By David Hatch
(Monday, July 16) Two FCC commissioners endorsed tax breaks as the best way to encourage large corporations to sell communications outlets to minority- and women-owned businesses to improve paltry ownership levels.
Robert McDowell, a Republican, said Supreme Court decisions have made it difficult to adopt race-based preferences, but Jonathan Adelstein, a Democrat, urged the FCC to pursue "narrowly tailored race-conscious" initiatives anyway.
To sidestep judicial complications, McDowell recommended incentives targeted at "economically disadvantaged businesses." Adelstein, meanwhile, said he is not sure his approach can win agency approval. The commissioners made their remarks at a policy conference sponsored by the Minority Media and Telecommunications Council.
Adelstein blamed himself and other regulators for neglecting the matters. "I guess I haven't done a very good job in the last four years, but it hasn't been for a lack of trying," he said. "The FCC needs to do its part, and I don't think we've done a very good job up to now."
The Democratic commissioner also wants the FCC to improve its industry monitoring and to tighten enforcement of the government's "equal employment opportunity" rules. McDowell further recommended that the FCC partner with the Small Business Administration to advance opportunities.
An earlier tax-certificate effort for minorities ended in the mid-1990s amid allegations that some parties were abusing the program, an allegation the National Association of Black-Owned Broadcasters considers overblown. Recent reports have indicated that minorities own a little more than 3 percent of U.S. television stations.
On Friday, the National Association of Broadcasters asked Rep. Charles Rangel, D-N.Y., chairman of the House Ways and Means Committee, to hold a hearing on diversifying media ownership. Rep. Bobby Rush, D-Ill., introduced a minority tax-certificate bill earlier this year.
Panelists Monday also addressed concerns raised by two powerful Democratic members of Congress late last week about the implications of private equity ownership of communications outlets on FCC regulations and public-interest obligations.
In a letter, Rep. John Dingell, D-Mich. -- chairman of the House Energy and Commerce Committee -- and Rep. Edward Markey, D-Mass., chairman of Energy and Commerce's Telecommunications and the Internet Subcommittee, asked FCC Chairman Kevin Martin, a Republican, for his views. The lawmakers noted that critics assert that private equity owners mostly emphasize "cutting costs, increasing revenues and the ultimate resale of the enterprise."
"There's nothing intrinsic about the private equity model that would make you less sensitive and less interested in meeting your public-interest obligations," said Douglas Lowenstein, president of the Private Equity Council. The council was formed in February to represent major equity players. Lowenstein said the firms always add value to the companies they purchase so the holdings are more profitable when sold.
In an advisory dated Friday, the investment firm Stanford Group Company predicted that Martin's upcoming written response would not discourage private equity deals. Nevertheless, the firm cautioned that the House Democrats might be seeking to influence the FCC's ongoing review of its media-ownership rules.