FCC Commissioners Call on Congress to Revive Minority Tax Certificate Policy

by Tiffany Bain on July 12, 2012

Toward the end of a House Subcommittee on Communications and Technology oversight hearing on July 10, Federal Communications Commissioners told Congress to revive the law that broke down a major barrier to entry for potential minority and women media owners.

During the 2½ – hour meeting, veteran Commissioner Robert McDowell and newly appointed Commissioner Jessica Rosenworcel, who are Republican and Democratic members, respectively, clearly advocated for the reenactment of the FCC’s Minority Tax Certificate Program.

“This has been a very important issue of mine,” McDowell told the committee. “Congress could be helpful by reinstating the version of the tax certificate law that was in place for many, many years.”

Rosenworcel agreed with McDowell and said that the program “was one of the most effective means of promoting diversity of ownership.”

In remarks delivered at Howard University in March, Minority Media and Telecommunications Council President and Co-founder David Honig shared a grim picture of the current state of minority and women media ownership.

He revealed that as of 2009, minorities, who make up 34 percent of the nation’s population, owned a mere 7 percent, or about 800 of the nation’s 11,000 full power radio stations, and that percentage is decreasing by nine percent annually. Women, who make up 51 percent of the nation’s population, own just 6 percent of radio stations. Additionally, during the peak of minority ownership in 1992, African Americans owned 23 full-powered television stations; today, they own only eight. Women own just five percent of TV stations.

“The statistics are not encouraging,” Rosenworcel told the members of the House Subcommittee.

“A few months ago, I wasn’t optimistic about reversing the decline in minority ownership, but now that the Commissioners have asked Congress for help, I have more faith that we can turn this around,” Honig said.

History of the FCC Minority Tax Certificate Program

According to a history-making media ownership filing by the Diversity and Competition Supporters (DCS), “The Commission adopted the Tax Certificate Policy in 1978 to provide companies with an incentive to increase minority media ownership. The policy allowed companies to defer capital gains taxation on the sale of media properties to minorities.”

Prior to the program’s development and implementation, “minorities owned approximately 40 broadcast licenses, [which was] one-half of one percent of approximately 8,500 total broadcast licenses granted by the Commission,” according to an FCC Minority Market Barrier Entry report.

“We wanted to see more minority ownership,” said former FCC Commissioner and tax certificate co-composer Tyrone Brown. “ One of the key things that I was interested in was that not only was minority ownership very, very small then, radio stations, in particular, were sold through this very exclusive club and there weren’t any minority entrepreneurs in that club, so you never found out about stations that were available until they were sold.

“The tax certificate made owners go out and find minority entrepreneurs to buy stations to let them know that they were available, and so minority business people became part of the that club, and that was maybe the most important thing that the tax certificate did, ” Brown explained.

In 1995, the 104th Congress repealed the Minority Tax Certificate Program, which was in its 17th year. During its 17-year existence, “the FCC granted 356 tax certificates – 287 for radio, 40 for television and 30 for cable franchises,” as stated in the DCS filing.

Why Hasn’t Anything Been Done to Increase Minority and Women Media Ownership Since the Law’s Repeal?

Per Section 257 of the Communications Act, added in the Telecommunications Act of 1996, every three years the Commission is obligated to review and report to Congress on its efforts to identify and eliminate market entry barriers for small businesses and entrepreneurs, as well as its proposals to eliminate those barriers.

During the Subcommittee’s hearing, Congressman Mike Doyle (D-PA) questioned the Commission on its statutory mandated plans in assessing women and minority media ownership.

In February, BBSJ reported that the last report, covering 2007 to 2009 wasn’t published until 2011. Currently, the Commission should be preparing to release its next report covering 2010 to 2012. We hope that this one won’t be delayed.

FCC Chairman Julius Genachowski, reconfirmed Commissioner Mignon Clyburn, and newly appointed Commissioner Ajit Pai all agreed that gathering data is a very important first step in confronting the issue of increasing minority and women media ownership.

Genachowski assured the Subcommittee that the “data is underway,” and Pai said that he “supports action ideally by the end of the year, if we can get it [the data] in order to address these serious issues.”

“I’m hoping we are in the process of funding, getting more robust information that is needed for us to make decisions, not only in this aspect but overall in all media ownership proceedings,” Clyburn said.

To make real progress in increasing minority and women media ownership, the Commission should do all it can do to collect the data they need to implement or revive a policy, such as the Minority Tax Certificate Program. As Rosenworcel said at the Subcommittee meeting, “It’s the right thing to do.”

  • Tiffany K. Bain is a 2011 public relations graduate of Florida A&M University. She currently serves as the Minority Media & Telecommunications Council’s Research Associate. She got her start in the industry in 2007 as an Emma L. Bowen Foundation intern at the nation’s leading cable provider.

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  • Jamara2

    Thanks for sharing this information! I didn’t know this happened and it really is like we’re going backwards as far as racial progress. What a shame. I really hope they do something about this soon!

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