decided in favor of the media companies, which effectively shut down Aereo.
Delivering content over the Internet is now an intriguing prospect to broadcasters, as long as they get paid for it.
Earlier this year CBS launched CBS All Access, which provides a live stream of the network’s owned stations and a library of video on demand content (some major sports packages, such as the NFL, are not included but could be included down the road).
When asked how CBS All Access is faring with consumers, Moonves said the product — which costs subscribers $5.99 a month — was ahead of projections. He declined to offer a specific number.
“When Netflix tells you how many people watch ‘House of Cards,’ we’ll tell you how many [subscriptions] we have,” he said.