1 1 2 3 4 5 MEDIA DIVERSITY: 6 MINORITY MEDIA OWNERS CONQUERING NEW FRONTIERS 7 8 NTIA Minority Ownership Roundtable 9 10 Tuesday, July 18, 2000 11 9:00 a.m. 12 13 Ronald Reagan Building and International Trade Center 14 Polaris Suite, Concourse Level 15 Washington, DC 16 17 18 19 20 21 22 23 24 25 2 1 P R O C E E D I N G S 2 MR. ROHDE: Good morning everyone. Welcome 3 to this roundtable hosted by the National 4 Telecommunications Information Administration. 5 First of all, I wanted to apologize for the 6 room change. We had this scheduled in a different room 7 in the Commerce Department, but the responses and 8 interest in the roundtable got so overwhelming that we 9 had to find a different room. So I apologize for that; 10 and I think that may account for the fact that we have 11 people that are still starting to trickle in, and we're 12 starting a little bit late because of all that. So I 13 apologize for all that. 14 For those of you who may know, with great 15 deal of detail, what the National Telecommunications 16 Information Administration does is that NTIA serves as 17 the chief policy shop for the administration with respect 18 to the Information and Telecommunications Policy. 19 Underneath that broad umbrella of 20 responsibility that we have at NTIA, we also play a 21 critical role within the administration for developing 22 policy with respect to media ownership. And in fact, we 23 have an office called Minorities Telecommunications 24 Development Program which is a very important office 25 within NTIA. One of the primary functions of this office 3 1 is to produce reports on the status of minority 2 ownership, and that brings us to today's roundtable. 3 This roundtable is, indeed, part of that 4 overall information-gathering process of which we are 5 engaged at NTIA throughout this year to come out with a 6 report that we anticipate will be toward the end of the 7 year, some time late fall or early winter. This report 8 in our judgment is critically important. Unfortunately, 9 we have not had a report such as this come out in a 10 couple of years, so it is long overdue, particularly at 11 this time in which the medial industry is changing so 12 dramatically, as we all know, particularly since the 1996 13 Telecommunications Act which dramatically changed a lot 14 of the ownership rules. We have seen very significant 15 changes within the industry, and so we believe it's very, 16 very important for us to conduct this report. 17 And if I could be allowed an 18 advertisement -- I'll probably repeat at this end -- is 19 that shortly NTIA will be sending out a survey to 20 minority broadcasters throughout the country, radio and 21 television. And I know many of you who are here in this 22 room are going to be receiving that survey, and we'd 23 really like to ask your assistance in filling out that 24 survey. The results of that are kept anonymous. There's 25 nothing held specifically to the individual or 4 1 responders. The data is incredibly important to us, and 2 that will provide a key piece of information as we 3 prepare this report. 4 NTIA, as I said, is responsible for policy 5 development and a broad range of telecommunication and 6 information issues, but there probably is no other area 7 of which NTIA works on that really gets to the heart of 8 the fundamental constitutional principle in this country, 9 and that is the ability of people of our society to have 10 the right and exercise the right to speak and to be 11 heard. And that's so critically important. Particularly 12 now, as our economy and our society moves into more of an 13 information-based society, it's critically important that 14 all segments of our society have an opportunity to speak 15 and be heard through the electronic means. Traditionally 16 we've known that as television and radio. Now with the 17 advent of high-speed Internet access, we see the 18 emergence of new technologies that are changing this 19 dynamic. They're creating new opportunities, they may be 20 creating new challenges, all of which we need to be as 21 policymakers cognizant of and look toward in developing 22 policy. 23 So we live in a very exciting time right 24 now, a time in which there's a lot of change, there's a 25 lot of new opportunity. There's also a lot of 5 1 challenges. And the purpose of this discussion and the 2 two panels we'll have this morning and the workshop we 3 will have this afternoon is to try to have an airing out 4 of a number of these issues and to have a frank public 5 discussion about this. 6 Following this roundtable discussion today, 7 NTIA will continue to receive comments on this subject, 8 or you can access our website, ntia.doc.gov, where you 9 find information about this roundtable, as well as an 10 invitation for further comments. So for those of you 11 here who want to collect some of your thoughts and share 12 them with us in written form, we certainly welcome all 13 that. 14 Now, without any further delay, what I'd 15 like to do is begin over here to my left and ask each of 16 the panelists we've invited here this morning to 17 introduce themselves and speak of your affiliation. Then 18 after you've all introduced yourselves, we will then get 19 into a series of questions and proceed. 20 MR. TWIST: Kade Twist with the Benton 21 Foundation and the Digital Divide Network. 22 MS. TRIGG: Good morning, S. Jenell Trigg, 23 Fleischman and Walsh, a law firm here in Washington, D.C. 24 I'm a member of the Broadcasting Internet E-Commerce 25 Groups. 6 1 MR. PEREZ: I am Ben Perez from Abacus 2 Communications Company. We're an FTC, a legal and 3 engineering consulting firm, and I'm also the principal 4 of Abacus Television, a low-power TV broadcaster in and 5 around Pittsburgh, Pennsylvania. 6 MR. HAMMOND: Al Hammond, Santa Clara 7 University School of Law. I guess the affiliation is 8 first director of Minority Telecommunications. 9 Basically, a century ago (Laughter). 10 MR. EDWARDS: Eddie Edwards, President and 11 CEO of Glencairn Broadcasting and Chairman of the Black 12 Broadcasters Alliance. 13 MR. CASEY: Jim Casey. I'm with Greenberg 14 Traurig, a law firm here in town. I represent tribal 15 telephone and telecommunications companies as well as a 16 number of tribal broadcasting interests. 17 MR. CAMPOS: Good morning. My name is Roel 18 Campos. I'm with El Dorado Communications. I'm one of 19 the principal owners along with my partner, Tom Castro. 20 We operate a company in Houston, Texas, and we own and 21 operate three radio stations there and have made 22 contracts to acquire more. We broadcast principally to 23 the Hispanic community in Houston. 24 MS. BUSH: I'm Tony Cook Bush. I'm with 25 Broadwave USA and Northpoint Technology, a new technology 7 1 start-up that will be providing multiple channels of 2 video programming and Internet access. 3 MR. BANKS: I'm Lyle Banks. I started 4 Banks Broadcasting to own and operate television stations 5 recently formed. And we just acquired a couple of 6 television stations in the last 12 months. 7 MR. ROHDE: Thank you all very much for 8 coming here. I would like to begin by turning to the 9 professor in the group, Mr. Hammond. 10 Maybe you could set the stage for 11 us a little bit since you claim to go back a century, 12 which I know is not true. It's slightly less than that, 13 I know, but take us back a couple of decades at least, 14 and kind of set the stage as to what your perspective is 15 and how the broadcast industry -- how the overall stage 16 has changed and evolved. And take us up to the point you 17 see us at today. 18 MR. HAMMOND. Okay. 19 When we started the minority ownership 20 policies back in the '70s, broadcasting was pretty much 21 sort of a country club sort of business. It was an "old 22 boy" sort of business. There were a lot of folks who 23 owned stations, and they saw them basically as cash cows. 24 They were very profitable at that time. And that was the 25 stage in which we started to press to get entry. 8 1 By the time the '80s hit with the 2 relaxation of the multiple ownership rules, we started to 3 notice that prices for acquiring stations went up 4 substantially, and this was despite the fact that we had 5 an acquisition fund that was made available, and we had 6 the tax certificate sale, and a recognition that minority 7 ownership improved or increased the amount of diversity. 8 With those price increases came higher 9 demands for money to get in, and as people began to buy 10 in higher multiples, they sort of had to sell the farm as 11 it were. And when the recession hit, a lot of 12 broadcasters, both minority and majority, found 13 themselves not able to cover their debt. 14 That in turn produced a great deal of 15 pressure from broadcasters to try to minimize the amount 16 of expenses, and to do that, in part, by acquiring more 17 stages and/or reducing the amount of competition within 18 market. That's when the LMA started, among other things, 19 and a lot of that's when the pressure to reduce the 20 duopoly rule started. 21 Along with that the entire information 22 industry was changing, so we had increased competition 23 from cable and, again, greater pressure for multiple 24 ownership in order to combat the need to basically 25 protect your market share. And more recently competition 9 1 from telecommunications which I don't think people are 2 really addressing as much yet. But if telecommunications 3 is competing with cable in the local market for the 4 distribution of video programming and oral programming, 5 generally, and if the Internet is becoming the place over 6 time for webcasting, the entire structure and the focus 7 of broadcasting has got to change. 8 And along with that you have a change in a 9 perception of the value of spectrum. Spectrum is no 10 longer something to be just separated off, cordoned off 11 for only one activity. Spectrum is now something that is 12 fungible and that's usable for lots of different things. 13 And if anyone should have been aware of that, it should 14 have been the broadcasters after Teletext and the use of 15 BDI for transmission of information for the hearing 16 impaired. 17 A spectrum can be split up, it can be 18 multiplexed, it can be used in lots of different ways. 19 The pressure on everybody for the use of that spectrum is 20 going to increase over time. 21 Now, if you look at all those things 22 together, it changes the way in which broadcasting has to 23 be operated. Any broadcaster their self is looking to 24 acquire more stations, is looking to acquire more 25 spectrum and is looking to use that spectrum in as many 10 1 ways as possible with as little restriction on the use of 2 that spectrum as possible; and that's where we find 3 ourselves today. 4 MR. ROHDE: Okay, thank you. Very 5 insightful. 6 I'd like to turn to Mr. Perez. You are 7 actually focused on a particular minority community, the 8 Hispanic community which is a very fast-growing segment 9 of our population. 10 What, from your perspective -- given the 11 outline that Mr. Hammond has just given us about the 12 current circumstance that is increasing costs, the kind 13 of external competition which is putting pressures on 14 ownerships to become larger group ownerships -- what 15 effect does that have for Hispanic broadcasters, from 16 your judgment? 