Today's broadcast companies find themselves in a dynamic marketplace. New digital technology is greatly expanding the options for using our Nation's airwaves. Many traditional broadcast rules, including those addressing financial interests and syndication, ownership, and equal employment, no longer exist or have been relaxed. Many television broadcast companies have recently acquired cable and Internet holdings.

This changing landscape poses new challenges and opportunities for broadcasters and our Nation. As we forge new paths, we must hold fast to the values of diversity and localism that have long served our Nation well. For almost a century, we have promoted diversity of independent editorial viewpoints and guarded against undue media concentration. We have labored to prevent the potential monopolization of the marketplace of ideas, to protect the needs of local communities, and to promote the free exchange of diverse viewpoints and information. We have supported policies that would increase opportunities for minorities, women, and small businesses to participate fully in the broadcast industry. Despite our laudable efforts, minorities still own less than four percent of all the commercial broadcast stations in the United States, while representing 29 percent of the population. Clearly, there is much more work to be done.

Changes, Challenges, and Charting New Courses: Minority Commercial Broadcast Ownership in the United States is part of the Commerce Department's continued commitment to promoting greater opportunities for all Americans in the communications arena. This report examines the current state of minority commercial broadcast ownership in the United States and provides critical, empirical data about such ownership in this ever-changing industry. The information set forth in this report will provide a basis for policymakers and business to undertake initiatives that serve to increase opportunities for minorities to own viable telecommunications enterprises.

The Department looks forward to working with industry to ensure greater participation by all Americans in the broadcast industry.

Norman Y. Mineta

Minority Commercial Broadcast Ownership in the United States

UNITED STATES DEPARTMENT OF COMMERCE

Norman Y. Mineta, Secretary

Robert Mallett, Deputy Secretary

NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION

Gregory L. Rohde, Assistant Secretary for Communications and Information

Kelly Klegar Levy, Associate Administrator, Office of Policy Analysis and Development

Minority Telecommunications Development Program

Maureen A. Lewis, Director

Chanda Tuck-Garfield, Associate Director

Sheree Stalling, Administrative Assistant

Project Contributors

Art Brodsky, Director of Communications

Sallianne Fortunato, Telecommunications Policy Analyst

Jeffrey Joyner, Senior Counsel

Sandra Laousis, Telecommunications Policy Analyst

James McConnaughey, Senior Economist

Kathy Smith, Chief Counsel

ECONOMICS AND STATISTICS ADMINISTRATION

Gwendolyn Flowers, Chief Economist

David Payne, Economist

Acknowledgments

The Department would like to thank all the minority broadcasters who contributed to this effort.

The Minority Telecommunications Development Program wishes to thank Milton Brown, Jaron Charles, Lan Chu, Fahima Danishgar, Teresa Goode, Tanya Holmes, Josephine Johnson, Josephine Scarlett, Mary Smith, and Mary Stewart of NTIA, and Kevin Matthews and Melanie Cook of the Minority Business Development Agency. We especially appreciated the assistance of Ruth Ann Bramblett, Stacy Furukawa, David Lassman, Kristin Stettler, Thomas Zabelsky, William Davie, Jr., Kathy Tuck, Maurita Coley of Cole, Raywid & Braverman, Edward Jones, Jr. of UDC Cable 19, David Honig of the Minority Media and Telecommunications Council, James Winston and Lois Wright of the National Association of Black Owned Broadcasters, Francisco Montero of Shaw, Pittman, Potts & Trowbridge, S. Jenell Trigg of Fleischman & Walsh, Michael Sullivan of the Community Broadcasters Association, Dahlia Hayles of Rainbow/PUSH Citizenship Education Fund, and many others who contributed to this report.

