**Final Report**

Utilization Rates, Win Rates, and Disparity Ratios for Broadcast
Licenses Awarded by the FCC

Prepared for the FCC as a deliverable under the contract "Estimation of
Utilization Rates/Probabilities of Obtaining Broadcast Licenses from the
Federal Communications Commission or of Obtaining Broadcast and Wireless
Licenses through Secondary Market Transactions"

prepared by

KPMG LLP

Economic Consulting Services

For

Federal Communications Commission

November, 2000

[I. Introduction 3](#i.-introduction)

[II. Comparative Hearings and Minority and Female Credit
5](#ii.-comparative-hearings-and-minority-and-female-credit)

[Comparative Hearing Process 5](#comparative-hearing-process)

[Minority and Gender Credit in Comparative Hearings
6](#minority-and-gender-credit-in-comparative-hearings)

[Gender Ownership Policies 9](#gender-ownership-policies)

[III. Data Collection 11](#iii.-data-collection)

[IV. Definitions of Win rates, Availability, and Disparity Ratios
13](#iv.-definitions-of-win-rates-availability-and-disparity-ratios)

[V. Participation by Race and Gender in Comparative Hearings
18](#v.-participation-by-race-and-gender-in-comparative-hearings)

[VI. Win Rates and Participation Rates by Race, Gender in Comparative
Hearings
21](#vi.-win-rates-and-participation-rates-by-race-gender-in-comparative-hearings)

[VII. Win Rates and Disparity Ratios by Race, Gender based on Definition
of Control
31](#vii.-win-rates-and-disparity-ratios-by-race-and-gender-based-on-definition-of-control)

[VIII. Level of Competition within Hearings
34](#viii.-level-of-competition-within-hearings)

[Appendix I: Information Collected from Form 301 for the
Development](#appendix-i-information-collected-from-form-301-for-the-development)

[of Utilization Ratios 38](#of-utilization-ratios)

[Appendix II. Standard Deviations of Estimates Presented in Tables
39](#appendix-ii.-standard-deviations-of-estimates-presented-in-tables)

# I. Introduction

KPMG LLP has prepared this report for the Federal Communications
Commission (FCC). The FCC engaged KPMG to prepare a study of utilization
rates and probability of obtaining broadcast licenses from the FCC. The
study will assist the FCC as part of a series of studies to determine if
there has been previous discrimination by the agency or passive
participation by the FCC in discrimination by the private sector.

This study measures license award rates by gender and race during
periods of time when the FCC's stated policy was to provide preferences
to minorities and women. During this period, the FCC awarded licenses
under two regimes. First, the FCC would award a license to individual
applicants (singletons) who were judged as qualified when only a single
application was received. Second, if more than one applicant applied for
the same license, then the FCC used Comparative Hearings, an
administrative hearing process, to allocate broadcast licenses during
the period from the 1940s until 1993.[^1]

In this report, KPMG presents its findings regarding participation rates
and utilization rates for participants who were involved in Comparative
Hearings from 1978-81 and 1989-93. A comparative hearing was the
administrative process that the FCC used to allocate broadcast licenses
during the period from the 1940s until 1993.[^2] This report provides
results developed from data collected and compiled on the participation
and success of minorities and women in the FCC's comparative hearing
award process for radio and TV licenses.[^3]

The report is organized as follows.

Section II, Comparative Hearings and Minority and Female Credit provides
a brief overview of the comparative hearing process and an introduction
to minority and female credit.

Section III, *Data Collection*, outlines the efforts taken to collect
these data.

Section IV, *Definitions of Win Rates, Availability and Disparity
Ratios*, reviews some of the properties of these measures.

Section V, *Participation by Race and Gender in Comparative Hearings*,
summarizes participation statistics by demographic group.

Section VI, *Win Rates and Disparity Ratios by Race and Gender in
Comparative Hearings*, contains the central results of this memo. The
section includes various formulations of win rates and disparity ratios.

Section VII *Win Rates and Disparity Ratios by Race and Gender, Based on
Definition of Control,* considers win rates and disparity ratios based
on a variety of definitions of which group controls an application.

Section VIII, *Level of Competition within Hearings*, looks at variation
in the level of competition within hearings by examining the average
number of parties per application and average number of applications per
hearing across various demographic groups.

Appendix I provides the data collection form used to acquire these data.

Appendix II, *Standard Deviations*, discusses the impact of statistical
uncertainly on each of the estimates presented in the previous sections.

# II. Comparative Hearings and Minority and Female Credit[^4]

## Comparative Hearing Process

Comparative Hearings began soon after the FCC was created by the
Communications Act of 1934 (the "Act").[^5] The Act granted the FCC the
authority to regulate "communications by wire and radio so as to make
available to all the people of the United States a rapid, efficient,
nation-wide, and worldwide wire and radio communication service." This
Act also empowers the FCC to issue broadcasting licenses "as public
convenience, interest, and necessity requires."[^6]

One landmark court case that was resolved in 1945 reinforced the
importance of the comparative hearing process in awarding a broadcast
license when there are multiple applicants. In *Ashbacker Radio Corp. v.
FCC*, 326 U.S. 327 (1945), the Supreme Court of the United States held
that:

> Where the Federal Communications Commission has before it two
> applications for broadcasting permits which are mutually exclusive, it
> may not, in view of the provisions of the Act for a hearing where an
> application is not granted upon examination, exercise its statutory
> authority to grant an application upon examination without a hearing.

This decision set the legal precedent that a publicly distributed
license must be assigned through a process that does not exclude
competition for the license.

A comparative hearing was necessary when more than one applicant applied
for the same broadcast license. In the event of multiple applicants, the
FCC would hold a comparative hearing, a proceeding that was presided
over by an Administrative Law Judge (ALJ). The purpose of the
comparative hearing was to determine which applicant for a broadcast
license is best qualified to hold the license.

