Could it be a brighter day for the broadcast industry?

Minority tax incentive program back on the table

In 1995, President Bill Clinton did something that even the Congressional Black Caucus couldn't defend on the Sunday morning talk shows. He signed a bill that repealed the Federal Communications Commission's minority tax certificate program. It was a blow to entrepreneurs who depended on the program to stimulate increased minority ownership in an industry largely controlled by whites.

For 17 years, the program allowed companies to defer capital gains taxes on the sale of radio, TV, and cable properties to minority-owned companies. Minorities benefited from the plan because they were then able to buy properties at a lower price. Some may believe it doesn't have an affirmative action bill's chance of passing in a Republican-controlled Congress, but lately it seems it might make a successful comeback

In the last session of Congress, Sen. John McCain, Republican chairman of the Committee on Commerce, Science, and Transportation, and Sen. Conrad Burns, Republican chairman of the Communications Subcommittee, sponsored the Telecommunications Ownership Diversification Act to "ensure that small businesses, particularly those owned by members of minority groups and by women, are not left behind." Democratic Rep. Charles Rangel is also preparing legislation in the House. He is working with Democratic Rep. William Jefferson to sign up a Republican sponsor in the House, as well as a Democrat in the Senate, to create a corresponding bipartisan bill in both chambers.

On the plus side, Michael Powell, the Republican chairman of the FCC, issued a statement last fall applauding the McCain-Burns bill, which, he says, "Correctly recognizes that promoting new entry into this vibrant industry, especially by minorities and women who heretofore have been generally left out, will further its vitality and benefit all Americans." Don Cornwell, owner of Granite Broadcasting, says Powell's "sympathies are in the right place. He did some things before becoming chairman to try to encourage" the program's reinstatement.

A number of details must still be worked out regarding the size and scope of a new certificate program, but the tax incentives would probably be pretty much the same. Possible issues may include reducing the size of the program and making sure that buyers are, in fact, minority-controlled. Also, the term "disadvantaged" might replace "minority" to broaden the number of groups that will be included.

Inner City Broadcasting Chairman Pierre M. Sutton welcomes the program's return but is against expanding it to include white women and small businesses. "Because those groups are not defined clearly enough, it could lead to abuses that would again jeopardize the opportunity for African Americans and minorities to gain a greater toehold in America's airwaves," Sutton said. He's referring to the time when Mitgo Corp., a company owned by black entrepreneur Frank Washington, became the poster child for the abuse of programs intended to foster the growth of minority-owned companies. Washington was part of a $2.3 billion deal he and two white-owned companies put together with Viacom Inc. It went down the tubes when critics successfully argued that Washington was merely a front man for the white-owned operations because he had put up the smallest portion of the money. More important, the deal led to the repeal 9f the tax certificate program.

A recent National Telecommunications and Information Administration report states that industry consolidation has made it more difficult for minority broadcasters to increase their share of the market. African Americans, for example, ohm only 23 television stations, "and our company owns nine of those," Granite's Cornwell laments. So a reinstatement of the tax certificate program is news he and others can cheer about.