17 MR. PEREZ: Well, they both have a niche 18 market in those markets where there's significant 19 Hispanic population. The niche market has a protective 20 effect for them because they are specialized and more 21 adept at serving that market. But on the other hand, in 22 the many other markets where the Hispanic population 23 constitutes a small percentage of population, it becomes 24 extremely difficult for them to play equally because 25 acquiring stations in those markets when their format 11 1 doesn't fit isn't feasible, and they would either have to 2 diversify into other formats where there are small 3 Hispanic populations or be limited to those markets where 4 the population base is there. So it's both a blessing 5 and a handicap. 6 MR. ROHDE: I'd like to turn to Antoinette 7 Bush. Tony I think, in my judgment -- you have at least 8 established in my mind -- I go way back with you when you 9 were working with Senator Hollings -- to put on your old 10 hat -- from the days in which you had a broader policy 11 objective. 12 Share some of your thoughts about where you 13 think we're at today with respect to broadcasting, and 14 the ability of minority groups to seek ownership of 15 broadcasting properties. 16 MS. BUSH: Well, I think there's good news 17 and bad news. I think obviously we've been through a 18 tremendous amount of consolidation in the radio industry 19 and to some extent in the television industry; and I 20 think that that's had the statistics that NTIA produces, 21 and demonstrates that that's had a negative impact 22 overall on the number of minority broadcasters. 23 There have been some benefits, and some of 24 the benefits is not a result of the Telecommunications 25 Act, but really the Clinton Administration and the 12 1 efforts of the NTIA and the SEC to encourage minority 2 ownership, which has resulted in the sale of stations to 3 minority owners in numbers that were significant higher 4 than before. 5 So while overall I think there's been a 6 decline in the number of minority owners, there has been 7 some success in the existing minority owners acquiring 8 stations and in there being some new entrants into the 9 broadcasting business. 10 I think that the challenge is going to be 11 the ability of minority owners to sustain their ownership 12 interest as consolidation increases. I think there will 13 be continue to be pressure brought by large, non-minority 14 owners for further relaxation. I know it's hard to 15 imagine, but certainly it's constantly there in the 16 television area, and I think that over time we'll 17 probably see it in the radio area. Once everybody gets 18 done with the current consolidation that's going on, I 19 think some of these big guys are going to say, well now, 20 I'd like to have some more and what do I have to do and 21 seeking further relaxation. 22 So I think that's going to be something 23 that we have to continue to be vigilant on and to be very 24 concerned about and to work not just with the FCC and the 25 Department of Commerce on these issues, but I think 13 1 members of the minority broadcasting community have to 2 continue to be active in Congress and letting members 3 know how important it is to keep the current restrictions 4 in place and to continue to promote minority ownership. 5 And I think there needs to be an additional 6 focus by minority broadcasters on what other 7 opportunities there are. I think when Al was talking 8 about the increasing pressures to maximize the use of the 9 spectrum that minority owners, as do all broadcasters and 10 I think all spectrum licensees, have to continue to look 11 at what new opportunities there are to use the existing 12 spectrum that they have and being creative on a 13 going-forward basis. 14 MR. ROHDE: Lyle Banks, I know we've had 15 discussions in the past year. You're a broadcaster, 16 you're somebody who's got some big ideas. In fact, if I 17 was a venture capitalist, you've sold me enough to want 18 to give you money, but I don't have any to give you. 19 You're certainly a man of vision. You want to go places 20 and you're interested. 21 What are the challenges that you see lying 22 ahead of you? You're in the business, you want to expand 23 your role in the business, and you're also caught in the 24 center of other minorities who want to get more into the 25 business. Just articulate for us the challenges you see 14 1 in front of us. 2 MR. BANKS: A challenge right now is 3 growth. Our industry has consolidated so much that it's 4 very difficult for a company my size to really break 5 through as quickly as at least I want to break through or 6 our investors want to break through. If anyone here is 7 backed by a venture capitalist, you're working with a 8 four to six-year time line, and you have to get in and 9 get out, get the returns within a period of time. So 10 it's kind of tough. It's taken me about a year to a 11 year-and-a-half to get funding and to get a couple of 12 stations. 13 This is a very different environment that 14 existed about five or six years ago and the kind of money 15 that we have backing us, we would have been able to 16 purchase large groups before. So growth is an issue in 17 this consolidated industry. 18 The other thing is scale in terms of 19 economies, programming. The fixed-cost items are tough 20 to lever down if you are a small company. So to the 21 extent that you can get some scale, you can start to 22 control those costs a little bit better. 23 I guess the third thing is figuring out 24 what exactly you're going to do with your assets over 25 time. Everyone is a little bit confused about the 15 1 prospects of up digital and data casting and use of the 2 digital spectrum. There isn't really that many clear 3 business plans on how to use that. So that's a little 4 bit of a challenge right now. There needs to be some 5 leadership on the broadcast side other than these big 6 footprints of spectrum that Iblast and other companies 7 are employing. There has to be some local application 8 for that that can really start to increase the values on 9 the television side. 10 So I'm working on those sorts of visions 11 and trying to sell those to my investors as well. 12 MR. ROHDE: Let me ask a similar question 13 to Eddie Edwards. You've been in the business a few 14 decades. You go way back. You've been at many different 15 levels from on-air talent to management and a whole range 16 of things. 17 What, in your judgment, are some of the 18 challenges with respect to access to capital, 19 programming, the whole range of things? Can you tell us 20 your perspective? 21 MR. EDWARDS: I think that the money's out 22 there today. It seems as though everybody's got money 23 that they want to throw your way. Trying to find the 24 right property is a big problem. How can we competitive 25 when we have these mega companies that literally own 16 1 everything today? When you find a station, it's going to 2 be in a very, very small market, and you're not going to, 3 in my opinion, be able to really turn it around and make 4 the kinds of profits that a capital venture firm would 5 want to see or that you personally would want to see. 6 So I'm very concerned about the properties 7 that are available today. There aren't too many to 8 choose from. And once again, when you do find them, 9 you're going to find them in very, very small markets, 10 and in some cases undesirable markets. 11 MR. ROHDE: One of the issues that I've 12 heard a great deal of discussion about is the concern 13 about advertising revenues for minority broadcasters. 14 Jenell, I know you've worked in that area a 15 little bit. Maybe you can speak to some of the issues 16 you see related to advertising revenues. 17 MS. TRIGG: Well, I think Lyle and Eddie 18 addressed some of the issues that are present for 19 minority broadcasters. First of all, minority 20 broadcasters are usually late entrants into a market, so 21 if you're looking for television, you're looking at not a 22 wide choice of network affiliation. You're looking at 23 smaller markets, you're looking at sometimes weaker 24 signals. 25 On radio, you now have majority-owned 17 1 groups competing in a minority format, so you're not the 2 only game in town anymore when it comes to urban format. 3 And what consolidation has done is really I think 4 exacerbated some of the already inherent problems that 5 have existed. 6 You've got multiple combination groups now 7 competing locally, up to eight stations in some market. 8 And nationally, there are local dollars, spot dollars and 9 national dollars. Large groups can leverage not just the 10 acquisition of programming but also spot dollars. 11 It certainly is easier to negotiate with a 12 media buyer -- and Lyle and I have a media buyer-seller 13 relationship from way back -- when you've got multiple 14 stations and you're able to sell and package some of the 15 weaker stations with some of the stronger stations. And 16 again, majority-owned stations in groups can do that. 17 They indeed go into a media buy looking to acquire a 18 certain amount of share revenue. 19 Now, minority-owned stations, regrettably, 20 have had other problems for years without consolidation, 21 and these are in particular radio stations. The no-urban 22 dictate from advertisers that you should not buy 23 minority-formatted stations. Supposedly, that audience 24 is less desirable. Don't spend as much money, don't eat 25 as much product that they're selling; and yet, that's 18 1 immediately to the contrary. 2 Particularly today, when you're looking at 3 the growth of Hispanic and African American consumerism, 4 household income is increasing, you're looking at higher 5 per capita consumption on many core products, but yet 6 those advertisers are not placing their dollars 7 proportionately on minority-owned and particularly on 8 minority-format stations. 9 The FCC -- as Greg will tell you -- we had 10 an opportunity to look at some of these advertising 11 discriminatory practices through a study that originated, 12 believe it or not, from a provision of the 1996 13 Telecommunications Act. Section 257 requires the FCC to 14 eliminate, identify small business market entry barriers; 15 and part of that study was the Civil Rights Forum 16 issuance of When Being Number One Is Not Enough: The 17 Impact of Advertising Practices on Minority-Owned and 18 Minority-Formatted Broadcast Stations. 19 This was a significant study because this 20 has been going on for years. Television stations, radio 21 stations, but for the first time we had a statistical 22 disparity analysis as well as one very large smoking gun 23 which was the Katz memo. If you remember, it was a memo 24 that was issued internally with Katz media, and the 25 phrase that we all remember greatly is, "Advertisers want 19 1 prospects, not suspects," and this was in regards to 2 reaching minority audiences. 3 So this is what minority owners have to 4 deal with, the devaluation of their advertising 5 programming, devaluation of their advertising consumers, 6 the viewers and listeners, as well as sometimes lesser 7 programming. And consolidation post the 1996 act really 8 has just enhanced those difficulties. 9 MR. ROHDE: Thank you. 10 Mr. Campos, do you have some perspective to 11 show on this advertising issue? What Jenell said, is it 12 a similar experience which you've had? 13 MR. CAMPOS: Yes. Jenell I think has 14 summarized it very nicely in terms of the overall 15 situation with advertising. In the Hispanic marketplace 16 when it comes to advertising, you have much of the same 17 phenomena, and things vary market to market. There are 18 inherent prejudices and stereotypes that are out there on 19 the part of buyers of advertising. And the Hispanic 20 community often times, like all minority communities, is 21 viewed as less economically capable, less desirable as 22 far as a consumer or as a purchaser of products. 