Michael Dell is positioned to collect as much as $4 billion by selling the rights to TV station airwaves that a company controlled by his investment firm has been buying quietly in recent years for $80 million.
According to a Wall Street Journal report on Wednesday, Dell’s MSD Capital, his investment arm, currently controls a group of broadcasters called OTA Broadcasting, that collectively own spectrum licenses that are worth $4.2 billion, based on prices set by the FCC.
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Based in New York, MSD Capital is a 80-person firm, established in 1998 to manage the personal investments of Michael Dell.
Some of the stations under Dell’s control include the Spanish-language channel Azteca America and a New York-based Korean TV channel. He also owns 11 local stations in the Pittsburgh area, which collectively cost him roughly $7.3 million to invest in, but is now estimated to be worth $1.47 billion, Business Insider report.
Dell’s investment in TV stations is part of a broader activity called spectrum speculation. The investments were likely made in anticipation of the upcoming FCC auction, in which spectrum licenses will be sold to wireless-broadband carriers like AT&T and Verizon, who need additional airwave frequencies to meet the soaring demand for its services.
Other notable spectrum speculators include Fortress Investment Group and Blackstone Group, The Journal’s report said. The FCC auction is set to take place later this year.
But the report also noted that it’s unlikely Dell will get the full $4.2 billion from the auction. The FCC sets the opening bid at the highest-possible price to get as much participation as possible, and runs the auction in the style of a Dutch auction, in which the price is dropped until the buyer is found.
Dell Inc., the Round Rock-based company, is the No. 3 computer maker in the world, employs 13, 000 workers in the US. Last year, Michael Dell ranked No. 23 on Forbes’ list of the richest Americans with a net worth of $19.1 billion.
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