In the period from 1970-1993, 2,437 licenses were awarded by comparative
hearing while 6,178, or the majority of the licenses, were awarded to
singleton applications because these applications were never challenged.
Factors that the FCC described as determinative of license award were:

1\. Diversification of control of the media of mass communications.

2\. Full-time participation in station operation by owners.

3\. Proposed program service.

4\. Past broadcast record.

5\. Efficient use of frequency.

6\. Character of the applicants.

7.  Other factors.

While the measures of success in acquiring a license that are presented
in this report were influenced by these factors, we do not control for
these factors in the measures that we present in this report. A
companion report, "Logistic Regression Models of the Broadcast License
Award Process for Licenses Awarded by the FCC" develops models of win
rates by minority and gender status that control for some of these
factors.

## Minority and Gender Credit in Comparative Hearings

While the criteria set forth by the FCC in 1965 included diversification
of control, initially the FCC refused to include the racial composition
of an applicant group as a relevant factor in a comparative hearing.
This position was challenged in 1965 by the Comint Corp applicant group
in the comparative hearing for a TV broadcast license in Orlando,
Florida.

In 1965, the D.C. Court of Appeals vacated the decision that awarded the
TV license to Mid Florida Corp. and opened the license to competition.
Eight applicants filed for ownership and the matter went to comparative
hearing. In the comparative hearing, one of the applicants, Comint
Corp., filed an application that included two black owners with a 14%
shared interest. The proposed community for the license awarded had a
25% minority population. Comint argued that minority ownership should be
given comparative credit on the basis of the 1965 statement on
comparative hearings (1 F.C.C.2d 393 (1965)) which stated that the \"two
primary objectives toward which the process of comparison . . . are . .
. the best practicable service to the public, and . . . a maximum
diffusion of control of the media of mass communications.\" The FCC
noted that while it:

> \"is sympathetic with Comint\'s argument and recognizes the validity
> of the goal of increased minority ownership of the media of mass
> communications .... however, the Communications Act, like the
> Constitution, is color blind and therefore, in a comparative broadcast
> proceeding, which is governed by the Commission\'s Policy Statement .
> . . Black ownership cannot and should not be an independent
> comparative factor . . . rather, such ownership must be shown on the
> record to result in some public interest."

Comint challenged the FCC's refusal to explicitly consider race in the
comparative hearing process and appealed the FCC's ruling to the DC
Court of Appeals.

In the 1974 decision 495 F.2d 929 (D.C. Cir. 1974), the DC Court of
Appeals reversed the result of the Mid-Florida comparative hearing. The
Court held that comparative merit should be awarded to an applicant, two
of whose stockholders, each owning approximately seven percent of the
applicant\'s stock, were Black and would participate in the operation of
the station. The Court pointed out that both of the Black principals
were local residents of the community being applied for who had been
active in advancing the interests of Black members of the community, and
that 25 percent of the population of the area applied for were Black. It
also noted that since the highest interest owned by any of the
applicant\'s principals was ten percent, the two stockholders\'
individual and combined ownership was substantial. In addition, no
Blacks were then participating in the ownership or management of any of
the media of mass communications in that community. In these
circumstances, the Court concluded that minority stock ownership is \"a
consideration relevant to a choice among applicants of broader community
representation and practicable service to the public.\" (161 U.S. App.
D.C. at 357, 495 F.2d at 937.) The court went on to comment:

> It is consistent with the primary objective of maximum diversification
> of ownership of mass communications media for the Commission in a
> comparative license proceeding to afford favorable consideration to an
> applicant who, not as a mere token but in good faith, as broadening
> community representation, gives a local minority group media
> entrepreneurship\.... We hold only that when minority ownership is
> likely to increase diversity of content, especially on opinion and
> viewpoint, merit should be awarded. (TV 9 Inc. v. FCC, 495 F.2d 929
> (D.C. Cir. 1973), cert. denied, 418 U.S. 986 (1974)).

Accordingly, without recommending or requiring any quota system, the
Court held that merit should be awarded for minority ownership where it
is likely to increase the diversity of program content, especially of
opinion and viewpoint. In a Supplemental Opinion, the Court emphasized
that it was not holding that merit should be based on Black ownership
alone, but rather in that case upon a meaningful combination of
ownership and participation in station affairs which indicated that
Black persons having a substantial identification with minority rights
would be able to translate their positions and their ownership stake
into meaningful effect on this aspect of station programming. The Court
also explained that \"merit\" meant only \"favorable consideration,\" or
a plus-factor, not a \"preference,\" and that it was to be weighed along
with other relevant factors in determining which applicant is to be
awarded a preference. (161 U.S. App. D.C. at 361, 495 F.2d at 941.)

This decision set a new precedent for the incorporation of minority
participation as a factor in the comparative hearing process.

Not long after the Court of Appeals decided that minority credit for
integrated minority owners was appropriate, Administrative Law Judges
began deciding cases on this basis. Additionally, administrative law
judges at the FCC expanded on the TV 9 decision. In particular, the
considerations applied to race in the *TV 9* decision were applied to
gender in the *Rosemore* decision.

In *Rosemore Broadcasting, Co., Inc*., (54 F.C.C. 2d 394, 418 (1975)),
the FCC reasoned that integrated female ownership should be awarded
credit in comparative hearings because women, like minorities, are
\"likely to increase diversity of content.\" The FCC went on to state
that female participation in an application can be given credit when it
"reflects broader community representation." Because two of the three
individuals associated with *Rosemore Broadcasting Co.'s* application
were female and these women planned on playing a significant role in the
day**-**to**-**day operation of the broadcast station, the *Rosemore*
application was enhanced in the FCC's eyes. The *Rosemore Broadcasting
Company* went on to win the license in the comparative hearing.

Since the DC Court of Appeals in 1974 had set in place minority
ownership and employment policies within comparative hearings the FCC
and Administrative Law Judges had started awarding minority credit to
applicants for broadcast licenses. However, in 1978 the FCC observed a
\"continuation of an extreme disparity between the representation of
minorities in our population and in the broadcasting industry\" and
subsequently issued \"further Commission action\" or Statement of Policy
on Minority Ownership of Broadcasting Facilities (See 68 F.C.C.2d 979,
982). This statement formalized the use of minority merits in the
comparative hearing process.