23 Indeed, that's not the case at all. Both 24 the African American community and the Hispanic community 25 are the significant growth areas in America. An 20 1 incredible number of high percentage of all the babies 2 being born in the next 50 years are going to be Hispanic, 3 for example, in America. That happens to be a factor of 4 demographics, of numbers. It just is the case; you can't 5 hide from statistics. 6 And the recent census will show a lot of 7 those figures, and there will be some very surprising 8 growth that will be demonstrated in many markets, 9 including our market of Houston which has suffered from 10 an undercount of the last census that occurred. 11 So what has to occur is constant effort, 12 constant vigilance and constant education on the part of 13 minority business people because it's a problem that all 14 of us share, not just the media. The people who are 15 spending certain dollars for family products, for baby 16 products, for cars in our particular market -- and we 17 make this example all the time -- are, in our view, our 18 audience, our Hispanic numbers because you have a 19 huge -- again, demographics don't lie -- skewing to the 20 younger-age individuals that are buying, that are 21 purchasing and that are raising families. 22 So these are the kinds of statistics that 23 we need to do to educate. And ultimately, the economic 24 incentives and economic drive of business hopefully will 25 overcome many of these problems. But they're still 21 1 there, and we have to deal with them on a day-to-day 2 basis in our particular marketplace. 3 MR. ROHDE: Thank you. 4 Let's continue our discussion, maybe focus 5 more on programming. 6 I believe it was last summer that there was 7 a huge controversy where the NAACP was threatening to 8 boycott a lot of the network programming because it felt 9 that it didn't have an adequate portrayal of minorities 10 within the content of it. 11 I know that, Jim Casey, you and I have some 12 common background and that we're familiar with some 13 Native American people in the same part of the country. 14 I grew up around the Sioux Indian people in the Dakotas 15 and very familiar with them. I can't recall anything 16 I've ever seen on television that remotely relates to the 17 Sioux Indians that I grew up around and know about that 18 community. I mean, the Native American community seems 19 to be almost entirely absent from any kind of 20 representation, either positive or negative, in 21 programming. 22 I'd be curious about some of your thoughts, 23 James, as well Kade Twist, some of your thoughts about 24 some of the Native American issues with respect to 25 programming. How do Native American people see this 22 1 medium of television that's so dominant in our culture 2 and our society as Americans? But yet, Native Americans 3 struggle with a lot of assimilation issues in our 4 society. 5 What are your thought about that? 6 MR. CASEY: The programming issue for 7 Native Americans and Indian tribes is somewhat different. 8 People get tired of hearing Indians say, "We're 9 different," so the issue's come across in a different 10 way. 11 When you talk about Native American 12 programming from the concept of what the Native Americans 13 are looking for, you very rapidly move into the 14 non-commercial broadcast realm and not the commercial 15 broadcast realm. These groups don't tend to identify 16 commercial radio and television as responsive in any way 17 to their needs, their desires and to serving Indian 18 people. 19 In the non-Indian areas you haven't got the 20 demographics to support a commercial station. With the 21 consolidation of the media and everything you're hearing 22 people talk about right now, the Indian demographic in 23 non-reservation areas simply does not support an Indian 24 format -- a tribal format -- it just doesn't work. 25 In some urban areas, you have programming 23 1 available through groups like the Native American Public 2 Telecommunications, American Indian Radio and Satellite. 3 They produce shows like Native America Calling and Native 4 Voices that get shipped out over non-commercial stations 5 into some of the urban markets, an hour here, an hour 6 there, 3:00 in the morning, whatever. So it's not a 7 major portion. 8 On the reservations, the focus is on 9 cultural redevelopment, language preservation and 10 restoration-- very focused community needs. And again, 11 that does not support the commercial model. So as a 12 result, what you see is there's a fair amount of "Indian 13 programming." You only see it on the reservations for 14 the most part. 15 And you don't see commercial stations. 16 There are three that I'm aware of. Well, there are two 17 that are in existence. 18 MR. ROHDE: Radio? 19 MR. CASEY: Radio stations. There is one 20 that I'm aware of, non-commercial, low-power television 21 station on the Squanamish-Kootenai reservation right in 22 conjunction with a college up there. Television 23 broadcast has just not been a medium that the tribes have 24 been able to get into because of expertise and lack of 25 capital. Tribes have a serious problem with capital 24 1 because they can't pledge assets, meaning their assets 2 just simply can't be pledged. They can't pledge land, 3 for example, so capital becomes a real problem. 4 But there are about 33 non-commercial 5 tribal radio stations serving the needs of the immediate 6 tribal groups, and they have their own set of problems 7 with getting applications for the FCC. Many of them 8 don't think that they need an application from the FCC, 9 but that's a whole other issue. (Laughter) 10 MR. ROHDE: We won't go there. 11 MR. CASEY: We won't keep talking about 12 that. 13 So the problem is very different, and it's 14 been pushed mainly to the non-commercial realm. 15 The commercial realm is starting to move. 16 I know of one application right now before the FCC for a 17 commercial FM radio station in Minnesota. There's talk 18 of one in Florida. So they're starting to move, but many 19 tribal people on content are looking now to leapfrogging 20 to the new technologies. Why start where everybody else 21 started and fight your way through? Let's start with 22 the webcasting and combine that with the broadcast. So 23 that if I am broadcasting from Window Rock, but I need 24 advertising to support that, I'll do my advertising over 25 the Internet and use that advertising to support the 25 1 broadcast because I'm not going to sell ad space out in 2 the middle of the desert; it's not going to happen. So 3 it's a very interesting new development. 4 MR. ROHDE: Kade, I'm interested in your 5 thoughts about this. 6 MR. TWIST: Well, there's two things that 7 really affects the consolidation media. One is the lack 8 of Indian content, which is obvious, and two is the lack 9 of stability in Indian country. Media is a great form of 10 stabilizing, community-building, consensus, building 11 constituencies, developing ideas, closing ideas. You can 12 popularize things. 13 A lot of tribes, if you poll 558 tribal 14 nations, 557 of them are trying to reformulate their 15 constitutions. And without having a public discourse 16 that's community-centered around those very, very 17 important issues -- self-determination issues -- where do 18 you go, what do you do? It's slowed down; the process is 19 incredibly inefficient. And maybe the Internet and the 20 local area networks will help facilitate that, but it's a 21 very severe problem. 22 But the consolidation of media definitely 23 removes community from media. One thing in particular is 24 the idea of identity in cultural and social wills of the 25 community-- of Indian country. It gets removed from that 26 1 context as well. And one of the problems with that is 2 that the quality and the existence of identity becomes 3 something that is commodified; it's a consumer rather 4 than a producer. 5 And unfortunately, the way new mediums are 6 developing, and specifically the Internet -- the way web 7 pages are formulated -- they're totally consumerist in 8 nature. All of the information has to be up front, it 9 has to be positioned in a way to where it can give 10 consumer gratification rather than inspire consumer to 11 transform himself or herself into a producer. 12 What we have then as a end result is 13 throughout Indian country we have this image that has 14 been largely produced. Indians have become signs. We're 15 like strip malls, virtual and non-virtual. We're all 16 over the place, and it's nothing that we've created 17 ourselves. This helps us remove ourselves from our 18 histories and a way to contextualize present experience 19 with past experience, and a lot of Iron Eyes Codys are 20 dangling around in our subconscious because a lot of 21 times that's what non-Indian people really want to see. 22 They want to see product justification from sort of stoic 23 construct. And that is what has happened, that is what 24 is continuing to happen. I don't see an end to that any 25 time soon. And I don't see a new medium of the Internet 27 1 doing anything to change that. I see consumers and 2 consumers and consumerism all over the foreheads of 3 Indian country. 4 MR. ROHDE: You know for years we've 5 assumed that diversity is connected with ownership. In 6 other words, if you want to address and audience or a 7 segment of our population, that the ownership matters, 8 and that ownership is going to determine what the 9 programming and the make-up of the information that's 10 going to be communicated. 11 I wanted to read a couple of statistics. I 12 know that some of these are dated because they're based 13 upon 1998 data that NTIA did in its Ownership report. 14 The African American population in this 15 country is around 12 percent which is recent census data. 16 But in 1998, we found that black ownership -- this is 17 radio and television combined -- accounted for 18 1.7 percent of that. 19 Hispanics constitute about 11 percent of 20 the population, but with respect to media ownership, 21 1.2 percent, radio and television combined. 22 Asian Americans, 3.8 percent of the 23 population, but .04 percent of broadcast ownership. 24 And Native Americans which are .09 percent 25 of the population were down at .02 percent, probably even 28 1 have dropped further in the last couple of years. 2 The question is, there's such a dramatic 3 difference between the breakdown of these certain 4 societal groups and the access they have to owning media 5 properties to communicate within our society. 6 I'd like to maybe turn to you, Mr. Edwards. 7 Does ownership matter? If we want to make sure that all 8 segments of our society have a chance to have their 9 voices heard, they feel represented in what they see on 10 television, they're connected to it, in the programming 11 you're going to address these certain audiences, does it 12 need to be owned by, in proportion, these segments of the 13 population or can the same people who own all the 14 stations speak to all these different people of society. 