Small TV Stations Get Hot

Small television stations face a tougher time than most competing with cable and the Web. But some investors are snapping them up, betting on a surge in the value of their airwaves.

Investors including Michael Dell's MSD Capital LP and Fortress Investment Group LLC are buying small, sometimes bankrupt stations in major markets including Los Angeles, New York and Seattle, where the demand for airwaves, or spectrum, is at a particular premium. The investors are jumping into the market ahead of a so-called incentive auction hosted by the Federal Communications Commission, which plans to reclaim spectrum for use by wireless phone companies and other bidders. The auction is part of a broader rearrangement of U.S. airwaves by the FCC aimed at addressing consumers' seemingly voracious appetite for wireless broadband services. While the private-equity funds are buying stations for as little as several million dollars, observers say their value could be many times higher once the FCC auction gets under way. Much about the auction remains uncertain, however, including the timing.