*Metro Broadcasting, Inc.*

Reviewing the FCC's policies under intermediate scrutiny, the Supreme
Court held that the FCC\'s policy of minority ownership and employment
in comparative hearings which gave enhancement credit for minority
ownership and participation and the policy of allowing \"distress
sales\" to FCC-approved minority-owned firms did not violate equal
protection under the Fifth Amendment.

The Court reasoned:

> Minority preference policies adopted by the Federal Communications
> Commission (FCC)\-- do not violate the equal protection component of
> the Federal Constitution\'s Fifth Amendment, where Congress has
> enacted appropriations legislation (101 Stat 1329-31, 102 Stat 2216,
> and 103 Stat 1020) prohibiting the FCC from spending any appropriated
> funds to examine or change its minority ownership polices, because (1)
> the policies in question have been mandated by Congress; (2) the
> interest in enhancing broadcast diversity is, at the very least, an
> important governmental objective; and (3) the policies in question are
> substantially related to the achievement of the government\'s
> interest, since (a) both the FCC and Congress\--whose joint
> determination must be given great weight\--have concluded that there
> is a relationship between expanded minority ownership and greater
> broadcast diversity, (b) this judgment is based on extensive empirical
> evidence rather than on impermissible stereotyping, and (c) the
> policies are in other relevant respects substantially related to the
> goal of promoting broadcast diversity**...**

## Gender Ownership Policies

Gainesville Media, Inc.

Approximately one month after the Commission issued Statement of Policy
on Minority Ownership of Broadcasting Facilities, a Review Board hearing
the Gainesville Media, Inc. case reanalyzed its decision regarding
female ownership credit in comparative hearings. Initially, the board
held that . . .

> since there was no evidence in the record of the extent of female
> ownership in the mass media in Gainesville, we had no basis on which
> to conclude that such participation would achieve a public interest
> benefit. Upon further reflection, we now believe the better course is
> to consider female ownership and participation, despite the absence of
> record evidence regarding the ownership situations at other stations
> (see Gainesville Media, Inc., 70 F.C.C.2d 143, 149 (Rev. Bd. 1978)).

Soon after the Gainesville decision, a review board clarified the
justification and reasoning for female ownership policies. The Board
concluded:

> \... merit for female ownership and participation is warranted upon
> essentially the same basis as the merit given for black ownership and
> participation, but that it is a merit of lesser significance. The
> basic policy considerations are the same. Women are a general
> population group which has suffered from a discriminatory attitude in
> various fields of activity, and one which, partly as a consequence,
> has certain separate needs and interests with respect to which the
> inclusion of women in broadcast ownership and operation can be of
> value. On the other hand, it is equally obvious that the need for
> diversity and sensitivity reflected in the structure of a broadcast
> station is not so pressing with respect to women as it is with respect
> to blacks\--women have not been excluded from the mainstream of
> society as have black people (see Mid-Florida Television Corp., 70
> F.C.C.2d 281, 326 (Rev. Bd. 1978), set aside on other grounds, 87
> F.C.C.2d 203 (1981)).

This decision demonstrated that credit is applied for female
participation in a broadcast license application, but that credit is not
as significant as the credit applied for minority participation in a
broadcast license application.

In 1993's *Bechtel* decision 10 F.3d 875 (D.C. Cir. 1993), the D.C.
Circuit Court found that the "continued application of the integration
credit is arbitrary and capricious, and therefore unlawful." The court
stated that the policy of extending additional credit to applicants who
intended to personally manage and operate the broadcast stations was
"without foundation." By invalidating the integration credit the court
effectively eliminated gender and race ownership and employment policies
associated with the integration credit. In 1994 the FCC suspended all
active comparative hearings until an adequate resolution to the issues
raised in *Bechtel* could be formulated.

The Telecommunications Act of 1996 eliminated the role of comparative
hearings in the renewal of broadcast licenses. The 1994 suspension of
the comparative hearing process effectively became permanent in 1997
when Congress mandated that the FCC utilize a competitive bidding
process for the distribution of all future commercial broadcast license
awards.[^7] The first auction associated with this mandate occurred in
October of 1999 and generated (unofficially) about \$58 million from the
distribution of 116 broadcast licenses and included several frozen
license applications from the *Bechtel* ruling.

While minority ownership policies were not included in this auction
process, first-time broadcasters and "small" broadcasters were accorded
with auction credits to assist in their bidding.

After the suspension of the comparative hearing process due to the
*Bechtel* decision, but before the implementation of the broadcast
license auctions, two important court cases were decided which will
impact the ability of the FCC to implement minority and female ownership
and employment policies in the future.

In the 1995 *Adarand* decision \[515 U.S. 200 (1995)\], the Supreme
Court held that any federal program that uses racial or ethnic criteria
as a basis for decision making must serve a compelling governmental
interest such as remedying past discrimination and must be narrowly
tailored to serve that interest. Furthermore, the court ruled that any
racial distinctions employed by a local, state, or the federal
government "must be analyzed by the reviewing court under strict
scrutiny," specifically overruling the standard of review used in *Metro
Broadcasting*.

In *United States v. Virginia,* 518 U.S. 515 (1996), the Supreme Court
considered the distinctions made by local, state, and the federal
government with respect to gender. In this case the court reaffirmed
that these gender distinctions need only satisfy "intermediate
scrutiny". While the definition of intermediate scrutiny is somewhat
vague, it is clear that intermediate scrutiny is a lower standard than
strict scrutiny.

# III. Data Collection

In order to develop statistics about the success of female, ethnic and
minority and majority race groups in the comparative hearing process,
KPMG collected data from FCC archives in Suitland Maryland during the
period October, 1999 through March, 2000. Within the files on
comparative hearing proceedings, maintained as paper files at the
National Records Center, exist data on the declared minority status of
parties to applications for broadcast licenses that were considered in
the comparative hearing process. Also available are outcomes of the
comparative hearings, i.e. a record of which applications have been
awarded the licenses.

