Minority broadcast hearing sways to PRA


What was advertised as a House Judiciary Committee hearing on trends affecting minority broadcast ownership devolved at times into a discussion of John Conyers’ (D-MI) Performance Rights Act, which included an attack on Radio One, which turned down an invitation to testify. Conyers said that Arbitron’s PPM technology and broadcast ownership consolidation were two big culprits afflicting minority ownership, then launched into PRA, noting many who joined Radio One in turning down opportunities to testify.

At least three of the four witnesses seemed to understand the purpose of the meeting. The only one who mentioned PRA at all, not surprisingly, was Kendall Minter of the Rhythm and Blues Foundation – he suggested his musicians’ group would support minority broadcast owners’ position on PPM in return for some royalty cash.

NABOB’s Jim Winston said the two biggest problems were PPM and meeting loan covenants in the midst of the current recession. He didn’t mention PRA at all, and later under questioning said that Congress had determined long ago that broadcasters need not pay performance royalties and saw no reason for a change now.

Arbitron’s Michael Skarzynski argued that the problems minority broadcasters are having are not caused by PPM, but by a “perfect storm” of recession, lost ad revenue and resulting problems with debt service.

Media Access Project frequent testifier Andrew Schwartzman had a number of suggestions, including ownership cap rollbacks, three-year operator licenses with teeth, reinstatement of the minority tax certificate; approval of Robert Johnson’s proposal to create a TV group anchored on DT side channels; and expansion of LPFM.

Among the MIAs cited by Conyers were Radio One’s Cathy Hughes and Alfred Liggins III; Reach media’s Tom Joyner and Oscar Joyner (Radio One has a ownership stake in Reach); Al Sharpton;  Jesse Jackson Sr.; MMTC’s David Honig; Hillary Shelton of NAACP; and Francisco Montero of Fletcher Heald Hildreth. Oscar Joyner was actually in the gallery but declined to speak.

Hank Johnson (D-GA) kept the ball rolling, decrying Radio One’s refusal to pay one penny to the starving artists. He also chastised the company for using its Detroit stations to attack Conyers over PRA.

Lamar Smith (R-TX) seemed to suggest that it could be time for media ownership rules to undergo another round of deregulation, saying there is much more competition from other entertainment sources now than when the current rules were written. He also noted that PPM problems were not just a minority problem, but a problem for all small broadcasters.

“I fear the loss of these minority stations. They are our talking drum,” said Rep. Maxine Waters (D-CA). She said her entire political career had been spent trying to maintain minority institutions, which she said have always been at risk. It’s not just minority broadcasters who are struggling in the current economic downturn. She worried that black auto dealerships are about to be wiped out. In a rare split with Committee Chairman Conyers, Waters had voted against his performance royalty bill, but she didn’t mention that difference of opinion in her remarks at the hearing on minority ownership trends.

The hearing was interrupted twice for floor votes.

Following are more detailed summaries of witness testimony.

* James L. Winston, Executive Director and General Counsel, National Association of Black Owned Broadcasters: Two major areas of concern: debt service and problems with Arbitron’s PPM technology. As advertising revenues fall, the broadcast companies soon find themselves having difficulty with their lending institutions, particularly when it comes to meeting covenants. While in the past broadcasters and lenders have worked through tough times, new lenders – hedge funds – are more interested in getting quick liquidity and are not interested in workouts. Among them: Goldman Sachs, GE Credit, Wachovia Bank,Wells Fargo, J.P. Morgan Chase, and Bank of America. As TARP recipients, they should be required to cooperate. Alternatively, Rep. James Clyburn’s request to Treasury that a special fund be provided to get companiesa through current difficulties. As for Arbitron’s PPM, minority broadcasters are dealing with huge losses in audience after the change from diaries to PPM – with a resulting loss of revenue often far worse than the market as a whole. Glad for FCC investigation, but since there are jurisdiction questions would like Congress to get involved. Charges that Arbitron is concentrating on holding down costs rather than producing accurate results. Needs to do much better job recruiting participants.

* Michael Skarzynski, President and CEO, Arbitron, Inc.: We recognize the critical role of Black and Hispanic radio. Three challenges are creating a perfect storm. Recession leads to advertising drop, which leads to a decline in revenue, which in turn leads to difficulty servicing debt. All of radio has had devastating revenue loss in Q1 in the 20%-30% range. Radio is also now competing with podcasting and internet streaming. Meanwhile, advertisers are demanding more accountability. Arbitron is adding cell phone only sampling, country of origin sampling, and adding minority panels. All stakeholders must work together with policy-makers and lenders to help radio survive. Arbitron is committed to work with all industry stakeholders survive this perfect storm.

* Andrew Schwartzman, President and CEO, Media Access Project: Looking for internet to add to diversity. Radio listening and television watching is still going up. Minority ownership is distressingly low, and FCC needs to do better job collecting data on this – although this has been addressed by Michael Copps. Single largest obstacle by far has been media consolidation – upped price of stations and created other obstacles. What to do: Strengthen caps on national and local ownership; three-year licenses; restore tax certificate; approve Robert Johnson’s Urban Television HD side channel proposal; and expand LPFM. Aligns with Winston on PPM – says current problem shows that either the old or the new Arbitron technology is suspect and it should be investigated.

* Kendall Minter, Chairman of the Board, Rhythm and Blues Foundation: PPM needs to be fixed so minority broadcasters are paid properly by advertisers. In turn, these broadcasters should support the musicians who they play over the air with a performance royalty. Consolidation is also a problem, and the lack of ownership diversity limits access to the airwaves to minority musicians. Large companies are watering down and homogenizing their programming, also limiting opportunity for new acts. Also complains about the overuse syndication, which hinders local programming (news, talk, music).

RBR/TVBR observation: It seemed to us a perverse hearing. A significant amount of energy was spent on PRA, even though we are not aware of any broadcaster, minority or otherwise, who thinks it would be good for business. And there is no link whatsoever to PRA and increasing ownership diversity.