On August 5, Senator Robert Menendez (D-NJ) offered legislation to revive the minority tax certificate program, which provides tax incentives to sell broadcast properties to socially disadvantaged businesses. The plan would provide $350 million in tax certificates over six years for businesses to sell to FCC-certified socially disadvantaged businesses.
A tax certificate program was one of the measures strongly advocated by panelists at the FCC's en banc hearing and conference on "Overcoming Barriers to Communications Financing" at the Schomburg Center for Research in Black Culture in New York. Statistics presented at the meeting suggest that the tax certificate program helped the number of women and minority broadcast owners increase by a factor of five from 1978 to 1995.
Since that time, ownership by minorities and women has declined markedly. The Commission said the main purpose of its recent en banc meeting, which it promised to conduct in its December 2007 Diversity Order, was to learn about the present state of capital markets and how the Commission could address specific problems that women and minorities face in securing funding.
The Commissioners kicked off the meeting with their own statements regarding the state of diversity in media today with most lamenting the dismal numbers of women and minority broadcasters. Commissioners Copps, Adelstein and Tate all mentioned significant media consolidation as one cause for decreased diversity in media ownership.
Each noted the December Diversity Order, which adopted 13 items to increase diversity in media, as a significant step in the right direction, but also noted that more action is needed. Some of the additional measures the Commissioners mentioned included improving the data collection on ownership, updating the Adarand studies and strengthening the Commission's Equal Employment Opportunity program. Both Commissioners Copps and Adelstein noted that the current definition of "eligible entity" limits the effectiveness of the current policies, with Copps specifically stating, "I believe it is absolutely essential that we work toward race-conscious remedies if we are serious about reversing the sad state of minority ownership."
CNBC's Erin Burnett moderated the two panels, which included 24 witnesses to provide their perspectives on the topics "Successfully Securing Equity Financing" and "Successfully Securing Loans." The panel discussions on various impacts to women and minority-owned broadcasters covered a wide swath of media issues ranging from localism to a la carte programming to the importance of incorporating digital media plans into business plans.
Panel members said that policy changes in the 1990's severely impacted women and minority broadcasters, and that the Commission's December Diversity Order was a welcome correction. The National Association of Black Owned Broadcasters (NABOB) in particular lauded the prohibition against discriminatory language in advertising contracts.
At least one panel member said that historically, the only programs that have been effective in increasing women and minority ownership of media have been those that provide genuine economic benefits to attract equity capital such as the Designated Entity Program and the tax certificate program.
Other panelists stated that the financial issues go deeper, and thus the Commission should address larger issues and adopt more extensive policy changes. For example, NABOB discussed the importance of ratings to stations, as advertising is the lifeblood of stations. Its representative argued that Arbitron's move to new technology in September 2008 will severely impact the advertising base of women and minority stations because it fails to adequately represent the audience of women and minority stations.
An owner of a Low Power Television (LPTV) station with a Spanish-language format advocated for the Commission to give must-carry status to LPTV stations that meet full-power public interest obligations so they have more leverage when negotiating with the local cable company. She said better placement translates to more advertising dollars and thus stronger ownership.
Finally, Andrew Schwartzman, representing the Media Access Project, unveiled his proposal for a new class of broadcast station, which he states will provide existing broadcast stations with a new revenue stream and bolster diversity and provide collateral for new licensees to attract capital without requiring legislation. Schwartzman suggested that the new Class S stations would use the multiplexed facilities of full power digital TV licensees. The licensee would compensate the "main" licensee for use of its facilities, and would be required to lease the facilities back to the station for a maximum of six hours per day if the "main" licensee wanted to use the capacity for HD broadcasting. The Class S stations run by Class A licensees or socially or economically disadvantaged entities would be eligible for must-carry status. And the Class S stations would not be able to carry commercial programming for more than half of the broadcast day.
An archived audio webcast of the hearing is available here.