The data collection effort involved collecting information for 3063
parties involved in 775 applications in a sample of 230 comparative
hearings over the periods 1978 to 1981, and 1989-1993. These periods
were selected to satisfy a number of requirements.[^8] First, these were
both periods when financial information was collected in the license
application.[^9] Second, during these periods, the FCC's stated policy
was to provide credit for minority applicants.

KPMG retrieved documents from a random sample of the hearings that
occurred during these two time periods. The universe of available
hearings was made available to KPMG in two formats. For the period prior
to 1983, the Administrative Law Judge Listing was used. This is a paper
database. For the period after 1983 we relied upon the BAPS database.
The BAPS database is an electronic database containing information on
each comparative hearing that took place from the early 1980's up to
today. Both data sources provide the following important information
with regards to each hearing:

-   unique hearing identifiers

-   service

-   ascension number.

-   call sign

-   start date for hearing

-   end date for hearing

Tables 1 and 2 show the population of hearings and population of
applications for radio and television hearings, broken into the two time
periods.

Table 1.

Number of Hearings

  --------------------------- --------------- ------------- --------------
  Years                       1978-1981       1989-1993     Total

  All Licenses                421             142           563

  Radio                       286             134           420

  AM                          85              0             85

  FM                          201             134           335

  TV                          135             8             143
  --------------------------- --------------- ------------- --------------

Table 2.

Number of Applications

  ---------------------------- ---------------- ------------- -------------
  Years                        1978-1981        1989-1993     Total

  All Licenses                 1,064            595           1,659

  Radio                        716              583           1,299

  AM                           177              0             177

  FM                           539              583           1,122

  TV                           348              12            360
  ---------------------------- ---------------- ------------- -------------

A sample of 230 comparative hearings was drawn from the population of
hearings using stratified random sampling. The sample was stratified by
service (AM, FM, and TV). This sample size was selected in an effort to
balance the cost of data collection with the need to obtain a reasonable
level of accuracy at various levels of disaggregation.

Once the sample was drawn, data collection personnel, who were primarily
made up of personnel with legal or paralegal backgrounds, retrieved the
files from the National Records Center in Suitland, MD. and collected
the necessary data.[^10] The data items that were collected for the
construction of the utilization ratios come principally from the
application form 301. The items from this form are shown in appendix I.

# IV. Definitions of Win Rates, Availability, and Disparity Ratios

Differing definitions for availability, utilization, and disparity
ratios may offer a variety of insights; accordingly, we have used these
data to develop a variety of estimates.[^11] The differences in the
estimates that appear in this report are mainly due to differing
measures of availability, which is defined as the pool of applicants or
potential applicants who are willing and able to compete for a broadcast
license.

Before presenting results, this section describes the measures and how
they are constructed. All of the win ratios we have developed are
expressed as a ratio of a measure of success (or winning applicants) and
a measure of participation (or applicants). A number of different ratios
are presented. They are generally presented in the order of complexity
of the calculation, with the simplest calculations presented first.
While we present a number of measures, our preferred measure is called
the "relative award rate" and it is presented in Table 13.

A key concept to keep in mind when reviewing these results is that there
are different levels of aggregation that can be used to make
calculations of success in acquiring licenses. This is due to the nature
of the comparative hearing process and the fact that hearings are made
up of multiple applications and applications can be made up of multiple
parties of different race and gender who cooperate to bid on licenses.

The party is the lowest level for which measures of success can be
calculated. Next there is the application level. Therefore, when we
measure win rates, we can do it at the party level; i.e. how many
parties of a particular group were involved as participants in winning
applications. Or we can measure win rates at the application level, e.g.
we can measure how many applications won where at least 1 party of a
particular group was represented in the application or we could measure
how many applications won when a particular group controlled more than
50% of the equity in the application. We present measures that use all
of these definitions here.

There are strengths and weaknesses to all of the measures that we
present. For example, looking at the data on a party basis, as we will
do in tables 7 through 12, shows how a demographic group does overall
but says nothing about the distribution of results for a group. If many
parties from one demographic group were concentrated in only a few
winning applications, it might appear as if the group were acquiring
more licenses than it was actually acquiring because success would be
attributed to a lot of parties who won few licenses. Also, accounting
for equity control may be important because if that control is lacking,
then what appears to be adequate participation may in fact not be
meaningful participation. Finally, it is also important to distinguish
win rates based on the value of licenses. It is conceivable that a group
could be winning a reasonable number of licenses but if they were
licenses of little value, this would not be a reasonable result. To
account for this possibility, we have weighted the win rates by
population of the area in which the licenses are awarded where
population serves as a proxy for value of the license.[^12]

Definitions for the measures that will appear in the tables that follow
are provided below.

Relative win rate (party basis) = \# winning parties in-group / \# of
parties in-group.

Relative win rate (equity basis) = equity of winning parties in group /
equity of all parties in group

Absolute win rate = \# winners in-group / total \# of parties in all
groups combined

\% of winners = \# of winners in group / total number of winners

(also known in literature as a utilization rate)

\% participation = \# of parties in group / total number of parties

Disparity ratio = % of winners / % participation

The relative award rate *R* is defined by the following equation:

![](media/image1.wmf){width="2.7222222222222223in"
height="0.4722222222222222in"}

where *N* is the number of hearings, *i* indexes hearings, *z~i~* takes
a value of one if the license in hearing *i* is awarded to a minority
and zero if not, and *m~i~* is the percentage of minority applicants in
hearing *i*. The relative award rate is defined analogously for
non-minorities, males, and females.

