Who would have thought that the “old-fashioned” business of TV airwaves could be so lucrative? Aside from Michael Dell, of course.
Over the past few years, Dell has been purchasing independent TV stations through OTA Broadcasting LLC, a division of his MSD Capital LP. From the WSJ article:
“Those stations collectively broadcast over airwaves that could be valued at as much as $4.2 billion, based on prices recently set by the Federal Communications Commission. The agency is gearing up to run an auction to buy those airwaves, so they can be resold to wireless operators like AT&T Inc. later this year.”
As it stands, Dell’s most valuable holding is a former Korean station from New York, purchased for $6.6 million almost 4 years ago- the FCC’s opening bid stands at $377 million.
Not surprisingly, Dell will most certainly receive a smaller payout than the possible $4 billion he can currently receive- the question is, where will the auction leave him? Even if he receives half of what is currently offered, he is looking at a 2500% return. Not a bad haul for a few years’ time. This makes me think not just about alternative investments, but specifically how older technology or infrastructure stands in today’s rapidly advancing world- what’s the next big play?
This is the definition of value investing. Absolutely brilliant.
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