15 MR. EDWARDS: Absolutely. Minority 16 ownership is a must, and I don't think that you can 17 equate their programming to our 18 community -- satisfactorily anyway, to our liking because 19 ownership is far more than just programming. Let me say 20 that clearly. It's a voice in the community. It's 21 power, the power to make decisions, the power to do 22 business with people in your community which we don't see 23 enough of in these times. So there is no doubt that we 24 need to continue to fight to survive among the ownership 25 ranks and program to the communities that we serve as 29 1 well. 2 Let me say this-- the producers. Tim Reed 3 just build a major studio in Petersburg, Virginia that I 4 had a chance to visit, and we had what I considered to be 5 a very deep conversation because we talked about that. 6 Of course, you have the WB network, you 7 have UPN, you have Fox, and they've all done a fairly 8 good job I think with programming to our community; but 9 when we talk about depth, there's not enough depth. When 10 we talk about documentaries and we talk about educational 11 programming, doing specials on black business people, we 12 just don't see enough of that today. And I personally 13 feel, as he does and many others in our industry, that if 14 we had more owner operators, that picture would 15 drastically change. 16 So there's no doubt that there is a 17 difference. We have to be represented at the table as 18 far as ownership is concerned; no doubt about it. 19 MR. ROHDE: Well, this is a real challenge 20 because, as Mr. Banks has pointed out and others, we're 21 dealing with a fixed market here. There's only so many 22 licenses that one can access, and the ownership is 23 growing consolidated. 24 Mr. Perez, I think you operate some 25 low-power stations. Can you speak to a little bit about 30 1 how some of the low-power television stations have helped 2 minority ownership and where you see that headed? 3 MR. PEREZ: Yes, but let me lead into it 4 with one comment. 5 One of the things we can't forget is that 6 the federal government is very tightly, constitutionally 7 constrained from getting involved in programming and 8 programming format. So both NTIA and the FCC were driven 9 to focus their efforts on ownership and employment 10 because those were areas where at least we had -- we, 11 when I was back in government -- some constitutional 12 latitude to do pro-minority things. 13 Now that latitude has been recently 14 constrained greatly by court cases, but there still is 15 more room to maneuver in the EEO or employment area and 16 the ownership area than there is in programming. The 17 courts instantly slap the FCC when it gets anywhere near 18 programming, and the FCC as a philosophical matter 19 accepts that. 20 So unless somebody comes up with a better 21 handle, I think ownership and employment are the only 22 ways that the government can assist in solving the lack 23 of programming dilemma. 24 One of the areas that there's been some 25 sort of just accidental significant progress is in the 31 1 low-power TV area. Low-power TV was a small secondary 2 service made up of television stations that only have a 3 10 to 15-mile service radius, which is about comparable 4 to a Class A FM service radius. It was created in 1982 5 somewhat as a second thought by the FCC, but unexpectedly 6 they got literally tens of thousands of applications from 7 all over the country, including many applications by 8 minorities in the big cities trying to get into 9 television, who found that both the economics and the 10 spectrum of full-power television was just out of bounds, 11 impossible to tackle. 12 Unfortunately, because it was a secondary 13 service, it was very difficult to get funding, very 14 difficult to get advertising and very difficult to grow. 15 The service continued to grow until there was about 2,400 16 low-power TV stations in the country, roughly twice as 17 many low powers as there are full-power television 18 stations. 19 Recently, the low-power industry pushed 20 through Congress legislation to convert low-power from 21 the secondary status to primary status. And that 22 legislation is in the process of being implemented by the 23 FCC; and about a thousand low-power stations have filed 24 for authority to become primary Class A television 25 stations, the Class A nomenclature being copied from the 32 1 FM service. 2 So now you have about 1,200 full-power 3 large stations, and you have about 1,000 of these new 4 Class A stations. They're in the process of being 5 licensed, and the process will be completed in about five 6 more months. 7 What's unique about the low-power service 8 and what's relative about it for minority ownership 9 purposes is that in the low-power service about 10 10 percent of the licensees are minority. So when the 11 Class A licenses are issued, suddenly the number of 12 "television stations controlled and owned by minorities" 13 would jump by a factor of about 10, just by one swoop, 14 not because anybody was trying to do anything for 15 minority ownership, but because the low-power TV industry 16 fought and got legislation to give it primary status. 17 The thing that's ahead of us is that the 18 television industry, because of duopoly and the pressure 19 on the FCC to raise the television ownership limits is 20 going to go through very rapid consolidation much as the 21 radio industry did. 22 FCC Chairman Kennard in a recent speech 23 said that the FCC has calculated a drop of about 1,000 24 radio station owners since the implementation of the 1996 25 Telecommunications Act. Those were radio station owners 33 1 that dropped out of the mix because of consolidation. 2 I think everyone in low-power TV and 3 full-power TV is expecting the same thing to happen in 4 television as soon as the ownership limit's lifted, or at 5 least raised, which I think the FCC has signaled the 6 willingness to do. 7 I think one of the things that this group 8 can look at is to focus on groups like the full-power and 9 the minority-owned low-power stations and say, well, what 10 can we do to preserve those minority owners so that 11 duopoly television and television ownership relaxation 12 doesn't result in them disappearing over the next five 13 years much as a lot of radio station owners have 14 disappeared? 15 We've just enjoyed a ten-fold increase in 16 ownership, but that could just be erased in the next five 17 years because people are going to come to people like me 18 and offer ten times what was ever available for my 19 stations, and for a small businessman that's very hard to 20 say no. 21 MR. EDWARDS: Greg, can I go back to the 22 programming question that you raised too? 23 MR. ROHDE: Sure. 24 MR. EDWARDS: I was sitting here thinking, 25 and I said to myself, I could probably accept 34 1 non-minorities programming to minorities -- meaning the 2 networks -- providing that we were represented in that 3 decision process. But in most cases today we're not 4 represented in that process which is why ownership is so 5 important. 6 If you go behind the walls of any of these 7 networks, I can't think at any of the networks of one 8 person that's involved in the decision to pick up a 9 program. So if we were at that table, just like this 10 roundtable, discussing what it is that the African 11 Americans out there watching whatever network want to 12 see, then I could accept that. 13 MR. ROHDE: Mr. Hammond, you had a comment. 14 MR. HAMMOND: Let me just say, minority 15 ownership does matter. The court decision basically took 16 issue with the fact that there was no statistical 17 substantive support for the notion that diversity of 18 ownership translated into diversity of programming. But 19 I think shortly we will have statistical evidence that 20 establishes that, and I think that will change, 21 especially with regard to radio; that there's statistical 22 evidence that supports the conclusion that minority 23 ownership does make a difference. It also makes a 24 difference in employment. 25 So I think that's about to change. But 35 1 what also has to happen is it can't be a one-time only 2 study that's done to justify, or to confirm, the value of 3 minority ownership. That study has to be ongoing, and as 4 a responsibility of every broadcaster -- especially those 5 who are given an opportunity to participate because they 6 are suppose to be providing diverse programming to 7 otherwise not-served communities -- to establish that 8 they are doing that and to continue to do that. 9 MR. ROHDE: Thank you. 10 James, you had a comment. 11 MR. CASEY: Yes. I just wanted to make a 12 point, a follow-up to what Mr. Edwards said. 13 The idea of ownership, while it may not 14 need to be controlled, there needs to be participation. 15 And the difficulty for -- I can make an example of what 16 the non-Indians providing programming to Indians will 17 give you as an example of why ownership is so important. 18 If you have a bunch of people with no 19 Indian knowledge, no Indian background, no Native 20 American heritage, whatever, and you put them in a room 21 and say, let's come up with some Indian programming, what 22 are they going to come up with? 23 Well, let's run a special on Indian gaming, 24 maybe we'll send some cameras out to a few pow-wows, and 25 we'll run Dances with Wolves. (Laughter) That's your 36 1 Indian programming. And so, without the Indian 2 participation in the process, you're not going to get 3 programming that speaks to anybody but Hollywood. 4 And for Indians that's been a particular 5 problem. Mr. Twist mentioned Iron Eyes Cody. There's 6 been controversy over as to whether he was even Indian. 7 I think he was actually Italian. (Laughter). So it's a 8 problem, and so the ownership becomes a critical piece to 9 get the participation, whether that's a 10 minority-ownership position for minorities, whether 11 that's controlled -- maybe the definition needs to be 12 looked at -- but the participation is critical. 13 MR. ROHDE: Mr. Campos, you had a comment. 14 MR. CAMPOS: I want to make the point that 15 both Mr. Edwards and Mr. Hammond made, but also put it 16 from a different perspective. 17 I think we all have to remember that the 18 airwaves are controlled by government. It's "the" 19 government that has established licenses. It's the 20 "government" that, in the '20s and '30s when the first 21 licenses were given out, that created the "old boy" 22 network or the existing or the vestiges and the progeny 23 of the ownership that exists today. 24 So when we talk about minority ownership, 25 we can't allow ourselves -- this is my view -- and put 37 1 ourselves in the dangerous niche of having to justify it 2 solely with programming; and solely saying that, if you 3 have minority owners, then you will have a certain "type 4 of programming." 5 I think that does happen, but the real key 6 here I think is that because it is a government-created 7 right, then all people, especially minority people, 8 deserve the ability to be an owner and to own those 9 rights that the government created. 10 The danger here in getting involved and 11 justifying our ownership by programming is a huge danger. 12 We can't fall into that trap, if you will, in my view. 13 And so, what we have to do is basically say -- to pick up 14 what Mr. Edwards said in the beginning -- that owning 15 media is very important in our society. Why is it 16 important? Because it's a high-level, high-profile kind 17 of business. 18 If you own media as a minority person, you 19 have disproportionate impact on your community. You have 20 other members of the community being involved in 21 business, creating not only employment, but creating 22 entrepreneurs out there, creating other opportunities for 23 sales, other opportunities for business. 24 The benefits are so huge that we can't 25 forget that. In my community by being a minority owner, 38 1 we bring access to business people in our community that 2 would never have access to media, that would never 3 understand that they need to get business plans. We 4 provide a consulting role, if you will, or a push and a 5 development. 