Winner take all relative win rate = #winning parties in group where
equity is

> controlling / #parties in group

It is informative to contrast calculated win ratios across different
groups of applicants. Nevertheless, it is important to keep in mind that
win rates cannot account for differences between groups that span
multiple dimensions. For example, when contrasting a win rate for male
applicants with a win rate for female applicants it is important to keep
in mind that the ratio does not account for differences in other
applicant characteristics (asset holdings for example) across the two
groups. This suggests that it would be inappropriate to conclude that
discrimination is taking place simply on the basis of win rates. Further
analysis, which is presented in a companion study, using logistic
regression models, discusses whether there are significant differences
in award rates based on race or gender, while controlling for many
factors that affect award rates.

The definition of the pool of "eligible participants" associated with
various groups has frequently been a disputed issue in the calculation
of availability ratios for studies of disparity. Typically, the broader
the measure of the pool who are eligible to participate for each group,
the greater the dispute because a broader pool is less likely to contain
qualified and willing participants. At one extreme, the entire
population of the group in question can be classified as eligible
participants. But the entire population is not qualified or willing to
participate in the process and therefore this is an inappropriate
measure of eligibility. The Croson decision suggests a measure that
contains only those who are qualified, willing and able to
participate.[^13] The measure of availability used in this study is
narrower and more conservative than that in [Croson]{.underline}. In the
contracting context, availability is measured by counting all
pre-qualified contractors, not just those who apply for a given
contract. In licensing, there is no group of pre-qualified bidders, so
the study uses those who actually applied for the given license.

Consistent with the conditions of Croson, we use a measure of the pool
of eligible participants for each group. For the purpose of the win
rates, availability, and disparity ratios presented here, the set of
eligible participants associated with each group is limited to the set
of individuals in that group that we actually observed participating in
a comparative hearing.[^14]

It is certainly conceivable that a broader measure of the pool of
eligible participants could be more relevant. A broader and
theoretically more appealing measure might include those who would have
liked to apply, but failed to apply, because they may have been
frustrated by the process or did not have equal access to the resources
required to fulfill the application requirements.

We have not attempted to develop a methodology to measure the number of
eligible participants for various groups using definitions of
availability that are broader than the number who have actually
participated in the hearing process. We believe that this line of
inquiry is certainly warranted since the availability measure is an
extremely important determinant of whether one can adequately measure
the existence of disparity. If the measure of availability excludes
potential applicants who have not been able to apply due to the
existence of discrimination, then disparity measures that do not account
for this possibility will be biased against a finding of discrimination.
On the other hand if the measure of availability is over-inclusive so
that it were to include those who are not qualified, willing and able to
participate in the process, then disparity measures using such a measure
of availability would be biased towards a finding of discrimination. The
measures of availability that we use in this study are certainly not
over-inclusive and are more likely to be under-inclusive.

Win rate and disparity measures that are based on a narrow definition of
availability, such as the one we use here, result in a conditional
measure of win rates or disparity. The disparity and availability ratios
are conditional in the sense that we are testing only the second of two
dimensions of the process. The first dimension of the hearing process
relates to who is able to participate in a hearing; i.e. who is able to
apply. The second dimension relates to who wins given that they have
passed the first hurdle, i.e. been able to participate and have been
included in the application and hearing process. Our analysis only
considers the second of these two dimensions. If minority or female
participation has been affected by impediments such as inadequate access
to capital, due to discrimination, the disparity measures represented
here would not capture this dimension of the licensing process.

We do note, as the following data will suggest, that minority
participation in broadcasting is very low relative to minority
representation in the general population. Table 3 shows the minority
participation in broadcasting and minority shares of the U.S.
population.

Table 3.

Participation in Comparative Hearings and Percent of U.S. Population in
1990\*

+----------------------------+-----------------+-----------------------+
|                            | Percent of      | Percent of U.S.       |
|                            | Parties in      | Population            |
|                            | Hearings (1)    |                       |
|                            |                 | \(2\)                 |
+----------------------------+-----------------+-----------------------+
| Total Minority             | 8.9%            | 23.8%                 |
+----------------------------+-----------------+-----------------------+
| Black                      | 3.4%            | 12.2%                 |
+----------------------------+-----------------+-----------------------+
| Asian                      | .4%             | 2.7%                  |
+----------------------------+-----------------+-----------------------+
| Hispanic                   | 3.9%            | 8.7%                  |
+----------------------------+-----------------+-----------------------+
| American Indian, Eskimo,   | .4%             | .7%                   |
| Aleut                      |                 |                       |
+----------------------------+-----------------+-----------------------+
| White                      | 91.1%           | 76.2%                 |
+----------------------------+-----------------+-----------------------+
| Male                       | 79.3%           | 48.7%                 |
+----------------------------+-----------------+-----------------------+
| Female                     | 20.7%           | 51.3%                 |
+----------------------------+-----------------+-----------------------+

\*Notes: (1) Detailed race and ethnic categories do not sum to total
minority for the Percent of parties in hearings, due to nonreporting of
this level of detail for a small portion of the minority applicants (.8%
fail to report the level of detail about their minority status). (2) For
the percent of U.S. population, there is slight overlap in the figure
for black and Hispanic because black includes those blacks of Hispanic
origin (about .5% of the 12.2% of blacks are of Hispanic origin).

There is certainly a large difference between the minority share of
participants in comparative hearings and the minority share of the U.S.
population.

Note that during the period that we are performing this analysis, the
FCC's stated policy was to provide credit for minority participation in
applications. Therefore, when we present win rates and disparity rates,
one would expect that if the FCC's policy has been effective, there
would be greater minority participation (and probably greater
utilization) than in the absence of this policy. We can assume then that
the level of female and minority participation, which is low relative to
female and minority representation in the population, would have been
even lower still in the absence of the FCC's stated policy.[^15]

# V. Participation by Race and Gender in Comparative Hearings

Table 4 shows the number of hearings in our sample.[^16] Tables 5 and 6
present data on participation, by demographic group, using alternative
definitions of participation. Table 5 shows the number of parties to
applications considered in hearings, broken out by race and gender, and
the percentage of each group of the total number of participants in
these 230 comparative hearings. Table 6 is similar to table 5 except
that it shows the number of applications where a group has at least 1
party of a given demographic group participating in the application.

