With Spectrum Auction A Wrap, How Should NJ Spend Its $300M Proceeds?

One proposal: funnel some funds into journalism and media-related endeavors to compensate for deep cuts to New Jersey’s journalism community in recent years.

A recently completed nationwide auction of broadcast spectrum led by the federal government will net New Jersey $332 million, putting before lawmakers the question of exactly how a state with serious fiscal challenges should use the auction proceeds.

According to the Federal Communications Commission, two of New Jersey’s four publicly owned television stations ended up being among the 175 nationwide that were involved in the auction. Conducted by the FCC, the goal of the selloff was to free up more airwaves for wireless providers who are trying to meet an increasing consumer demand for streaming video and other content delivered over wireless broadband.

The results of the auction were announced late last week, wrapping up a complicated sales process that began early last year. But state officials say they don’t expect the revenue from the auction will be available until the summer.

Unfavorable financial position

While no specific purpose for the auction proceeds is spelled out in the state budget that Gov. Chris Christie has put forward for the 2018 fiscal year, New Jersey’s financial position isn’t good. New Jersey is one the nation’s most indebted states, and the public-employee pension system is grossly underfunded. The state has also continued a practice of maintaining razor thin budget reserves, and Wall Street rating agencies have given New Jersey the second-worst credit rating among U.S. states.

But state lawmakers are also being lobbied to use at least some of the auction proceeds to help support New Jersey’s journalism community. A media-advocacy organization has proposed creating a new consortium led by state colleges to reinvest auction profits into journalism and media-related endeavors, since the state has experienced devastating cuts to its journalism community in recent years. Officials from NJTV, the current provider of public television throughout New Jersey, is asking that revenue from the auction be dedicated to help support its programming. They also said the sale would have no impact on programming currently provided.

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.

Exploring options

But after the federal government announced in 2015 that it would be conducting an auction to free up bandwidth for wireless providers, the New Jersey Public Broadcasting Authority decided to explore entering the sale. It’s goal: 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 until last week state officials had said very little since, citing strict anti-collusion rules associated with the federal auction process.

The official results of the auction were announced by the federal government last Thursday, with the stations in Montclair and Trenton among the list of those agreeing to go off the air as a result of the FCC’s redistribution of broadcast spectrum. The Montclair station’s airwaves netted $194 million, while the Trenton station’s brought in $138 million.

The stations in Camden and New Brunswick were not affected by the auction and will share broadcast spectrum with the two stations that were, state officials said.

“The results of the FCC auction are a win-win,” said John Blair, executive director of the New Jersey Public Broadcasting Authority.

“NJPBA was able to monetize its surplus assets while continuing to provide New Jersey-centric programming across the State,” Blair said. “NJPBA remains committed to our valued viewers and providing quality public television service in New Jersey.”

A billion dollar payday?

At one point, federal analysts had estimated the state’s publicly owned airwaves could be worth as much as $2.3 billion a noteworthy sum for a state with deep fiscal challenges.

But state officials had cautioned on numerous occasions that New Jersey was unlikely to see such a huge windfall because state law prohibits the sale of all four stations’ broadcast spectrum. The federal government also used a “reverse auction” format during the sale, a process that pitted sellers against each other to intentionally drive down the bids as the auction unfolded.

Still, the total proceeds of $332 million is slightly higher than a $325 million placeholder that Christie put in the $35.5 billion spending plan that he put forward in late February for fiscal year 2018, which begins on July. At the time, Christie said the $325 million could be derived from a variety of state assets, including the auction.

Investing in media consortium

Mike Rispoli, who leads the News Voices: New Jersey project for Free Press, a nonprofit organization aimed at protecting press freedom, is hoping the auction proceeds don’t get lost in the overall state budget. For the past several weeks, Rispoli has been pushing lawmakers — who have the authority under the state constitution to appropriate revenues — to adopt legislation that would devote at least $100 million from the spectrum sale to establish a new consortium that would boost civic engagement in New Jersey at the community level. In fact, Rispoli was testifying before lawmakers as they are digging deeper into Christie’s budget proposal around the same time that the FCC made its announcement last week.

“These publicly owned airwaves were civic assets and came with an obligation to serve the people of New Jersey,” he said during a Senate Budget and Appropriations Committee public hearing.

“We believe it is right that the money from the sale of the state’s 20th century media be used to create a new forward-thinking media landscape focused on New Jersey and attuned to the residents’ needs,” Rispoli said.

The proposed New Jersey Civic Information Consortium would be led by four public universities, Montclair State University, New Jersey Institute of Technology, Rowan University, and Rutgers University, he said. It could help nurture locally focused online news sites, fund tools to help citizens search public data, and combat the spread of so-called “fake news,” he said.

A statement released by NJTV in the wake of the auction announcement also called on state officials to devote part of the payday to support its programming.

“NJTV is asking the state to dedicate at least some of those funds to New Jersey’s public television network, to assure the long-term sustainability and growth of NJTV as New Jersey’s independent source for local news, public affairs, arts and other programming, as well as community engagement activities.”

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