The Commission has announced changes to its rules and policies intended to increase broadcast ownership by entities that historically have been under-represented in the broadcasting industry. Although the current initiatives are directed toward new entrants and small businesses generally, the Commission has created certain policies targeted toward minority-and women-owned businesses.
The Commission has added a new rule (Section 73.2090), which states: "No qualified person or entity shall be discriminated against on the basis of race, color, religion, national original or sex in the sale of commercially operated AM, FM, TV, Class A TV, or international broadcast stations…" In the future, we will see a modification to FCC Forms 314 and 315 requiring an appropriate certification that this policy has not been violated.
Now, I understand what the efforts of the FCC are about, but in over 20 years of conducting buy/sell transactions, I have never seen a good deal turned down by a seller because of the race, creed, color, sexual orientation, etc., of a buyer. In my experience, what causes rejection are the price, terms, and conditions. It’s not about the status of the buyer, it’s about the status of his pocketbook! The first time I see a lawsuit over a rejected offer on the grounds of discrimination is going to be when I throw in the towel. Just because a buyer’s offer is rejected as being too low or represents a bad deal for the seller doesn’t mean we’re looking at discrimination. In the same vein, I have never seen a low-ball offer made based on the status of the seller. It’s usually about the station’s finances or condition of the business.
I do have one very big issue, and that’s a refusal to sell on the grounds that a buyer is going to flip the format to something that the seller finds objectionable or competitive. I have a BIG problem with that. I know of one situation in a nearby rated market where the incumbent licensee would not sell to a buyer who was going to program in Spanish…just on general principal, and I know of another situation where the incumbent licensee would not sell to a buyer who would program in Spanish because the incumbent had other stations which were programmed in Spanish and even went so far as to put language to that effect in a tower site sub-lease: “no Spanish from the tower”, so to speak. While this might qualify under the anti-discrimination language since it targeted Spanish programming, what would happen if the restrictions applied to “Classic Rock” formats or even to certain songs on a playlist? I’ve seen that one in a contract, also.
So…is this a solution in search of a problem? Maybe. I tend to think so, but maybe I’m just too naive. You tell me. This looks like a BIG invitation for mischief. But if it’s true that just one bad apple can spoil the barrel, then I guess we’ll just have to live with it. My advice: whether you’re a buyer or a seller, don’t get into the wrong "stuff". Keep it to basic business and focus on the important things. The only color we need to worry about is green and the only race we want to consider is to the finish line.
If the FCC truly wants to help new entrants and minorities, they need to roll back the ownership rules thereby freeing up inventory, allow tax certificates again, and they need to let us collateralize licenses. The problem isn’t racial discrimination, it’s about financial discrimination. New buyers need equity (old ones, too, for that matter). There is a lot of debt available out there, even if it is on egregious terms. But without equity you can’t get debt (seller or institutional). Given enough equity you don’t even need debt! Now there’s a problem in need of a solution!
So to the FCC I say: “all problems come wrapped in their solutions, but you have to focus on the real problems, not the ones you want to satisfy your solutions.”
Brett Miller
MCH Enterprises, Inc.