TABLE OF CONTENTS

INTRODUCTION

EXECUTIVE SUMMARY

I. HISTORY OF NTIA'S ROLE IN PROMOTING MINORITY OWNERSHIP 1

Minority Broadcast Ownership Reports 3

2000 Minority Broadcast Ownership Report Methodology 4

Public Comments 6

Minority Ownership Roundtable 6

II. MINORITY OWNERSHIP - CURRENT AND PROPOSED DEFINITIONS 7

NTIA's Definitions 8

Federal Communications Commission's Definition 9

Small Business Administration's Definition 10

The Telecommunications Ownership Diversification Act's Definition 11

National Minority Supplier Development Council's (NMSDC) Definition 12

Public Comments 13

The 2000 Report's Definition and Further Considerations 14

III. VIEWPOINT DIVERSITY IN A CHANGING INDUSTRY 14

The Emergence of Broadcast Ownership Diversity As a National Goal 14

The Changing Broadcast Industry 24

Multiple Ownership Rules 24

The Telecommunications Act of 1996 and the Aftermath of Consolidation 29

IV. CHALLENGES OF CONSOLIDATION 34

The Data Story for Minority Owners 34

Industry Overview 34

Radio 37

Television 44

2000 MTDP Survey Results 47

Broadcast Industry Experience 48

Impact of Telecommunications Act of 1996 49

Competitiveness of Minority Owners 51

Business Difficulties 51

Advertising Revenues 52

Station Purchases and Sales 53

Government Policies to Assist Station Acquisitions 55

Internet Broadcasting 56

Continuing Challenges 56

Advertising 56

Access to Capital 58

Broadcast Industry Employment 60

Need for Tax Certificate 61

V. CHARTING NEW COURSES: Broadcasters Moving Beyond Single Station Ownership and Conventional Technologies 64

Multiple Station Ownership 64

Public Equity Financing 64

New Technologies 65

CONCLUSION 67

APPENDIX A : 2000 MTDP Survey and Accompanying Letter 69

APPENDIX B : Nielsen Media Research Listing of Designated Market Areas (DMAs) by Ranking 79

APPENDIX C: Map of Radio Ownership in the U.S. 82

APPENDIX D: Map of Television Ownership in the U.S. 83

APPENDIX E: Minority Population Map for Year 2000 84

APPENDIX F: Minority Population Projection Map for Year 2005 85

APPENDIX G: Minority Population Projection Map for Year 2010 86

INTRODUCTION

On the tenth anniversary of the National Telecommunications and Information Administration's (NTIA) efforts to compile and report information on minority commercial radio and television ownership in the United States, we review the history of such ownership and the role of viewpoint diversity in a changing industry. We also continue our data collection efforts, examining the current status of minority commercial broadcast ownership in the United States.

The report is the product of a written survey of minority broadcast owners, written comments solicited through a Federal Register notice, comments offered at a public meeting held on July 18, 2000, and analysis of publicly available information, including a commercial database. The data presented in this report will assist NTIA's Minority Telecommunications Development Program (MTDP), as well as the policymakers, legislators, broadcast industry members, academicians, and consumer advocates with whom it works, in increasing opportunities for minorities to own viable broadcasting properties.

The report begins with a history of NTIA's role in promoting minority ownership. It then explores the critical issue of how to define minority ownership and the implications of different definitions. The report then looks at the longstanding value of viewpoint diversity, and examines its role in a changing industry. One of the most profound changes on the broadcast industry in recent years has been increased consolidation of broadcast properties. The report describes the impact of consolidation on minority owners.

As documented in the report, over the past two years there has been a modest increase in minority commercial broadcast ownership and in the growth of some minority station group owners who have acquired more broadcast properties. Whether the report presents evidence of a promising trend toward increasing minority commercial broadcast ownership or merely a fortuitous time in the industry's history during which some minority owners also benefitted is unclear at this time. The report does show that the vast majority of minority broadcast owners operate a single commercial radio or television station. These owners continue to face obstacles in a competitive broadcast marketplace, despite their willingness to seek new revenue streams and adopt new management and ownership arrangements. As detailed in the report, our survey results and roundtable discussion captured the minority owners' contentions that industry consolidation has exacerbated some of the barriers that have long plagued them, including equitable access to capital, deal flow, advertising, and broadcast employment opportunities.

Increasingly, many broadcasters are moving beyond traditional single-station ownership and embracing new management and ownership arrangements. In addition, many broadcasters are adopting new technologies to redefine how they broadcast their material. These are important developments that we will continue to monitor for their effect on minority owners' participation in this field.

Minority commercial broadcast owners have played a critical role in informing, educating, and entertaining Americans. This report provides important data about their continued ability to participate in the broadcast industry and provide our Nation with continued diversity of views and culture.

EXECUTIVE SUMMARY

With this report, Changes, Challenges, and Charting New Courses: Minority Commercial Broadcast Ownership in the United States, the National Telecommunications and Information Administration (NTIA) revisits the important topic of minority ownership of broadcast facilities. The agency, through its Minority Telecommunications Development Program (MTDP), has collected data on minority ownership since 1990, and issued reports annually from 1990 through 1994 and from 1996 through 1998. In 1995, NTIA published a report on the availability of capital for minorities trying to enter the broadcasting business. This report provides an historical perspective on minority ownership and an assessment of the impact that the recent trend of broadcast industry consolidation has had on minority ownership.

Our Nation has maintained a long-standing commitment to minority participation in the broadcast industry. Diverse voices contributing to public discourse is a fundamental element of our democratic society. The wave of broadcast mergers that swept through the industry following the passage of the Telecommunications Act of 1996, as well as emerging technologies, have highlighted the need to examine the effects of business, legal, and technological changes on minority ownership.