> Table 4.
>
> Number of Comparative Hearings in Sample by Type of Hearing

  ----------------------------------------- -----------------------------
  Radio and Television                      230

  Radio                                     155

  AM                                        25

  FM                                        130

  Television                                75
  ----------------------------------------- -----------------------------

We can see from Tables 5 and 6 that there were 3082 parties in 740
applications in these 230 hearings. 91.1% of all participants were white
while 8.9% were minority. Of the minority participants, about 43.1% are
Black, 48.8% are Hispanic, 4.5% are Asian, and 3.7% are American
Indian.[^17]

Men made up 79% of all parties while females made up 21%. A strict
comparison of the number of minority and female participants to the
population at large would indicate low minority and female participation
in the hearing process. While we have described earlier that this is not
an appropriate comparison for the purposes of Croson, it does
demonstrate that for at least the first dimension of the comparative
hearing process, participation; minority ownership of broadcast stations
is probably low because of low participation rates. This says nothing
about the issue of whether the comparative hearing award process was
fair or not.

Table 5.

Participation (number of parties in applications) by Minority Status and
Gender

in Broadcast, Radio, and TV Comparative Hearings

  ---------------- ------------ --------- -- ----------- --------- -- ------------ --------- --
                   Broadcast                 Radio                    Television             
                   (Radio&TV)                                                                

  Total Parties    3082                      1526                     1556                   

                   Headcount    Percent      Headcount   Percent      Headcount    Percent   

  White male       2262         73.4%        1060        69.4%        1202         77.2%     

  White female     546          17.7%        306         20.1%        240          15.4%     

  Minority male    182          5.9%         105         6.9%         77           4.9%      

  Minority female  92           3.0%         55          3.6%         37           2.4%      

                                                                                             

  White            2808         91.1%        1366        89.5%        1442         92.7%     

  Minority         274          8.9%         160         10.5%        114          7.3%      

  Black            106          3.4%         67          4.4%         39           2.5%      

  Hispanic         120          3.9%         70          4.6%         50           3.2%      

  Asian            11           0.4%         4           0.3%         7            0.4%      

  American Indian  12           0.4%         8           0.5%         4            0.3%      

                                                                                             

  Male             2444         79.3%        1165        76.3%        1279         82.2%     

  Female           638          20.7%        361         23.7%        277          17.8%     
  ---------------- ------------ --------- -- ----------- --------- -- ------------ --------- --

> \* minorities do not add exactly to total because sometimes, parties
> only indicated minority status
>
> and failed to specify the details of which minority group they were
> in.

Table 6.

Participation (Number of applications) by Minority Status and Gender in

Comparative Hearings (with at least 1 party in this demographic group)

  ------------------ ------------ --------- -- -------- --------- -- ----- ------------ --------- --
                     Broadcast                 Radio                       Television             
                     (Radio&TV)                                                                   

  Total applications 740          Percent      494      Percent      246                Percent   

                                                                                                  

  White male         662          89.5%        439      88.9%        223                90.7%     

  White female       332          44.9%        213      43.1%        119                48.4%     

  Minority male      90           12.2%        48       9.7%         42                 17.1%     

  Minority female    67           9.1%         41       8.3%         26                 10.6%     

                                                                                                  

                                                                                                  

  White              705          95.3%        474      96.0%        231                93.9%     

  Minority           122          16.5%        72       14.6%        50                 20.3%     

  Black              50           6.8%         31       6.3%         19                 7.7%      

  Hispanic           57           7.7%         30       6.1%         27                 11.0%     

  Asian              8            1.1%         3        .6%          5                  2.0%      

  American Indian    10           1.4%         6        1.2%         4                  1.6%      

                                                                                                  

  Male               694          93.8%        458      92.7%        236                95.9%     

  Female             374          50.5%        239      48.4%        135                54.9%     
  ------------------ ------------ --------- -- -------- --------- -- ----- ------------ --------- --

# VI. Win Rates and Participation Rates by Race, Gender in Comparative Hearings

In calculating win rates and disparity ratios, it is critical to
determine which applicant actually won each hearing. The data indicating
which applicants won the comparative hearings come from either the
Broadcast Applications Processing System (BAPS) database or the
Administrative Law Judge Listing. This data is also confirmed in the
manual data collection operation where we retrieved information directly
from archived comparative hearing documents. On occasion, the decision
of the ALJ to award a license to a particular applicant is appealed to a
higher court and there is a reversal of a decision. We have conducted
the additional data collection necessary to capture these post
comparative hearing reversals. In our sample of 230 hearings, this
occurred 15 times.

Tables 7 through 12 show counts of the number of parties by race and
gender who have participated in applications that won in a comparative
hearing. The tables also show participation rates, win rates, and
disparity ratios, both unadjusted and adjusted for differences in the
population of areas where the licenses were granted. Population weighted
participation and win rates are shown in tables 8, 10, and 12. These
rates are designed to determine if there has been any difference in the
win or participation rates according to the value of the license, where
the value of the license is proxied by population of the area in which
the license is awarded. Population data that are used as weights come
from U.S. Census data.[^18]

There are two relative win rate measures in the tables. Relative win
rate (party basis) is simply the number of winning parties in the group
divided by the total number of participants of that group. Relative win
rate (equity basis) is similar, except that wins are determined based on
which group has majority equity. Relative win rate (equity basis) can
differentiate between a win with minority participation but no equity,
and a win with participation and equity. Wins with substantial equity
participation are accorded higher weight than wins with little or no
equity participation.

The tables also show each group's share of winners and share of
participants. To the extent that the share of winners exceeds the
participation share, the group is winning at a higher rate than would be
dictated by their participation alone. To the extent that a
participation rate exceeds winning share, then the group is winning less
often than their participation would dictate. Based on these
definitions, table 7 shows that over all hearings, non-minorities are
winning at slightly lower rates (90.1% vs. 91.1%) than their rate of
participation while minorities are winning at slightly higher rates
(9.9% vs. 8.9%) than their participation rate.