6 So it's our right. It's a 7 government-created situation; therefore, we don't have to 8 justify it by what exactly is on the air. We deserve to 9 be owners in the proportion that we are in the community. 10 MR. ROHDE: Jenell, you had a comment. 11 MS. TRIGG: Certainly. I'd like to expound 12 on that a little bit. I think Mr. Campos and Mr. Edwards 13 touched on some of the other benefits of minority 14 ownership. 15 Having worked in broadcasting for 15 years, 16 there are so many other advantages for minority 17 ownership, and I think it's critical that we remember 18 that all broadcasters are required as a matter of law to 19 serve their communities, serve the public interest, 20 convenience and necessity. And it is, indeed, more than 21 programming. 22 Let's look at what else happens at the 23 operations of a broadcast station. 24 First of all, there are community 25 involvement and the decisions of what organizations to 39 1 support, what not to support and what degree to support 2 are made at the ownership level. And that includes 3 whether you're running public service announcements for 4 what issues are important to the minority community, 5 everything from the news broadcast. 6 Look at competing news broadcast. News is 7 some of the most profitable program areas on television 8 and radio, but yet what stories lead first to what 9 degree, whether you send a news truck with a full camera 10 crew and an anchor to the tenth riot of the week or 11 whether you're focusing on an awards ceremony for 12 disadvantaged kids. Those are the nuances in decisions, 13 in programming, how stories are portrayed, how people are 14 portrayed, how the community is supported that are made 15 at the ownership level. So, yes, every station's got 16 news, but a minority owner has control over the direction 17 of that news. 18 Again, having worked and been at the table 19 when we're deciding on a PSA budget, who gets the prime 20 time PSAs as opposed to the 3:00 a.m. spots? Who gets 21 the primo news anchor at their dinner event or they get 22 the sales account executive who got recruited the last 23 minute? Those are the decisions that are made at the 24 ownership and employment level that get a station 25 involved in its community and involved in the people it 40 1 serves. And that's way beyond programming, and those are 2 the inherent nuances that are critical to maintain 3 minority ownership. 4 MR. TWIST: There's one thing that all of 5 us minorities understand in America, and that is the 6 client-patron relationship. We either tell our stories 7 or we listen to our stories. And ownership allows us to 8 tell our stories. The lack of ownership allows us to 9 listen to our stories. 10 When we listen to our stories from an 11 Indian perspective, we are bombarded with rich gaming 12 tribes-- the battle of the Piquots without reservation, 13 alcoholism, wandering, homeless Indian people in inner 14 cities. We're not seeing the reality of our lives. 15 We're not seeing the reality of our culture or families 16 or clans or identity; it's something that is being 17 shaped, formulated and articulated by our patrons. And 18 if history has proven anything over the last 500 years, 19 it's that the client-patron relationship is self-serving, 20 and it has not gone anywhere to promote a better 21 understanding or a better sense of self-determination for 22 the so-called client. 23 MR. ROHDE: Before we close out this panel, 24 I wanted to get to a couple questions. And since you're 25 volunteering to speak, Lyle, you can speak, but I'd like 41 1 you to answer a question too. 2 And my question is, last summer, the FCC 3 relaxed the duopoly rules, and I'm curious what your 4 thoughts are as to what impact that has had on the 5 ability of minority owners, such as yourself, to try to 6 acquire more properties? 7 MR. BANKS: It's had just a huge, negative 8 impact on me, and I think it will have the same sort of 9 impact for other people coming with me or behind me. 10 It's just close another door of opportunity. It's very 11 tough right now to even get into the top 75 or maybe even 12 85 DMA-ranked markets. Because of the consolidation and 13 duopolies this is very difficult. And I think as Jenell 14 pointed out before, you have a lot of consolidators that 15 are now fishing in DMA-ranked waters that I would 16 normally fish in now, so it just makes it much more 17 difficult. 18 And plus it also impacts the ability to buy 19 programming and other services. So to the extent that 20 you could find a way to keep your programming costs down 21 in light of that, it was very tough to do that. 22 One of the things I wanted to just touch on 23 as far as following up on some of the nice things that 24 Jenell said is, having been a general manager for many 25 years in different stations and an owner now, this issue 42 1 about programming or minority-targeted programming can be 2 important from minority or diverse owners, but I think 3 the important thing is the fact that our existence makes 4 our services and our programming more representative of 5 the communities in which we serve, and that's the 6 important thing to me. 7 The other thing is, as an owner, and trying 8 to either get funding or looking at the landscape, the 9 numbers of minority owners and women owners is so small, 10 and I think a lot of that has to do with the fact that 11 there isn't a huge pipeline of people that are coming 12 through the broadcasting system to be able to take on 13 ownership. And so, we need to do a better job in 14 improving employment opportunities for women 15 minorities-- managers and entrepreneurs coming through. 16 And I think that's one of the responsibilities that we 17 each have as owners and as managers to open up the 18 pipeline. 19 When I graduated from school, I had no idea 20 that opportunities existed on the television side. I got 21 on the TV side just by happenstance. You don't have role 22 models and access to people who are decision-makers or 23 who have an interesting and influential jobs on the 24 television side unless you're actually there. 25 MS. TRIGG: Everybody wants to be an 43 1 anchor -- 2 MR. BANKS: Exactly. 3 MS. TRIGG: -- or a TV cameraman. 4 MR. BANKS: But they don't know that the 5 programming director or the community affairs director or 6 the news director-- that there are jobs that yield an 7 enormous amount of influence at a television station, and 8 there are ways in which you can get into those jobs. And 9 I feel it's my responsibility -- and I have done so in 10 the last 15 years -- to stay as accessible as possible 11 and open to people and giving people those opportunities. 12 MR. EDWARDS: But Greg, the question too 13 is -- if I may -- and I had this discussion with a couple 14 of broadcasters the other day -- is there really equal 15 opportunity behind some of the job opportunities within 16 the broadcasting industry? And as much as it hurts, I 17 would have to say no. 18 I applaud the NAACP and Kwasi Mfume for 19 what he has started and continues to do, looking behind 20 the doors of the networks and local stations at the 21 makeup of their staffs. There are a lot of young people 22 today coming out of school with degrees in mass 23 communication and journalism who can't even get entry 24 jobs who are minorities. It's not fair, and it's been 25 long overdue for an organization such as the NAACP to 44 1 seriously, seriously look into. 2 I applaud you for hosting this roundtable 3 because we have a serious problem in this industry, not 4 just with ownership opportunities; we have a serious 5 problem in this industry with employment, period. So if 6 we can conquer employment, we can conquer ownership. But 7 we need a start; we need job opportunities. 8 MR. BANKS: Of 1,200 television stations, 9 how many African American general managers are there? 10 About six? 11 MS. TRIGG: On a good day. 12 (Laughter). 13 MR. ROHDE: Let me ask this question. 14 Last night, I spoke to Commissioner Susan 15 Neff. She called because she really wanted to be here, 16 but could not because of a conflict. And she asked me a 17 question which I didn't know an answer to. 18 And that was, what about female ownership? 19 Does anybody know the status of female ownership? 20 Toni? 21 MS. BUSH: The last report was done in 1987 22 when the Census Bureau broke down those standard 23 industrial classification codes into the four level. In 24 fact, some of the statistical data that we collected as 25 part of the market entry barriers report back in 1996 45 1 were already nine years old for women ownership, and 2 there has been no study. 3 AWRT looked to the FCC to get statistics, 4 and yet the commission has never collected that data 5 before. So we're working with 13-year-old numbers on 6 statistical and way before the 1996 act; so no, we really 7 don't have an idea where it is for women-- radio, 8 television or any communications group. 9 MR. ROHDE: This may be a speculative 10 question, but perhaps maybe you can speak to it or anyone 11 else here. Maybe Lyle, since you've been involved in 12 management before. 13 Assuming we'd like to expand more 14 opportunities for female ownership and broadcasting, do 15 they face the similar challenges that minorities face or 16 are there unique things about female ownership or what do 17 you suspect is the issue? 18 MS. TRIGG: Having been in management and 19 looked at some ownership properties and trying to 20 transition, it still very much an old boys network, "old 21 white boys" network. So in that context, there are some 22 inherent difficulties on both sides, and sometimes it's 23 tough to tell which obstacle you're dealing with. You 24 don't know whether you're being hampered, particularly in 25 access to the capital side, whether you're a minority or 46 1 whether you're a female; or whether you're asked to get 2 your husband to sign your papers or whether you need to 3 bring more collateral to the table because they don't see 4 you making money. 5 So there are times when it's both. There 6 are some advantages, however, having both disadvantages, 7 but those are far and few between. 8 MR. ROHDE: Toni. 9 MS. BUSH: And I'm going to approach this, 10 Greg, from a slightly different perspective, because 11 we've been talking about the radio industry and the 12 television industry. But I think the problem is larger 13 than that, and we've got the same problems in the cable 14 industry. There is no minority ownership that I'm aware 15 of in the satellite radio industry, the DBS industry. 16 And the concern that I see, while we talk 17 about radio and television stations -- and I think there 18 are some opportunities that minority owners need to 19 explore as to what they can do as the conversion to 20 digital happens. But my big concern is that as the new 21 technologies come along, we're seeing zero ownership by 22 minorities and/or women. And I think that in large part 23 it goes back to the point that Roel made, which is this 24 is the government's spectrum, and the government has to 25 decide how it's going to license the spectrum and what it 47 1 is going to do to promote ownership by a diverse group of 2 Americans in its licensing process. 3 I, of course, can't resist the opportunity 4 to point out that our company currently has license 5 applications pending at the FCC. Broadwave USA is made 6 up of affiliates all over the country. We have 69 7 affiliates; 65 percent of our affiliates are minorities, 8 30 percent are African American, 30 percent are female. 