MICHEAL DELL IN FORBES

Why Is Michael Dell Buying Up Bankrupt TV Stations?

Jul. 7 2011 - 9:49 am | 5,399 views | 0 recommendations | 4 comments

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Michael Dell’s personal investment firm has quietly picked up a couple of struggling local television stations in recent weeks. Last month the computer mogul’s OTA Broadcasting, a subsidiary of his MSD Capital, bought California’s KTLN for $8 million. Then days ago Dell’s firm won Seattle’s bankrupt KFFV at auction for $5.2 million.
Why is a tech billionaire, worth $14.6 billion at our last check, investing in the local TV market? Well, he’s not — at least not in the stations themselves. If recent speculation is to be believed, he’s investing in the airwaves.
Seattle Times tech blogger Brier Dudley broke the story of Dell’s involvement in a bidding war for KFFV. He thinks it’s most likely that the mogul’s company is making a “real estate play”, holding on to these relatively inexpensive stations until Congress approves a controversial FCC plan to auction off spectrum. In a nutshell, the government plans to buy back spectrum — or airwaves — from broadcasters and then auction them off to big telecoms outfits like AT&T, who will use the extra airspace for wireless networks for cell phones, iPads and the like.
Right now, Dell’s move is purely speculative. Legislation on incentive spectrum auctions has yet to make it past Congress. And worse, according to National Association of Broadcasters comms chief Dennis Wharton, there’s no guarantee that government will pay up once spectrum sales are complete.
“The risk involved for a speculative investor like Dell is that the payout they are expecting turns out to be an empty promise from the government,” he told FORBES.
Wharton said that he wasn’t aware of many small local TV stations being snapped up in speculative plays, adding that most of the approximately 1700 local outfits nationwide are affiliated with big national broadcasters like ABC, Fox or Univision. He said that the ad market has rebounded in the past year, with car ads back on the air and political ads expected to boost revenues in the run-up to 2012.
“We’ve seen very few broadcasters express an interest in returning their licenses,” he said. “Most have a legacy in the business and intend to stay.”
Dell’s firm would not be drawn on their reasons for investing in local TV. “Regarding OTA Broadcasting, MSD Capital has no comment,” said a spokesperson.http://blogs.forbes.com/clareoconnor/2011/07/07/why-is-michael-dell-buying-up-bankrupt-tv-stations/

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