FCC Minority Incubator Proposals See Light of Day

FCC Minority Incubator Proposals See Light of Day

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It’s time for the FCC to move on promoting incubation for minority radio ownership

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In 1938, two engineers, Bill Hewlett and Dave Packard, started work in a rented garage at 367 Addison Avenue in Palo, California. They had $538 in capital. Their first product, a resistance capacitor audio oscillator, would be used to test sound equipment for the Walt Disney Studios. The following year the two would formalize their partnership, deciding whose name would go first on the letterhead based on a flip of a coin.

The story is a romantic one, at least in the technology world. While the flip of the coin would be the least of their gambles (just ask Carly Fiorina), the stakes are much higher for minority entrepreneurs trying to break into the media marketplace.

Simply put, there is a dearth of minority ownership of radio and television stations in the United States. According to the Minority Media and Telecommunications Council, while minorities make up one-third of the American population, minorities own approximately seven percent of all full power commercial radio stations, which represent approximately one percent of the industry’s asset value. In addition, minorities own only 29 out of over 1300 full power television stations in the United States.

The reason these numbers are important is pretty straightforward. For all the prevalence of social media and our disproportionate use of platforms such as Twitter and Facebook, Americans overall and the minority community in particular still rely heavily on broadcast television and radio for news and commentary.

For example, according to the Pew Research Council, 66% of Americans treat television as their main source of national and international news, while 16% of Americans treat radio as their main source of national and international news.

To be effective participants in the political forum, an electorate has to be informed. In addition to being informed, minority consumers of news and information demand information and insight about issues that affect them specifically – information that they may not be receiving from mainstream media. To ensure consumer access to multiple media voices, barriers that block entrepreneurs from purchasing radio and television stations need to come down and policies to be put in place to effect their removal.

Specifically, these barriers to entry have included access to spectrum, access to capital, and access to opportunity. Policymakers at the Federal Communications Commission (FCC) have been making some effort to address the access to capital barrier. For example, on December 8, 2011, the FCC held its third annual capitalization strategies workshop, designed to link small and minority media and telecommunications entrepreneurs with potential funders and financial strategies.

What we have not seen on the part of the FCC is support for a concept that has launched a number of tech firms in the United States: incubation.

Think of incubation as a souped-up garage that a young Hewlett, Packard, Bill Gates, or Steve Jobs would have liked to have at their disposal. The Organisation for Economic Co-Operation and Development defines an incubator as a property-based venture which provides tangible and intangible services to new technology-based firms, entrepreneurs, and spin-offs of universities and large firms, all with the aim of helping them increase their chances of survival and generate wealth, jobs, and a diffusion of technologies.

It’s not that the FCC is not cognizant of the benefits of incubators. In two recent speeches this year, FCC chairman Julius Genachowski referenced an incubator program in Detroit when talking about the benefits of broadband technology deployment. But is the FCC just giving the incubator concept mere lip service especially when it has had before it, for 20 years, a proposal by several minority organizations for an incubation program to promote radio ownership?

The proposal is pretty straightforward. If a radio broadcaster arranges to bring onto the radio dial new entrant, such as a minority or woman owner, the broadcaster would be allowed to acquire an additional station above the existing local ownership caps that limit how many stations a broadcaster can own in a given radio market.

According to comments filed by the Diversity and Competition Supporters (29 national organizations), the FCC has yet to act on the radio incubator proposal although it has been considered in six FCC rulemaking dockets over the past twenty years. An incubator proposal was first offered to the FCC in 1990 by the National Association of Black Owned Broadcasters as part of a media ownership diversity strategy. After being put out for comment by a unanimous FCC in 1992, the incubator proposal was rolled into a minority ownership docket. That docket remained inactive for seven years, and in 2002 it was quietly terminated in an administrative order.

Then in 2002, the incubator proposal was again considered in yet another docket, which focused entirely on radio
ownership. A year later, the proposal was rolled into a fourth docket, a biennial review of diversity in media ownership. Later, in 2006, the incubator proposal was reviewed in another media ownership docket.

Today the incubator proposal is being spearheaded by the MMTC with the support of dozens of national organizations that also have diversity in media ownership as a priority. The FCC is considering this proposal as it reviews its media ownership rules. Given the small and declining number of minority owned stations in the U.S., and given the resources an incubator program can provide to minority entrepreneurs in media, can we afford to wait another twenty years for a policy that can knock down another barrier to the marketplace?

2 COMMENTS

  1. Incubators are good vehicles for prepping entrepreneurs for entry into business, as they mainly offer resources, i.e.; physical space, business services, training, etc., frequently beyond the financial werewithal of start-ups. The incubators themselves are to be independent of clients, vendors, and investors to avoid conflicts of interest. For example, it would be improper for a station broker, or station to operate or control an incubator. It's not clear whether the proposed incubators meet this standard. And yet this proposal is pretty awful for another reason as it would essentially turn broadcast spectrum into a plantation.

    The most expedient and just action the FCC could take to facilitate increased minority-ownership is to implement tighter caps on ownership and network agreements. Short of having the Justice Department investigate broadcast groups for anti-trust violations, the agency could also call for a limited tax incentive to banks, investors, and broadcasters to encourage sales of stations to minority-owned interests with stipulations for local partnership and public access, a la the Fairness Doctrine. The FCC would be within its authority to not renew certain licenses in markets where minorities and women are disproportionately underserved.

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