Since 1990 when MTDP began collecting data on minority commercial broadcast ownership in the United States, African Americans, Asian Americans, Hispanic Americans, and Native Americans have consistently been underrepresented among the Nation's commercial broadcast owners. Ranging from a low of 2.7 percent in 1991 to a high of 3.8 percent in 2000, minorities' ownership of commercial broadcast facilities has remained far below their estimated 29 percent representation in the U.S. population.

This year's report shows modest progress in some areas of minority commercial broadcast ownership. It also reveals, however, the continuation of some disturbing trends. The positive findings include:

• Over the last two years, minorities as a whole have made some gains. In 2000, 187 minority broadcasters owned 449 full power commercial radio and television stations, or 3.8 percent of the 11,865 such stations licensed in the United States. These figures represent an increase of 0.9 percentage points of the number reported in 1998. However, about half of this increase was the result of an improved methodology to indentify minority owners.

• Minority owners have made some gains in the commercial radio industry, and some previous owners have been newly identified. In 2000, 175 minority broadcasters owned 426 stations, or about 4.0 percent of the Nation's 10,577 commercial AM and FM radio stations. This compares to their ownership of 305 radio stations in 1998, which represented 2.9 percent of that year's industry total. Again, half of the increase came from newly identifying already existing owners.



• All minority groups have increased their radio ownership since 1998. In terms of absolute growth, the number of Hispanic-American owned stations increased the most with the addition of 57 stations, followed by an increase of 43 African- American owned, 18 Asian-American owned, and three Native-American owned. Excluding the effect of the improved search methodology, however, the number of African-American owned stations increased by 15 percent, and Hispanic-American owned stations by 19 percent, Asian-American owned stations by 300 percent, and Native-American owned by 25 percent. The large increase in Asian-American owned stations was largely the result of purchases by one owner.



• African Americans' ownership of 211 radio stations in 2000 continues to lead that of other minorities and represents almost half of all minority-owned radio stations. Hispanic Americans owned 187 stations or 44 percent of all minority radio stations.

Findings causing continued concern include:

• Minority owners' share of the commercial television market decreased in 2000. The 23 full power commercial television stations owned by minorities in 2000 represented 1.9 percent of the country's 1,288 such licensed stations. This is the lowest level since MTDP began issuing reports in 1990. That year, minorities owned 29 full power television stations, compared to as many as 38 during 1995 and 1996. Between 1998 and 2000, there was a loss of five Hispanic-American and four African-American owned stations, and a new identification of two Asian-American owned stations, for a net loss of seven stations.

• While the broadcast industry's strong performance in recent years has benefitted some minority owners and may help explain the increase in the number, consolidation still threatens the survival of most minority owners, who as primarily single-station operators find it difficult to compete against large group owners.



• At a time when single-station owners are struggling to remain competitive, 61 percent of minority owners operate stand-alone stations. In 2000, 131 or 31 percent of minority-owned stations were part of a duopoly (two or more stations of the same type in the same market) compared to 36 percent of non-minority competitors. Seventeen minority-owned stations, or 4 percent, participated in a local marketing agreement, while 8 percent of non-minority competitors did so.

• As reported in past years, minority owners continue to own more AM than FM stations. In 2000, minorities owned 248 AM stations and 178 FM facilities. Declining AM listenership over the past 15 years and the technical limitations of these stations make them generally less profitable than FM stations.

MTDP's efforts to compile data on minority ownership highlighted a critical issue -- how to define "minority ownership." Indeed, there is no current consensus on a definition. There are different definitions in past NTIA reports, at the Federal Communications Commission, Small Business Administration, and in legislation. Depending on which definition is used, well-known minority broadcasters are or are not included. This report underscores the need for certain elements such as equity ownership and control to be part of a revised definition.

In preparing this report, we solicited the perspective of minority owners and have provided an overview of the continuing challenges that confront them as they attempt to acquire advertising, gain access to capital, and improve employment opportunities for minorities. This report discusses the reasons why many minority owners as well as others in the industry support the reestablishment of a tax certificate program, and NTIA urges further exploration of proposals to restore this program. The report also highlights industry-led efforts to train minorities for careers in broadcasting and to facilitate access to capital, which have positively contributed to advancing the goal of increased broadcast diversity.

In part to address these challenges, broadcasters are increasingly moving beyond traditional single station ownership and embracing new management and ownership arrangements. In addition, many broadcasters are adopting new technologies to redefine how they broadcast their material. These efforts afford new opportunities for minority owners and potential ways for us to ensure diversity of viewpoints over our Nation's airwaves.