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Minority report: Revive regs - Broadcasting & Cable

Minority report: Revive regs

Conyers tells group re-reg bill might be necessary; tax certificates are hot topic
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As FCC Chairman Michael Powell and his colleagues were putting final touches on plans to rewrite nearly all of the government's broadcast-ownership limits (see page 10), a few blocks away, anxious African-American broadcasters and policymakers were questioning whether such broadcasters have a future in an industry increasingly dominated by conglomerates.

The decline in minority ownership of broadcast stations, particularly by African-Americans, was the leading topic at a conference hosted by the Black Broadcasters' Alliance, the National Association of Black Owned Broadcasters, and the Black Entertainment & Telecom Association in conjunction with the annual meeting of the Congressional Black Caucus.

"After November's elections, we may have to step in with legislation" to stem consolidation, warned Rep. John Conyers (D-Mich.), the House Judiciary Committee's ranking member and host of a caucus roundtable on media ownership, in an interview last week. "Chairman Powell seems to want more door-opening in terms of allowing large companies to become bigger."

Conyers's threat doesn't carry much weight yet, but, if Democrats retake the House, any effort by Powell to broadly relax rules preventing broadcast companies from dominating national and local markets could face a strong battle.

In the meantime, African-American broadcasters last week pointed to what they see as government indifference to the 26% drop in black-owned stations since the 1996 Telecommunications Act eliminated national radio-ownership caps and set the stage for relaxation of local TV- and radio-ownership limits.

Atop a list of frustrations was the lack of a capital-gains tax break for companies that sell stations to minorities.

"It would be good to bring it back," said Steve Hegwood, chief executive of On Top Communications, whose company owns four radio stations in the Southeast. "Raising capital has been the most challenging part of my role as CEO of a new company."

That said, Hegwood contends he has had an easier go of fundraising than most minority owners because he is a veteran executive of African-American–owned RadioOne, a Wall Street favorite and the country's seventh-largest radio-station group.

Minorities generally have had more difficulty raising cash for new businesses than white owners. In 1978, the federal government tried to ease the problem with a "tax- certificate" program that helped minorities buy 288 radio stations, 43 TV stations and 31 cable companies. Congress eliminated it in 1995 after allegations of abuse.

Acknowledging that the loss of minority media ownership is a side effect of deregulation, Democrats and Republicans alike have proposed resurrecting the tax break.

In the last Congress, versions introduced by then-Senate Commerce Committee Chairman John McCain and House Commerce Committee ranking Democrat Charles Rangel died with little discussion. But the tax break isn't dead. McCain staffers say another version is in the works, and Powell and Senate Minority Leader Trent Lott have praised the idea. The Bush administration is reviewing the idea but hasn't taken a position.

One big question mark is whether a minority-targeted tax break would pass judicial muster in light of recent court decisions on affirmative-action programs. In 1995, the Supreme Court agreed with white-owned Adarand Contractors that preferential treatment for minorities is illegal unless a pressing societal wrong is being addressed. That decision contributed to the elimination of the FCC's equal-employment-opportunity rules for broadcasters, which the FCC has been struggling to rewrite for four years.

If the Supreme Court hears a challenge to the University of Michigan's affirmative-action policies, that case, too, will be watched for its potential impact on the tax-certificate program.

The delays are no reason for supporters of minority media initiatives to lose hope, Conyers says. All the new Congress needs in 2003 to tackle the ownership issues is a little break from a schedule too crowded now with fights over election reform, bankruptcy legislation and the prospect of war with Iraq.

"We will get into the matter a lot more deeply," he promises.

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