Washington

Minority Entrepreneurs Advised to Focus on New Media

McDowell, Baker, Clyburn agree that is where the investment action is 7/19/2010 03:54:04 PM Eastern

Minority communications entrepreneurs should be focusing on opportunities in new media, said FCC Commissioners at a D.C. conference Monday, and those commissioners said they are willing to help.

 
The other side of that equation is that the opportunities in traditional media are on the wane, they suggested.
That came at a standing-room only Q&A with a majority of commissioners--Robert McDowell, Meredith Attwell Baker and, via a sometimes hinky video link, Mignon Clyburn, at the Minority Media & Telecom Council's annual Access to Capital in Telecommunications Policy Conference in Washington Monday. 
McDowell said the description of broadcasting as a car with four flat tires was a "good analogy"--it had been volunteered by a questioner from the audience. He said there might be opportunities to buy stations, given lower valuations, but added that that was because revenues were in decline. "I think the best opportunities are in new media," he said. "That is where the next generation is going to go." 
He talked about the low entry barriers Baker also talked about opportunities in new media, saying applications will be a $30 billion business by 2013. "I think there may be value in some of the distressed broadcast assets," she said, "but to mind the new media is really where to focus." 
McDowell said more needs to be done at the FCC on diversity, including defining socially and economically disadvantaged businesses (SDBs) that would qualify for help, enforcing the minority set-asides in the XM/Sirius merger (Clyburn suggested there is some movement on that front after almost two years). But he also outlined progress, including since 2007 some 13 EEO-related Notices of Apparent liability involving 41 stations. He also pointed to working with advertisers to enforce the FCC's proscription on so called "no urban" and "no Hispanic" dictates, the practice of excluding those populations in ad buys. He also pointed to the FCC's own access to capital events--another one is coming up in the fall, and its extension of the build-out deadlines for minority-owned stations.
As to a year without an EEO enforcement action, which MMTC cited in a letter to the FCC slamming it for inaction, McDowell called that letter very valuable, but also said that in the past 24 months nobody has been doing much hiring, period. "So, we need to look at how much that is going to have a correlation with matters that are put before us in terms of EEO actions." 
He pointed out that the FCC has revised its distress-sale policy to encourage sales to eligible entities, and that it is working with the Small Business Administration to encourage banks to make SBA-guaranteed loans in broadcast and telecom deals. The FCC also gives "priority" to duopoly approval to companies who "incubate" eligible entities. 

McDowell also put in a plug for mentoring programs and incentives, as well as getting unlicensed devices up and running in the TV "white spaces," saying that WiFi on steroids opportunity could be one for minority entrepreneurs.

"There is a lot on that list, he said, "but going forward there is a lot to do." One of those he suggested, would be giving broadcasters a carve-out from media ownership rules. "We need to consider modification or waiver of the local ownership caps for a licensee that operates as an incubator program for SDBs. All three commissioners agreed that Congress needs to pass legislation reinstating the tax certificate policy, which would give media owners a tax break for selling media properties to SDBs. 
"I do not understand why Congress has not passed legislation to reinstitute a new and improved tax certificate program," he said. "This seems like a no-brainer. Clyburn said she had had meetings on the Hill and would do what she could. Baker said her concern was about the system being gamed. 
McDowell agreed, but said there were legislative fixes for that. "That one program alone could make a world of difference," he said. 
All three commissioners also said access to capital was the top barrier to boosting minority participation, but Clyburn said number two on the list was media consolidation. (That did not make either McDowell or Baker's list.) "[Consolidation] makes entry more difficult, from a size and scope standpoint, which boils down to capital availability and being able to navigate in that space affordably." She said broadband availability and affordability are major challenges as well. 
Baker said she thought the FCC should look at the positive side, promoting best practices and what is working. "Let's celebrate the good actors, not only [look at] the bad actors," she said. But Baker also said one of the diversity barriers was regulatory uncertainty. She called it "one of the largest problems hanging over this industry." She thanks MMTC for its position on network neutrality--it has raised concerns about the impact on investment and the minority community of expanding and codifying the FCC's openness guidelines. 
"I appreciate your stance," she said. "I think the unintended consequence of the proposed rules is that it may make it harder for new entrants to compete with the likes of Google with established server farms and content-delivery networks that can't be easily replicated." 
Baker said on the positive side was the FCC's plan to roll out an online repository of government grant and support programs. "Online resources are key," she said, given that is where people are increasingly going to get info on starting a new business. "Speed dating between entrepreneurs and private equity folks" can be helped by that online database she said.    
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