By type of service, as shown in tables 9 and 11, there is a slightly
different story. Because there does not appear to be any difference
between participation and win rates in radio (0% difference between win
rates and participation rates for both non-minorities and minorities)
but slightly higher win rates relative to participation for minorities
in TV (9.2% win rates versus 7.3% participation rate).

Both white females (19.7% vs. 17.7%) and minority females (3.5% vs. 3%)
are winning at higher rates than their participation rate. White males
are winning at slightly lower rates (70.5% vs. 73.3%) than their
participation rates, while minority males (6.3% vs. 5.9%) are winning at
a slightly higher rate than their participation rate.

This story changes slightly when participation and wins are weighted by
population. Weighting by population elevates the importance of
participation and wins in higher population areas. While there is not
much impact on the results for broadcast as a whole, the population
weighting affects the results for radio. For radio, after weighting for
population, minorities do a little bit worse than non-minorities and
females do a little bit worse than males. The differences between
participation and win rates after weighting by population are too small
to suggest that any sort of bias is occurring in the award process for
radio licenses such that minorities would not be as likely to win in
higher population areas.

Table 7.

Win Rates and Participation Rates (By race and gender) -- Broadcast

+------------+---+----+-------+--------+-----+----+------+---------+
| Total      | 3 |    |       |        |     |    |      |         |
| parties    | 0 |    |       |        |     |    |      |         |
|            | 8 |    |       |        |     |    |      |         |
|            | 2 |    |       |        |     |    |      |         |
+------------+---+----+-------+--------+-----+----+------+---------+
| Winning    | \ | \# | Rel   | Re     | Ab  | \% | \%   | Di      |
| Parties    | # | p  | ative | lative | sol | of | pa   | sparity |
|            | o | ar |       |        | ute | w  | rtic | Ratio:  |
|            | f | ti | win   | win    | win | in | i-pa |         |
|            | W | es | rate  | rate   | r   | ne | tion | %       |
|            | i |    |       | (      | ate | rs |      | winning |
|            | n |    | (     | equity |     |    |      |         |
|            | s |    | party | basis) |     |    |      | ÷       |
|            |   |    | b     |        |     |    |      | %partic |
|            |   |    | asis) |        |     |    |      | ipation |
+------------+---+----+-------+--------+-----+----+------+---------+
| White male | 8 | 22 | 36.5% | 30.9%  | 26  | 7  | 7    | .96     |
|            | 2 | 62 |       |        | .8% | 0. | 3.4% |         |
|            | 5 |    |       |        |     | 5% |      |         |
+------------+---+----+-------+--------+-----+----+------+---------+
| White      | 2 | 5  | 41.9% | 36.1%  | 7   | 1  | 1    | 1.11    |
| female     | 2 | 46 |       |        | .4% | 9. | 7.7% |         |
|            | 9 |    |       |        |     | 6% |      |         |
+------------+---+----+-------+--------+-----+----+------+---------+
| Minority   | 7 | 1  | 41.2% | 40.9%  | 2   | 6. | 5.9% | 1.09    |
| male       | 5 | 82 |       |        | .4% | 4% |      |         |
+------------+---+----+-------+--------+-----+----+------+---------+
| Minority   | 4 | 92 | 44.6% | 32.5%  | 1   | 3. | 3.0% | 1.17    |
| female     | 1 |    |       |        | .3% | 5% |      |         |
+------------+---+----+-------+--------+-----+----+------+---------+
|            |   |    |       |        |     |    |      |         |
+------------+---+----+-------+--------+-----+----+------+---------+
|            |   |    |       |        |     |    |      |         |
+------------+---+----+-------+--------+-----+----+------+---------+
| White      | 1 | 28 | 37.6% | 31.8%  | 34  | 9  | 9    | .99     |
|            | 0 | 08 |       |        | .2% | 0. | 1.1% |         |
|            | 5 |    |       |        |     | 1% |      |         |
|            | 4 |    |       |        |     |    |      |         |
+------------+---+----+-------+--------+-----+----+------+---------+
| Minority   | 1 | 2  | 42.3% | 38.1%  | 3   | 9. | 8.9% | 1.11    |
|            | 1 | 74 |       |        | .8% | 9% |      |         |
|            | 6 |    |       |        |     |    |      |         |
+------------+---+----+-------+--------+-----+----+------+---------+
| Black      | 5 | 1  | 48.1% | 44.1%  | 1   | 4. | 3.4% | 1.29    |
|            | 1 | 06 |       |        | .7% | 4% |      |         |
+------------+---+----+-------+--------+-----+----+------+---------+
| Hispanic   | 4 | 1  | 39.2% | 37.5%  | 1   | 4. | 3.9% | 1.03    |
|            | 7 | 20 |       |        | .5% | 0% |      |         |
+------------+---+----+-------+--------+-----+----+------+---------+
| Asian      | 5 | 11 | 45.5% | 69.4%  | 0   | 0. | 0.4% | 1.00    |
|            |   |    |       |        | .2% | 4% |      |         |
+------------+---+----+-------+--------+-----+----+------+---------+
| American   | 2 | 12 | 16.7% | 7.1%   | 0   | 0. | 0.4% | .500    |
| Indian     |   |    |       |        | .1% | 2% |      |         |
+------------+---+----+-------+--------+-----+----+------+---------+
|            |   |    |       |        |     |    |      |         |
+------------+---+----+-------+--------+-----+----+------+---------+
| Male       | 9 | 24 | 36.8% | 31.7%  | 29  | 7  | 7    | .97     |
|            | 0 | 44 |       |        | .2% | 6. | 9.3% |         |
|            | 0 |    |       |        |     | 9% |      |         |
+------------+---+----+-------+--------+-----+----+------+---------+
| Female     | 2 | 6  | 42.3% | 35.5%  | 8   | 2  | 2    | 1.12    |
|            | 7 | 38 |       |        | .8% | 3. | 0.7% |         |
|            | 0 |    |       |        |     | 1% |      |         |
+------------+---+----+-------+--------+-----+----+------+---------+

Relative win rate (party basis) = \# winning parties in-group / \# of
parties in-group.