9 Amongst the females, we have African Americans and 10 Hispanics. We have 12 percent Hispanic ownership, we 11 have Native American and Asian American ownership. 12 And so, assuming that we are going to be 13 successful, we will be the first company to have a 14 significant number of minority and female entrants into 15 the broadcasting industry in decades, maybe forever. 16 MR. PEREZ: When you think of the 17 stereotype for an Internet geek, it's always male. You 18 never see a female Internet geek. And I think the 19 stereotype probably has a lot to do with the level of 20 participation in the new media and the new industry. 21 And it's particularly problematic that the 22 Internet media is almost totally male dominated and 23 predominantly white dominated because when you think of 24 broadcasting, particularly television, being the other 25 alternative media to reach people and to influence 48 1 people -- the FCC in 1996 four years ago announced the 2 end of all new analog television licenses being 3 accepted -- television is done growing as an analog media 4 forever. There will be no more licenses to steer to 5 minorities, so the only game will be buying what's there. 6 And I yesterday, in preparation for today, 7 spoke to some of my friends back at the commission, and 8 they're projecting, at the earliest, five years before 9 they're really ready to start accepting digital licenses. 10 So there have been no new television filing 11 opportunities for five years past, and there will be no 12 more for another five years. So that's 10 years at least 13 before there's any new minority applicants. 14 MR. ROHDE: We're going to close this panel 15 off in a couple of minutes, but I'd like to close by 16 asking a question. I'm just curious if anybody on the 17 panel has a response to it, and that is kind of looking 18 ahead a little bit. 19 We all know the Federal Communications 20 Commission is considering some further liberalizations 21 coming up soon with respect to the national ownership cap 22 and maybe some other rules-- cross-ownership rules and 23 all of that. 24 I'm curious as to what the members of the 25 panel think. Since the FCC's not here, it's clear for us 49 1 to talk about them, right? 2 What advice do you have for the commission 3 as they consider these changes? Should the FCC move 4 forward with some more liberalization, should they hold 5 the line, should they make some changes in another 6 direction? What advice do you guys have? 7 MS. TRIGG: When the Adarand case was 8 decided in 1995, then Chairman Hunt pledged to do what 9 was called an Adarand study to look at the disparity 10 between minority ownership and majority ownership 11 licensing -- that whole process -- in fact, across the 12 board. 13 The commission has never conducted a 14 full-blown Adarand study. To their credit, they have 15 conducted some smaller studies -- and one I know that 16 Professor Hammond is working on -- in the discriminatory 17 advertising. But there is a need to stop and assess I 18 think, first, the impact of the 1996 act on minority 19 ownership before they take that additional step. And 20 there are a couple statutory provisions that I would 21 encourage them to read again or to take a look at that 22 give them the authority to do that. 23 And as a matter of law, they are to look at 24 promotion of minority and small businesses. And because 25 minorities fall in that small business context, they need 50 1 to take a look at the industry first and the impact 2 first-- do that Adarand study before they further open 3 the gates for consolidation. 4 MR. HAMMOND: I think it goes a little 5 further than that. You can't just look at broadcasting 6 as an isolated industry anymore. It's the information 7 industry. It's got equipment, it's got program 8 distribution, it's got content, it's got 9 telecommunications distribution, it's got software. 10 We need to know where minority ownership is 11 across the board. If we're going to make sure that 12 minorities actually participate in the 21st century and 13 the information industry, broadly defined, then we have 14 to look at all of these segments. 15 MR. EDWARDS: And I might add that when it 16 is discussed, that everybody be invited. And I've got to 17 go back to I salute you for having this. They've got to 18 invite everybody to the table to se what that impact will 19 be, that I don't think has happened. 20 We need to do a better job. We're in the 21 communications business, and sometimes we're the worst at 22 it. But we need to do a better job of communicating 23 what's happening and the impact that it might have on any 24 segment of our population. 25 MR. BANKS: When the test went away that 51 1 made an immediate negative impact on minority ownership, 2 and combined with the increased consolidation has just 3 been heinous. So I think if there's some discussions 4 that are more substantive about creating incentives to 5 increase access to deals, to lower the cost of capital 6 and financing for women and minorities, and to maybe 7 improve the valuations or incentives for sellers to sell 8 to minorities, women, that would be what I'm for. 9 MR. CAMPOS: There's absolutely no doubt 10 that consolidation has been the worst thing that ever 11 happened to minority ownership and small business 12 ownership; let's just be brutally blunt about it. 13 Any further liberalization will just create 14 and exacerbate the issue. In radio, which is the 15 industry that I'm familiar with, there will, in short 16 order, be a company that owns almost a thousand radio 17 stations across America. And as was said earlier, no 18 longer are the large companies only interested in small 19 markets; there are "business plans" to have clusters in 20 small markets and wheel and hub, and all these kinds of 21 situations to basically control huge numbers of radio 22 stations, in particular, across America. 23 I have seen a phenomena recently in which 24 in a divestiture situation, the company that's divesting 25 is concerned about where they're placing particular 52 1 signals, what signals are going to be left potentially 2 that could come back and be owned by somebody else to 3 compete against them later. So now they have an interest 4 in what is out there that may come back, and they want to 5 keep sort of a potential control on that situation. 6 There is a tremendous chilling in terms of 7 having properties available for anyone else, especially 8 minorities, and this is going all the way through all 9 levels of markets; that's just the way it is. So at a 10 minimum, there can't be any more liberalization. In 11 fact, what we need is a re-study of what has happened. 12 Is this good for America? Is this really what we want? 13 Do we want three or four or five companies 14 all across America to basically own all the radio 15 stations that broadcast and program to about 80 percent 16 of the population? Is that what we want? I mean, that's 17 what we got. 18 And this isn't the marketplace winning out. 19 You can't tell me that, oh, it's because minorities can't 20 compete. These were government policies, these were 21 licenses that were issued, this is a government-created 22 situation. So therefore, we are entitled to a equitable 23 playing field. The fact that new media and so forth is 24 not being attended to is also a big problem. So we have 25 that issue. 53 1 Government has to get involved and has to 2 create diversity and ownership because ownership is the 3 most important factor. Employment's important; 4 everything follows after that. 5 Secondly, government has to find a way to 6 get a new model for private capital. Lyle explained very 7 clearly what the typical minority entrepreneur problem 8 situation is. You've got venture capitalists who want 9 returns in three years, and they've got to have a certain 10 amount of money, and that money cost more for minorities 11 to get than it cost existing companies. We start off 12 almost with a minority situation in ownership of our 13 company because that's what it takes to attract capital. 14 So you start off in the negative. 15 So government-- create incentives to create 16 a new venture capital situation in which a venture 17 capitalist because they're only responding to their 18 particular limited partners who want their money back in 19 a certain number of years, let's find a way to have a 20 longer time span for returns. We're not talking about 21 not making money. We've got to make money. We've got to 22 basically be successful in business, but let's have a 23 different situation to allow minorities to build up their 24 companies and to stay in business. That's a big thing 25 also, to stay in business for the long run. 54 1 VOICE: Are you going to take any questions 2 from the floor? 3 MR. ROHDE: I'll address that in a second. 4 MR. PEREZ: It's always a very difficult 5 task to swim upstream against economic forces, and the 6 economies that flow out of consolidation are a 7 tremendously powerful economic advantage. And so, I 8 think it behooves us to both do what we can to limit or 9 fight further consolidation but also to plan for what we 10 can do within the context of consolidation for fear that 11 we might totally lose that fight. My understanding is 12 that there's tremendous pressure on the FCC to do 13 something in this direction, and I think it's going to 14 happen. 15 Recently, in the radio area, where the 16 consolidation process is much further along, some of 17 these mega companies have spun off some very nice big 18 city properties to minority groups, I think in large part 19 because of pressure coming from the FCC, Rainbow, PUSH, 20 NAACP and other people that are trying to encourage 21 diversification. 22 And, in fact, if you just look at big city 23 radio properties, you might say that minority ownership 24 in that small class of stations has gone up very recently 25 because of the spin offs that are coming out of 55 1 consolidation. So you could look at this problem and 2 turn it into an opportunity if you're successful at 3 controlling or encouraging the right outcome of the 4 spin-off process. 5 I think that for fear that we lose the 6 fight on the TV side, we also want to look at how we can 7 ensure that when the inevitable spin offs come out of the 8 TV consolidation, that those properties go to minority 9 owners. 10 MR. ROHDE: I want to conclude this panel. 11 This has been extremely enlightening, and I really 12 appreciate all of you being here and really thank you for 13 that. What I'd like to do is go to a short break. 14 I know, sir, you've been quite eager to 15 address a question. And I was going to say, well, hold 16 your questions to the end, but since you've been so 17 eager, I'll let you throw the final shot here. Then 18 after you've raised your question, if anybody has a 19 comment to that. We'll take about a 10-15-minute break, 20 and we'll come back for the second panel. And then 21 toward the end of the second panel, I'd like to have some 22 time of which others in the audience who want to make a 23 comment or ask some questions would be able to do that. 24 So please, go ahead. 25 MR. PEARSON: My name is Hugh Pearson. I'm 56 1 from Urban Box Office Network. 