Editorials

The FCC's tax-certificate policy, which would give companies a capital-gains-tax break for selling communications properties to minorities, is trying to make a comeback under the stewardship of Sen. John McCain. The original policy was a good idea gone bad, but it can and should be fixed. Begun in 1978, the policy was ended in 1995 due to abuses: Minorities were recruited as fronts so companies could get the discount. We said in 1999, when McCain tried to re-institute the policy, that it was time to give the tax break another try, so long as it contained the proper safeguards. It is now past time.

The current bill, introduced last week, would guard against abuses by reinstating the tax liability, plus tacking on a stiff 20% penalty, if the property were flipped rather than held by the original minority buyer or sold to another minority.

This latest try has made allies of McCain, Eddie Fritts (NAB), Robert Sachs (NCTA), Powell and David Honig (Minority Media Telecommunications Council). The House and Senate leadership should join the group.

Sen. John McCain was giving with one hand (see above) and taking away with the other last week. In the latter category, the campaign crusader introduced his long-vowed free-airtime bill in concert with Sen. Russ Feingold. The bill would: 1) force stations to carry two hours per week of candidate-centered programming, 2) revive the rate cut backed by the recently besmirched Sen. Robert Torricelli and 3) in a "rob Peter to pay Peter" scenario, give candidates $750 million in vouchers to pay broadcasters for campaign ads. The vouchers would be underwritten by spectrum fees collected from broadcasters.

Fortunately, this has a snow cone's chance in Hades of passage. The rate cut went nowhere as the Torricelli amendment, and the red flag it raises is dwarfed by that of spectrum fees/vouchers.

But the bill could fall on the rate cut alone, which is clearly discriminatory since it applies to TV but not radio or newspapers or the Internet or outdoor or transit. Then there is the market-driven certainty that any rate cut would be compensated for elsewhere or, as Michigan's John Dingell said of the Torricelli amendment: "We are putting our hands in the pockets of the home folks to get a campaign subsidy." Then there are the First Amendment concerns about micromanaging the media. The vouchers are just a vehicle for spectrum fees McCain hasn't been able to push through elsewhere.

While our gut tells us that broadcasters would serve themselves and their public better by airing more campaign coverage, the McCain-Feingold bill, which sticks one hand in the pocket of the home folks and both hands in the pocket of broadcasters, is not the solution.