NTIA finds minority ownership dwindlingRoundtable participants agree money is tight, prices high 7/23/2000 08:00:00 PM Eastern
Merrill Charles has always been pleased to offer his communications students at the State University of New York at Oswego College a taste of his real-life experiences as the owner of WHCD(FM) Auburn/Syracuse.
But as the radio stations in that upstate New York market were bought up, largely by Clear Channel Communications Inc. and Citadel Communications Corp., "the handwriting was on the wall," Charles said. "There's just no way for us to be able to compete as single-station owners in our market." He ended up selling to Clear Channel.
By "us," Charles means African-American broadcasters, particularly those who own small radio groups or stand-alone stations.
They are in the somewhat enviable position of being swamped with high-priced offers in an increasingly competitive market. However, with black-owned stations few and far between, every minority broadcaster who sells is one less that the others can look to and count on.
And because financial backers are not as obliging as they could be, African-Americans broadcasters say they can't beef up those dismal numbers.
That was the picture that emerged last Wednesday in Washington. About 100 people, mostly African-American, attended the National Telecommunications and Information Administration-sponsored roundtable on the state of minority-owned radio and TV stations.
Their comments will be used as the NTIA updates its August 1998 survey of minority ownership. Comments are being accepted through Aug. 8, and a report is expected by year's end.
The 1998 survey showed that, while blacks constituted 12% of the nation's population, they owned just 1.7% of the nation's 11,524 TV and radio stations, said NTIA chief Gregory L. Rohde, assistant secretary of Commerce. While there has been some support for minority ownership, with FCC Chairman William Kennard pushing for it, the overall number of minority owners certainly has dropped since the August 1998 survey, he said.
The problem is, "it's still very much an old boys' network-a white boys' network," said S. Jenell Trigg, a Washington attorney with Fleischman and Walsh LLP's Broadcast and Internet/E-Commerce Practice Groups.
When it comes to venture capital, "money has [been] and will continue to be tight" for most minority entrepreneurs, said James L. Winston, executive director and general counsel for the National Association of Black Owned Broadcasters Inc. (NABOB) and a partner in Washington law firm Rubin, Winston, Diercks, Harris & Cooke. Most venture capitalists want to invest in companies that plan to go public and they want their money back-plus a good return-"in three years, no more than five," he said.
Not even Quetzal/Chase Capital Partners, a minority media investment fund set up late last year by mostly white TV and radio broadcasters as the Prism Fund, has proved helpful, several roundtable participants said.
Kudos for the creation of the $175 million fund, but "they are not investing in those who need it the most," said Lois E. Wright, a former FCC lawyer and now vice president and corporate counsel of Inner City Broadcasting Corp. As of earlier this month, Quetzal had funded four minority firms. Of those, one was a broadcaster and three were Internet ventures.
Meanwhile, banks are withholding loans because the prices for radio and TV stations are so high, NABOB's Winston said. Indeed, money doesn't go very far in broadcasting these days, said Ginger Ehn Lew, CEO of Telecommunications Development Fund, a venture capital firm. When the fund was created under the auspices of the Telecommunications Act of 1996, "one of its initial hopes was to increase media ownership of broadcast properties," she said. But with just about $25 million raised so far, it changed its focus to "early-stage telecommunications companies [where] a million dollars here, a million dollars there can, in fact, make a difference."
Despite the gloomy consensus, the roundtable attendees-including Hispanics, Asian-Americans and Native Americans-appeared motivated to work together to effect change.
"We have to partner up ... to create our own consolidation," said Jacqueline Kong, president of HotPopTV.com and founder of Asian-American Media Development. She sees that happening online. "Broadcasters are not satisfying the needs of our communities [so] communities are rapidly forming on the Internet." There, costs are low and demographics highly desirable, she said.
Help may come with the revival of federal tax breaks for investors in minority broadcasting companies. However, said former FCC Commissioner Tyrone Brown, now counsel to the Washington law firm Wiley, Rein & Fielding, it's not yet clear whether the so-called tax-certificate proposal now being pushed in Congress would be reserved for minority media ventures or be open to any small business. "That will depend on the outcome of the coming [presidential] election," Brown said.
Meanwhile, minorities should look for other opportunities, such as possible uses of the spectrum that will be freed up by digital television, said Antoinette "Toni" Cook Bush, executive vice president of Northpoint Technology and BroadbandUSA and former senior counsel to the Senate Commerce Committee's communications subcommittee. "My big concern is that, as the new technologies come along, we're seeing zero ownership by minorities and/or women."
Minority broadcasters also should be wary of further relaxation of the FCC's TV station ownership rules, she said.
"There can't be any further liberalization," said Roel C. Campos, senior vice president and general counsel of El Dorado Communications Inc. and a former assistant U.S. attorney in Los Angeles. In fact, "we need a restudy of what has happened" so far. And so far, he said, "consolidation's been the worst thing to [ever] happen to minority and small-business ownership."