2 First of all, I'd like to say to Mr. Rohde, 3 you said that there are few Native Americans here 4 present. I'd like for you to know that 40 percent of the 5 African Americans have Native American blood, so there's 6 a lot of Native Americans present in this room. Okay, 7 number one. 8 My question is the following. In your PR 9 materials you talk about one of your aims is to make sure 10 that foreign governments open themselves up to American 11 companies. 12 I'm wondering why isn't one of your aims to 13 make sure that some of these major conglomerates that are 14 buying up everything, why aren't you questioning some of 15 these major mergers and acquisitions? 16 MR. ROHDE: Why is not NTIA questioning -- 17 MR. PEARSON: Why isn't the NTIA looking 18 into it and telling the FCC to question some of these 19 major mergers and acquisitions? Let's cut through the 20 chase and not do this, "okay, let's talk to the 21 minorities about what they don't own now." 22 Let's cut through the chase, and ask the 23 question, why you are not questioning some of these huge 24 mergers and acquisitions and recommending that they be 25 denied? 57 1 MR. ROHDE: Thank you. 2 With respect to the mergers, within the 3 administration, we've been trying to respect the desire 4 of the Administration to allow the Justice Department to 5 do the review and not to impose a view upon that. So 6 that's why we have stood back and allow the Justice 7 Department to do its review under the antitrust laws and 8 to give them that independence. And that's been a desire 9 within the administration to allow for this kind of 10 structure. 11 However, getting to the content of the 12 concern you're raising, I think you raise a very, very 13 good point and a very important point for us to look at. 14 I think the wave of mergers, not only in just the media 15 area but in the broader telecom area, are raising a whole 16 host of new questions that I don't think we've really 17 confronted before as a government. And particularly, 18 with the globalization of all these mergers are raising 19 new issues. 20 So it's something that we have to be very, 21 very sensitive to, and I think you raise a very good 22 point. Thank you for asking that. 23 Thank you all for being here, and we'll 24 take 25 about a 10-minute break, and we'll come back for the 58 1 second panel. 2 (Recess) 3 MR. ROHDE: I'd like to begin. 4 The intent of the first panel was to kind 5 of take a snapshot or a pulse check of where we stand 6 today with respect to minority ownership and the industry 7 in general. And with this panel we want to look forward 8 a little bit and look to see where things are headed, and 9 also to have a discussion about the role of new 10 technologies and what new technologies hold and what kind 11 of policy issues are related to all that. 12 I'd like to begin by starting over here to 13 my right. If each of the panelists could state your name 14 and your affiliation. Just go around and we'll begin a 15 series of questions just like we did the other panel. 16 So, please, Mr. Wilkens. 17 MR. WILKENS: My name is Herb Wilkens, and 18 I manage the Syncom group of venture capital funds. 19 MR. WINSTON: I'm Jim Winston. I'm the 20 Executive Director of the National Association of Black 21 Owned Broadcasters and a partner in the Washington, D.C. 22 law firm of Rubin, Winston, Diercks, Harrison & Cooke. 23 MS. KONG: Hi, I'm Jacqueline Kong. I'm 24 the executive director of the Asian American Media 25 Development, and the president of a new media Internet 59 1 company broadcasting, webstreaming video on the Internet 2 called HotPopTV.com. 3 MS. LEW: I'm Ginger Lew with the 4 Telecommunications Development Fund. We make investments 5 in early-stage communications companies. 6 MR. SAMARA: I'm Noah Samara. I'm the 7 founder, chairman and chief executive officer of 8 Worldspace Corporation, who has had two satellites built 9 and launched over Africa and Asia, and a third one is 10 being built to be launched over Latin America. 11 MS. HAYLES: I'm Dahlia Hayles. I direct a 12 media and telecommunications project for the Citizenship 13 Education Fund at Rainbow PUSH Coalition in Washington, 14 D.C. 15 MS. HONIG: I'm David Honig. I'm the 16 Executive Director of the Minority Media and 17 Telecommunications Council in Washington, D.C. 18 MS. HODGE: I'm Millicent Hodge. I'm a 19 general partner of the New Markets Equity Fund. It's a 20 recently founded fund that will focus on low and 21 moderate-income areas in urban and rural communities. 22 MR. CHINLOY: Peter Chinloy. I'm a 23 professor of real estate and finance at American 24 University, and I'm interested in telecommunications 25 issues. 60 1 MR. ROHDE: Well, thank you all very much 2 for coming here. I'd like to begin kind of where we left 3 off in the previous panel and talk a little bit about 4 financing and capital. Maybe we can begin with 5 Mr. Wilkens and Mr. Winston and go to Ginger, since 6 you're all involved with the establishment of funds and 7 looking at the capital issues. 8 Mr. Wilkens, could you just maybe share 9 some of your thoughts about where you see the issues 10 headed because of one of the issues we discussed in the 11 previous panel was the challenges that minority 12 broadcasters have in facing capital. Looking ahead a 13 little bit, how do you see this issue unfolding, and what 14 opportunities are out there? 15 MR. WILKENS: Well, you can't really look 16 forward unless you look back, and Syncom over the years 17 has financed a whole host of minority-broadcast 18 companies. We have financed Radio 1, Z-Spanish, 19 El Dorado, Worldspace, District Cable Television, South 20 Chicago Cable Television, Buenavision Telecommunications, 21 on and on and on. We're now financing Internet 22 companies, Net Noir is a new company, and we will 23 probably finance, and continue to finance, a host of 24 other companies. 25 I make that point because most people would 61 1 say, wait a minute -- oh, and I missed BET, Black 2 Entertainment Television -- one company, one venture 3 capital fund, managed to finance all those companies? A 4 lot of them are household names. 5 How did Syncom with very little capital 6 manage to finance all those companies? Well, the answer, 7 quite frankly, is we have taken a different view of 8 minority telecommunications and minority-owned 9 telecommunications companies. Our view is that the 10 talent in the minority community -- and most of you won't 11 believe this, but the proof of the pudding is in what 12 we've done -- exceeds the talent pool available in the 13 majority community because most of the talent in the 14 majority community is employed, perhaps gainfully, 15 perhaps not, but nevertheless they've been absorbed. And 16 there's plenty of talent -- unused talent, capable 17 talent -- in a minority community, so much so that you 18 can offset the capital against that talent, that 19 capability. 20 And what we have done is focused on the 21 best and brightest in our community; the people who 22 really understood what they wanted to do and what they 23 wanted to achieve. And because they have that kind of 24 capability, we're able to reduce the amount of capable, 25 and those people with the talent took those talents and 62 1 created the companies that you now see. 2 Noah Samara's a perfect example. Syncom's 3 investment in Worldspace was $500,000. Worldspace is 4 presently capitalized at $1.4 billion. It is the only 5 direct-satellite-to-earth operating system in the world. 6 Now how did that happen? That happened 7 because Noah Samara created the industry. He understood 8 more about satellites and direct-satellite-to-earth 9 operational systems than anybody we had come in contact 10 with, white or black, across America. He knew it. 11 This goes back 10 years ago, Noah? 12 MR. SAMARA: Yes. 13 MR. WILKENS: Ten years ago. 14 There are a lot of Noah Samaras probably 15 sitting right here in this room who understand various 16 segments of the telecom industry who we will finance. 17 And if we can do deals -- and by the way, I think 18 Worldspace today is conservatively worth maybe 19 $5 (billion) or $6 billion plus dollars. 20 So if we can put up $500,000, take a 21 significant equity stake in the company, and work with an 22 entrepreneur so that he or she can realize their dreams, 23 we can create all the minority owned companies in the 24 world in the future. In fact, we can control 25 communications in this country in the future; and that's 63 1 going to scare a lot of people, but that's the truth. 2 MR. ROHDE: Mr. Winston, do you share the 3 view that there's plenty of capital available for 4 minority broadcasters if they get the means? I mean, the 5 capital's there? 6 MR. WINSTON: First, I wanted to ask Herb 7 what kind of return they got on that $500,000 investment. 8 But I'll add that off the record later. 9 But on a serious note, Herb obviously goes 10 way back in this industry. We've been on many panels 11 together, and we've hosted him in NABOB conferences in 12 the past. 13 The issue with capital is, obviously, a 14 fairly complex one. Herb has taken his magic and applied 15 it in some very creative ways to help some very 16 significant companies. Unfortunately, not everyone's 17 business plan is as ambitious and has the vision to carve 18 out a brand new niche. For many people, they just want 19 to be the African American or Hispanic broadcaster in 20 their local market, and that is there overriding 21 ambition. And for those kinds of entrepreneurs, money 22 has always and continues to be tight. 23 Certainly today, if you're going to a 24 venture capitalist, as was talked about on the last 25 panel, most of them -- and I will exclude Herb; I'll let 64 1 Herb talk about his investment strategies -- are saying 2 we want a business plan that shows us that you're going 3 public or you have some other plan for taking us out in 4 three years, definitely no more than five. And for an 5 entrepreneur who wants to just be a broadcaster to his 6 community, his business plan is not going to fit that 7 model. 8 It used to be that that entrepreneur would 9 go to his local bank and take out a loan to purchase a 10 radio or TV station, but that was back when TV and radio 11 stations sold for 8 and 10 times cash flow. Now they're 12 selling for 20 times cash flow, and your bank's lending 13 it 5 times cash flow -- if you're lucky, they're lending 14 it 5 times cash flow -- then there's a huge gap between 15 what you need to purchase a radio station and what you 16 can get from traditional forms of debt financing. 17 So as a result, there continues to be a gap 18 for smaller to mid-level entrepreneurs, and it's not one 19 that is currently I think adequately being filled. 20 MR. ROHDE: Let's turn to Ginger. 21 Ginger, you are the administrator of the 22 Telecommunications Development Fund which was a creation 23 of the '96 Telecommunications Act. Maybe a lot of folks 24 don't really know a lot about the fund that you 25 administer. Maybe you can give us a little bit of 65 1 background about what this fund is, where you're at right 2 now, how much money you have to work with and what kind 3 of financing you're doing. 4 MS. LEW: The Telecommunications 5 Development Fund was part of the 1996 Telecom Act. The 6 purpose of the fund, which was set up to be a private 7 company, is to make investments in early-state 8 communications companies. 