Concern Over Access to Capital Dominates FCC Broadcast Symposium
Difficulties minorities and women face accessing funds to buy and keep afloat media companies was a theme of every panel of broadcasters, programmers, investors and attorneys at Thursday's FCC broadcast symposium on media diversity. Broadcast incubation programs, the defunct minority tax certificate and a “raised eyebrow” from the agency encouraging companies to pursue diversity were broached as possible solutions. The agency should hold a diversity symposium for large media companies, because the largely minority attendees now are mostly “talking to ourselves,” said Bayou City Broadcasting CEO DuJuan McCoy. Companies wouldn't turn down an invitation to such an event from Chairman Ajit Pai, said Beasley Media CEO Caroline Beasely.
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The agency's Advisory Committee on Diversity and Digital Empowerment hosted the event. The process of rechartering that body for another two years will start next month, Pai said in his opening remarks. The committee won't be allowed to “wither away” on his watch, he said. Commissioner Mike O'Rielly asked for input into creating a TV incubator program, Commissioner Geoffrey Starks expressed concern about FCC equal employment opportunity policy, and Commissioner Brendan Carr touted the broadcast repack as a job creator and the media modernization effort as eliminating barriers to entry.
Broadcasters can't leverage their licenses and new entrants don't have track records in the industry, making it extra difficult for minorities to get financing, said Russell Perry, founder of Perry Broadcasting, and Steven Roberts, president of Roberts Radio. “It's not like lenders are standing there with their hands out,” said Roberts. Those issues are exacerbated by investor coolness toward the radio industry, said Melody Spann Cooper, chair of Midway Broadcasting. Getting access to capital is especially hard in small markets, said Pedro Zamora, president of Zamora Entertainment.
Some put hope in the FCC's nascent broadcast incubation program, which currently applies only to radio stations. Pai said Thursday he expects the program to roll out in spring. The key to an incubator program encouraging minority ownership is to have steps in place to transition to independent ownership, said McCoy.
The only “magic bullet” that pushed minority ownership was the long-dead minority tax certificate, said investor and former FCC aide Frank Washington, who was involved in its creation. Roberts and others said the certificate led to their first stations. The FCC last year rejected ACDDE proposals that the agency advocate for Congress to restore the certificate.
National Association of Black-Owned Broadcasters President James Winston told us Reps. Bobby Rush, D-Ill., Yvette Clarke, D-N.Y., and G.K. Butterfield, D-N.C., are interested in restoring the certificate. Asked which large broadcasters prefer -- the tax certificate or the ownership waivers granted by the incubator program -- Beasley said she liked them both. The tax certificate grants a benefit to broadcasters selling stations, while the ownership waiver is a boon to broadcasters looking to buy, she noted.
Incubators and tax certificates focus on new entrants, but there's not enough discussion about keeping existing minority media companies going, said Paula Madison, majority owner of Africa Network. The agency should “look at how many of those businesses already launched are just treading water,” she said. Focusing on only new entrants is “shortsighted,” she said. The FCC should act to protect small, minority networks from most-favored-nation clauses and other contract terms that limit their ability to sell their programming, she said. Former NAB General Counsel Jane Mago said the FCC traditionally has been reluctant to get involved in contract terms between licensees.
Minority media companies also face challenges getting advertising dollars, said Sherman Kizart, managing director of Kizart Media Partners. Ad agencies don't always include minority-owned broadcasters in their ad buys, he said. Several panelists said delays in agencies making payments to smaller broadcasters are a recurring problem. Perry said agencies have been waiting as long as 150 days to pay him. That sort of delay is a deliberate act, Kizart said. Those chief financial officers “are pushing those payments down,” Kizart said. “There's a financial benefit.”