The key is the spectrum -- the broadcast spectrum. ( And it's no secret that I love the spectrum.) Several media companies control an invisible commodity, the valuable electromagnetic broadcast spectrum. Companies like LIN and Meredith can license this spectrum, which was originally designated for AM radio stations. But there's a great deal more here.
To learn more about the broadcast spectrum, watch this 3-minute video. You'll hear from Ruth Milken, the Chief of the Wireless Telecommunications Bureau for the Federal Communications Commission. You'll learn about supply and demand for the nation's airwaves. This electromagnetic spectrum encompasses everything from telephony to wireless Internet to TV.
As Milken makes abundantly clear, the big challenge that media companies and the FCC are facing is the soaring demand for spectrum. The supply of broadcast spectrum is greatly exceeded by demand. With smartphones and tablets, data demand is growing exponentially worldwide.
The companies that have licensed sufficient broadcast spectrum are now becoming enormously valuable.
Take Meredith. It's a media and marketing company with a wide range of businesses. Those include magazine publishing, brand licensing, television broadcasting, digital and customer relationship marketing, digital and mobile media and video creation operations.
One of Meredith's most valuable assets, it turns out, is its broadcast spectrum licenses. According to a recent Wells Fargo analysis, the spectrum value per share (SVS) of Meredith's stock is somewhere between $17 and $18.