9 We initially receive our funding from the 10 interest paid by financial institutions on spectrum 11 auction deposits. Up until 1996 when the FCC received 12 deposits from interested bidders in the spectrum 13 licenses, they used to place the money into non-interest 14 bearing accounts. Don't ask me why, but that's what 15 happened. (Laughter). And Congressman Towns in 16 particular, who is the father of this particular piece of 17 legislation, proposed the idea that the FCC be authorized 18 to place money into interest-bearing accounts. And in 19 this case, Mellon Bank pays a whopping 3.3 percent 20 interest on these spectrum auction deposits which accrue 21 to the benefit of TDF. 22 When TDF was first created, one of its 23 initial hopes was, in fact, to increase minority 24 ownership broadcast properties, but no one knew how much 25 money TDF was ever going to accrue through this process. 66 1 And over the course of the last 3 years, we've 2 accumulated approximately $25 million from this 3 interest-earning process. 4 Twenty-five million dollars in today's day 5 and age when you talk about broadcast properties doesn't 6 go very far. So as a result of this, the TDF, which has 7 been operational for the past year-and-a-half, has 8 instead chosen to focus on making equity investments at 9 early-stage new media, new communications technology 10 companies because this is where we think a million 11 dollars here and a million dollars there can, in fact, 12 make a difference. 13 We've made approximately six investments to 14 date, all in the range of anywhere from $700,000 to a 15 million dollars. We'll make up to $2 million for any one 16 investment. We have approximately $20 million to invest 17 total, so that's approximately 10 investments. 18 My investment partner, Daryl Williams, who 19 used the vice president of Ameritech's venture 20 fund -- Daryl and I are proposing to our board that we go 21 out and raise a new fund from traditional investment 22 sources -- from banks and pension funds -- in the very 23 new future because we think we've hit upon a very 24 interesting niche of opportunity because when we think 25 about communications and broadcast, we often times focus 67 1 on traditional broadcast. And the reality is, in today's 2 day and age we're talking about webcasting, Internet 3 radio, satellite radio-- all new forms of communications. 4 And I think these are opportunities of ownership that we 5 should be exploring and promoting. 6 MR. ROHDE: Thank you. Maybe this is a 7 segue to have Noah speak for a minute. You've already 8 had an advertisement from Mr. Wilkens. 9 MR. SAMARA: I should be on every panel 10 with him. (Laughter) 11 MR. ROHDE: Tell us a little bit about your 12 satellite technology, how it works, and also about what 13 kind of a role you see this playing domestically within 14 the U.S. in terms of creating more opportunity for media 15 ownership or media delivery. 16 MR. SAMARA: First, before I get into this, 17 I was thinking, $25 million, I'd give it to Herb Wilkens, 18 and it would go pretty far. 19 About 10 years ago, I set up a company, and 20 I didn't have anything at the time -- no money and no 21 financial backing -- but just went off to set up a 22 company that would ultimately have satellites built and 23 launched to cover some 4.6 billion people living in 24 Africa and Asia and Latin America in the Middle East and 25 in the Caribbean. 68 1 That was what we started with. I really 2 didn't know how far this was going to go, whether I was 3 going to start the company, create all of the enabling 4 regulatory environments, et cetera, and somebody would 5 come and buy it up or how exactly it would evolve. But 6 what I did know is that this was something that just 7 needed to get done. 8 First of all, it was a great market 9 opportunity. Just think of being able to reach some 10 4.6 billion people or maybe 10 percent of those people or 11 take 5 percent of those people; it's still a huge market 12 whichever way you cut it. And that was basically the 13 idea, and ultimately 10 years later we actually did end 14 up launching the first satellite ever that does this kind 15 of a service. In fact, we did it in Africa in advance of 16 such a service even being delivered here in the United 17 States. And it's the first such satellite system ever 18 launched that's dedicated; in fact, it's the first 19 satellite system, period, that has ever been launched 20 that is dedicated to cover Africa. So these are like two 21 points that make us mighty proud. 22 But what the satellite does is, instead of 23 direct TV, imagine having a small receiver that 24 looks -- in fact, this is a working receiver. It works 25 all over Africa and all over Asia. We have two 69 1 satellites that have already been launched. Imagine, 2 instead of a direct TV, just a satellite broadcasting 3 signals directly from the GO stationary orbit to a radio 4 that's this size. 5 And this radio basically has this antenna; 6 that's the satellite dish. That's all you need. And the 7 radio itself can be connected to a computer or you can 8 have a computer card that replaces the radio, and the 9 computer card plus this antenna is all you need to 10 actually receive all kinds of multimedia without the need 11 for telephone infrastructure. 12 The whole idea behind the service is -- the 13 company's mission is to create information affluence. 14 I've always believed that, really, the problem is not one 15 of poverty or one of politics or whatever; the real 16 problem around the world, particularly in the developing 17 world, is one of lack of information. 18 If you were to provide lots and lots of 19 information to people from universities over the air to 20 help broadcasting to lots of great entertainment -- I 21 have taken this radio in very remote areas and have heard 22 Louis Armstrong do his thing. It's just an incredible 23 experience. It's just an incredible experience that 24 we're providing, but that's what this is. 25 MR. ROHDE: What are the capital costs for 70 1 this, for launching this system? 2 MR. SAMARA: It has cost us so far about 3 $1.1 billion, and to fully launch the business into this 4 marketplace will cost another, maybe, $200 million, maybe 5 $300 million more, and we should break even fairly 6 quickly. It's a huge market. 7 VOICE: Are you publicly trading yet? 8 MR. SAMARA: That's the next step. 9 MR. ROHDE: What about the subscribers? 10 What does it cost to have one of those units? 11 MR. SAMARA: Imagine a radio band. We have 12 quite a large radio spectrum actually that's dedicated 13 for the service in one of the choicest parts of the radio 14 spectrum, as you know -- inside joke here. 15 So we have this L band frequency, and if 16 you could imagine a radio spectrum just like AM/FM, 17 there's this new frequency which is the satellite 18 frequency. And what we do is, once a subscriber buys one 19 of these receivers, we have dedicated a good chunk of 20 that radio bank basically to deliver service for free. 21 So if somebody just buys this radio, they 22 will forever until the life of this radio -- or until 23 their life, whichever, as lawyers tend to say -- they get 24 a free service. Then we've also dedicated a smaller part 25 of the spectrum, but still fairly large, to do very 71 1 specialized services that user would pay $10-12 a month 2 for. And we do most of our multimedia that way; we 3 deliver like a huge file into people's computers. And in 4 the U.S. a one-way broadcast of multimedia doesn't make 5 as much sense because of how well developed our telephone 6 infrastructure is; but in much of the developing world 7 you're on line for about 15 minutes and it drops, 8 particularly if you're downloading a big file. 9 So what we do is we aggregate great 10 content, and we deliver those contents across our 11 satellites across the developing world; and that we 12 charge subscriber fees, and then we have an advertising 13 model. 14 So basically we have three models for 15 making money; we lease capacity to broadcasters, we 16 advertise or co-advertise on content -- that's other 17 people's content if we don't develop the content -- and 18 then we charge subscribers for specialized services. 19 MR. ROHDE: Thank you. 20 Jacqueline, let's turn to Internet 21 technologies. What can you tell us about the future of 22 the Internet with respect to -- traditionally we know 23 television and radio broadcasting. And, in fact, this 24 weekend I remember reading in the Washington Post a story 25 about a radio station -- and I think it was in Los 72 1 Angeles -- that has completely switched its format from 2 broadcasting over the airwaves and is now entirely an 3 Internet radio station-- a new experiment. Where do you 4 see this happening? 5 MS. KONG: I see this as a future for 6 broadcasters, and, in fact, I see with the mergers -- you 7 were talking earlier about mergers -- I think that is 8 what is happening with the communications and field. 9 And what's happening is the technology is 10 here now to watch video on demand, at your convenience, 11 at real time, no download time. What hampered the 12 ability to actually broadcast earlier was the fact that 13 you would have to download large files off your computer, 14 off the server, in order to watch. 15 What HotPopTV does -- and we're pretty much 16 a new, start-up company utilizing this technology, 17 working specifically -- in fact, I really was very 18 excited about being here today because what we are doing 19 with HotPopTV is it is a network on the Internet 20 dedicated to ethnic programming. In other words, I spoke 21 at NATPE -- which is the National Association of 22 Television and Program Executives -- at their big meeting 23 in New Orleans with Kwasi Mfume, with Felix Sanchez from 24 the Latino community, and I represented the 25 Asian-American community, and it was very interesting 73 1 what the coalition was trying to do which was try to 2 create more awareness for more inclusion, meaningful 3 inclusion, in programming that accurately portrays ethnic 4 minorities. 5 And what I did find there in January was 6 that no one from the network bothered to take the 7 escalator upstairs from the convention floor. And it was 8 actually well publicized in U.S Today and the L.A. Times 9 and Variety and the Hollywood Reporter, but I just don't 10 see; if they don't bother to take the elevator upstairs 11 to find out about what the issues are for ethnic 12 minorities as far as what we would like to see happen and 13 how we would like to be included as far as programming 14 and management, I don't see that happening in traditional 15 major broadcast networking in the near future. 16 What I do see happening is this new 17 technology on the Internet being at a place where 18 communities are forming very rapidly on the Internet. 19 Black Planet is a major concern right now. And these are 20 not broadcast communities; these are communities that are 21 communicating through chat rooms and bulletin boards of 22 what is happening in their community. 23 What is happening is that major 24 broadcasters aren't satisfying the needs of our 25 communities, so what's happening is a lot of our younger 74 1 college students are running to the Internet, especially 2 the Asian-American community in a large form. 3 Asian Americans have been pretty much left 4 way behind. I believe African Americans and Latinos have 5 paved the way, but still if you look at last year's line 6 up for the fall network, out of 26 shows, not one show 7 that featured any ethnic minorities, and that's why the 8 coalition was formed. 9 Now we're talking a year later, and they've 10 canceled one of the only Asian faces on television which 11 is Martial Law. They did not pick up Gregory Nava's new 12 show which was about a Latino-American family which got 13 rave reviews in the L.A. Times but was not picked up by 14