Tap TARP to weather economic storm


Inner City Broadcasting head Pierre Sutton took to the pages of the New York Daily News recently to ask for presidential intervention in favor of troubled minority broadcasters. Hit by a triple play of adversity – loss of ad revenue due to a sickly economy, perceived loss of audience due to a new measuring system, and resulting difficulties making loan covenants – the industry could use some TARP relief to get through the next difficult months.

Sutton went on at some length about the value of minority broadcasting, which is undeniable. It played a critical roll in the battle for civil rights, and very recently, it was critical in getting Hispanics involved in the electoral process.

But he fears the perfect storm of bad events will knock minority license ownership much farther below its already inadequate level.

“The Treasury Department can easily tap into funds already appropriated under the Troubled Asset Relief Program, which has helped to restore credit flows to the financial and domestic automobile supplier industries,” suggested Sutton. “Bridge financing or government-backed loans could also be provided until the financial system recovers.”

RBR/TVBR observation: Broadcasting is a canary in the coal mine business. Since it relies on healthy businesses for its own health, a bad economy is especially toxic to the business, whether the operators are mainstream or minority. In short, all broadcasters are hurting.

In the current judicial climate minority initiatives cannot be called minority initiatives. Rather, they are aimed socially disadvantaged businesses or simply small businesses – it is simply hoped that minorities will be among those who own the companies receiving the help.

Since everyone is hurting, and the courts don’t like singling out any one ethnic or social group, it is difficult to see how the administration can extend a helping hand to Blacks and Hispanics alone, as much as it might want to and as much as they may need it.

Perhaps something can be worked out between broadcasters and lenders, with the administration acting as mediator, to at least keep creditors at bay for a specified period of time – enough time to get the broadcasting business righted. Sort of like troubled mortgage relief.

It will be to everyone’s advantage for that to happen, because if the lenders decide or are forced to take over the stations, they will not know how to run them and their value will plummet further than they already have.