The government’s first auction of airwaves in six years brought record-shattering bids last month. Now investors are rushing to tune into Entravision Communications Corp. in hopes of catching a rerun in 2016.
The Federal Communications Commission last month began selling airwaves to companies looking to capitalize on ever-increasing demand for Internet access on mobile devices. After the auction’s first week, the magnitude of bids topped $34 billion, the highest in FCC history.
The FCC is expected to expand the spectrum available to mobile carriers with an auction of broadcast allotments in 2016. That process would allow broadcasters to sell unused spectrum to mobile carriers and earn a cut of the purchase price.
Entravision, a Santa Monica Spanish-language radio and TV station owner, is poised to benefit from that sale, and the news of the upcoming auction helped drive shares up to $6.32 for the week ended Nov. 26. That 16 percent gain made Entravision the biggest gainer on the LABJ Stock Index. (See page 32.)
Entravision, which owns 58 television stations and 49 radio stations throughout the United States and Latin America, could bring in big bucks by selling spectrum from some of its under-performing assets, said Michael Kupinski, analyst at Noble Financial Group Inc. in Boca Raton, Fla.
“The company is uniquely positioned with (ultra-high frequency) spectrum in key cities in the United States that could generate as much as $1 billion in proceeds to the company,” Kupinski said.
Helping drive the stock price, Entravision said last week it would double its stock buyback program. The company is now authorized to repurchase up to $20 million of its common stock, up from $10 million initially established in August.
“We are committed to returning value to our shareholders through our dividend and repurchase programs and remain well positioned to execute on our strategic plan and drive long-term value creation,” Chief Executive Walter F. Ulloa said in a statement last week.
Tracy Young, analyst at New York’s Evercore Group, said the buyback announcement gave the stock an extra boost. But Entravision’s biggest driver for investors, she said, is the potential the FCC auction brings.
“The broadcast spectrum, which will be auctioned in 2016, is considered more valuable than the (advanced wireless services) spectrum” the FCC is currently selling, Young said. “Investors are expecting strong values for the spectrum that is included in markets such as Hartford and Los Angeles.”
