FCC preferences: affirmative action for the wealthy - awarding of broadcast licenses - includes related article on Jerome Lamprecht's case challenging the FCC's gender preference policy - Cover Story

0 Comments | Insight on the News, Feb 22, 1993 | by Evan Gahr

Summary: in awarding broadcast licenses, the government favors minority applicants. Critics say that logic - that diversity in ownership is reflected on the airwaves - is flawed. Proponents admit market forces probably play a larger role, but say ownership affects things like hiring and overall sensitivity.

In 1983, a diverse group that included the man who would later be Bill Clinton's transition chairman, Vernon Jordan, applied for the licenses of two Washington-area radio stations.

Jordan's group of prospective station owners, Vernell Broadcasting, looked like America: There were white women, black men and a Hispanic woman. This was no coincidence. The Federal Communications Commission considers the race of applicants when awarding new broadcast licenses or approving the sale of existing radio or TV stations to new owners. The favored groups are blacks, Hispanics, Pacific Islanders, Aleuts and Asians. Women, too, were officially preferred at the time.

The FCC also gives extra credit to owner-managers over absentee owners. Jordan told the FCC that he would work 40 hours a week as the stations' editorial director while maintaining his law firm partnership, pro bono work and corporate directorships. How? "By working a long week," says Vernell's lawyer, Roy R. Russo.

Jordan's commitment was never put to the test, as it turned out. Competing groups often buy each other out rather than endure long and expensive appeals of the FCC's decisions. Vernell received $765,000 in a settlement of the case that was encouraged by the FCC. The partnership that won the licenses paid $10 million to the seven other groups that had applied.

Among the investors paid to withdraw was entertainer Bill Cosby, who received $350,000 with a partner who was disqualified as a licensee by the FCC judge for having executed his wife's and children's signatures on a different application "with intent to deceive" the commission. Another $2.05 million went to a group in which a 26.5 percent equity interest was held by Antoinette Cook. Now Jordan's stepdaughter, Cook is mentioned frequently as a candidate for chairwoman of the FCC.

If Clinton is sincere in his opposition to bean counting, by race or by sex, he may want to take a hard look at the FCC's licensing preference policies, put in place in 1978 under the most recent Democratic president, Jimmy Carter, and only modestly reformed since (payments to make competing applicants go away are now capped at the amount invested in the application).

But the odds favor sweetening rather than shrinking the program. Despite scanty evidence that it promotes programming diversity, the FCC's racial bean counting has survived a Supreme Court challenge (with backing from Jordan, who wrote an amicus brief defending the policy).

There is ample evidence, on the other hand, that the financial benefits to both minority applicants and license holders who sell to them are substantial - certainly enough to make for a classic case of interest group politics, with beneficiaries having a strong incentive to defend the program and opponents little incentive to rally against them.

In a bid to bolster minority ownership of television and radio stations (estimated to be 0.5 percent at the time), the FCC began giving preference to minorities applying for licenses in 1978. It allows license holders who sell to minorities to defer capital gains taxes and encourages those who risk losing their license for violating FCC policies to transfer it to minority owners in a "distress sale" at a price of up to 75 percent of the market value.

The FCC's rationale - upheld by the Supreme Court's 1990 Metro Broadcasting vs. FCC ruling - is that minority ownership will lead to more diverse programming. All these policies are rooted in assuring in the broadcast area that there is an adherence to the concept of diversity," says FCC Mass Media Deputy Bureau Chief Rod Porter. "We believe diverse broadcast owners result in provision of diverse services to the public."

Critics, however, charge that the policies are really a sop to the wealthy, media-savvy minority investors positioned to take advantage of them and have little effect on programming. Harry Cole, one of the lawyers on the losing side of the Supreme Court case, calls the FCC's rationale - that the color of owners predicts programming - a racist assumption that "blacks think differently and whites think differently."

Many of the policies' supporters stop short of saying minority ownership directly affects programming. Instead, they contend that the policies are a form of affirmative action, helping minorities gain a foothold in an industry where they have been underrepresented. There are approximately 12,000 television and radio stations in the United States. According to the Commerce Department, about 3 percent are owned by minorities.

James Winston, executive director of the National Association of Black Owned Broadcasters, has no patience for the argument that if the FCC is practicing affirmative action, it's affirmative action for the rich. Any business incentive program has to be directed to people who have financial wherewithal," he says. "You can't go to a homeless shelter and implement [broadcast license] policies." Winston adds that the place to look for programming diversity is not in the music the station plays: "Any kind of owner can put on the same records. What the ownership policy is directed at is news and information. The purpose is to ensure minorities are in control of programming so they decide what news gets aired."