Michael Dell positioned to score billions in incentive auction

Computer mogul Michael Dell is positioned to make billions in the FCC's upcoming incentive auction of TV broadcasters' 600 MHz spectrum, The Wall Street Journal reported.

michael dell

Dell

Government records indicate a company controlled by Dell's investment fund has spent roughly $80 million since 2011 buying more than a dozen independent TV stations, the Journal reported. Those stations use airwaves that could be valued at as much as $4.2 billion in the auction, based on FCC-established prices.

For example, the company bought a former Korean station in New York in March 2012 for $6.6 million; the FCC's opening bid for its license is $377 million.

Because of the way the reverse auction will be held, though, it's highly unlikely that every license will fetch top dollar. After initially offering full price, the FCC will lower its offers until it scores the cheapest price for the spectrum it needs. Final prices are likely to be much lower than the initial offers, the Journal notes, and some participating broadcasters may not sell any spectrum at all.

The FCC stopped accepting applications from broadcasters for the reverse auction yesterday, and it plans to release a tutorial for participants to learn how to bid next month. The "reverse" portion of the auction, where the FCC will acquire spectrum, is slated to begin March 29.

"NAB expects robust broadcaster participation in the reverse auction, and we hope to see similarly robust participation from wireless bidders in the forward auction," said Dennis Wharton, executive vice president of the National Association of Broadcasters, said in prepared remarks. "While we've expressed our concerns, we hope that the rules and systems the FCC has in place will ensure that this voluntary auction goes off without a hitch, and we look forward to the close of a successful auction."

Financial analysts at Wells Fargo have predicted that AT&T (NYSE: T) will outspend its rivals on the "forward" portion of the auction, which will happen after the reverse auction and will invovle wireless carriers and others bidding for the spectrum released by broadcasters. The Wells Fargo analysts expect AT&T to drop up to $10 billion for a 2x10 MHz block of spectrum with nationwide capability. T-Mobile (NYSE:TMUS) is expected to bid up to $8 billion, and Verizon (NYSE: VZ) -- which has been circumspect about its intentions -- will reportedly spend $5 billion. Sprint (NYSE:S) has said it won't participate.

For more:
- see this Wall Street Journal story

Related articles:
AT&T predicted to dominate 600 MHz incentive auction with $10B in bids, outshining T-Mobile's $8B spend
Analysts: Comcast, Charter, Dish and Google might bid in 600 MHz auction - but won't be building out networks
Sinclair, CBS, Gray voice support for FCC's 600 MHz incentive auction, other TV broadcasters on the fence
Comcast, Charter may participate in 600 MHz auction, while Time Warner Cable plans to stay home
T-Mobile seen as favorite to win spectrum in 600 MHz auction, but smaller carriers likely to jump in as well

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