Relative win rate (equity basis) = winning equity in group / total
equity for group

Absolute win rate = \# winning parties in-group / total \# of parties.

\% of winners = \# of winners / total number of winners

\% participation = \# of parties / total parties

Disparity ratio = % of winners / % participation

Table 8.

Population Weighted Win Rates (By race and gender) -- Broadcast

+---------------------+--------------+-------------+---+----------------+
|                     | Population   |             |   |                |
|                     | Weighted     |             |   |                |
+---------------------+--------------+-------------+---+----------------+
| Group               | \% of        | \%          |   | Disparity      |
|                     |              | pa          |   | Ratio          |
|                     | winners      | rticipation |   |                |
|                     |              |             |   | %winning       |
|                     |              |             |   |                |
|                     |              |             |   | ÷              |
|                     |              |             |   | %participation |
+---------------------+--------------+-------------+---+----------------+
| White male          | 71.4%        | 75.3%       |   | .95            |
+---------------------+--------------+-------------+---+----------------+
| White female        | 17.5%        | 14.7%       |   | 1.19           |
+---------------------+--------------+-------------+---+----------------+
| Minority male       | 8.8%         | 7.9%        |   | 1.11           |
+---------------------+--------------+-------------+---+----------------+
| Minority female     | 2.3%         | 2.1%        |   | 1.10           |
+---------------------+--------------+-------------+---+----------------+
|                     |              |             |   |                |
+---------------------+--------------+-------------+---+----------------+
|                     |              |             |   |                |
+---------------------+--------------+-------------+---+----------------+
| White               | 88.9%        | 90.0%       |   | 1.0            |
+---------------------+--------------+-------------+---+----------------+
| Minority            | 11.1%        | 10.0%       |   | 1.11           |
+---------------------+--------------+-------------+---+----------------+
| Black               | 6.1%         | 4.8%        |   | 1.27           |
+---------------------+--------------+-------------+---+----------------+
| Hispanic            | 3.0%         | 4.1%        |   | .73            |
+---------------------+--------------+-------------+---+----------------+
| Asian               | 0.5%         | 0.6%        |   | .83            |
+---------------------+--------------+-------------+---+----------------+
| American Indian     | 0.2%         | 0.2%        |   | 1.0            |
+---------------------+--------------+-------------+---+----------------+
|                     |              |             |   |                |
+---------------------+--------------+-------------+---+----------------+
| Male                | 80.2%        | 83.2%       |   | .96            |
+---------------------+--------------+-------------+---+----------------+
| Female              | 19.8%        | 16.8%       |   | 1.18           |
+---------------------+--------------+-------------+---+----------------+

> \% of winners = \# of winners / total number of winners -- weighted by
> population in area of license
>
> \% participation = \# of parties / total parties -- weighted by
> population in area of license
>
> Disparity ratio = % of winners / % participation
>
> Table 9.
>
> Win Rates and Participation Rates (By race and gender) -- TV

<table>
<colgroup>
<col style="width: 17%" />
<col style="width: 9%" />
<col style="width: 7%" />
<col style="width: 11%" />
<col style="width: 12%" />
<col style="width: 8%" />
<col style="width: 0%" />
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 13%" />
</colgroup>
<tbody>
<tr class="odd">
<td>Total parties</td>
<td>1556</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Winning Parties</td>
<td># of Wins</td>
<td># parties</td>
<td><p>Relative</p>
<p>win rate</p>
<p>(party basis)</p></td>
<td><p>Relative</p>
<p>win rate (equity basis)</p></td>
<td colspan="2">Absolute win rate</td>
<td>% of winners</td>
<td>% partici- pation</td>
<td><p>Disparity:</p>
<p>%winning</p>
<p>÷ %participation</p></td>
</tr>
<tr class="odd">
<td>White male</td>
<td>440</td>
<td>1202</td>
<td>36.6%</td>
<td>29.4%</td>
<td colspan="2">28.3%</td>
<td>72.6%</td>
<td>77.2%</td>
<td>.94</td>
</tr>
<tr class="even">
<td>White female</td>
<td>110</td>
<td>240</td>
<td>45.8%</td>
<td>39.4%</td>
<td colspan="2">7.1%</td>
<td>18.2%</td>
<td>15.4%</td>
<td>1.18</td>
</tr>
<tr class="odd">
<td>Minority male</td>
<td>36</td>
<td>77</td>
<td>46.7%</td>
<td>36.7%</td>
<td colspan="2">2.3%</td>
<td>5.9%</td>
<td>4.9%</td>
<td>1.20</td>
</tr>
<tr class="even">
<td>Minority female</td>
<td>20</td>
<td>37</td>
<td>54.0%</td>
<td>22.7%</td>
<td colspan="2">1.3%</td>
<td>3.3%</td>
<td>2.4%</td>
<td>1.38</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>White</td>
<td>550</td>
<td>1442</td>
<td>38.1%</td>
<td>30.7%</td>
<td colspan="2">35.3%</td>
<td>90.8%</td>
<td>92.7%</td>
<td>.98</td>
</tr>
<tr class="even">
<td>Minority</td>
<td>56</td>
<td>114</td>
<td>49.1%</td>
<td>32.6%</td>
<td colspan="2">3.6%</td>
<td>9.2%</td>
<td>7.3%</td>
<td>1.26</td>
</tr>
<tr class="odd">
<td>Black</td>
<td>23</td>
<td>39</td>
<td>59.0%</td>
<td>39.2%</td>
<td colspan="2">1.5%</td>
<td>3.8%</td>
<td>2.5%</td>
<td>1.52</td>
</tr>
<tr class="even">
<td>Hispanic</td>
<td>22</td>
<td>50</td>
<td>44.0%</td>
<td>32.1%</td>
<td colspan="2">1.4%</td>
<td>3.6%</td>
<td>3.2%</td>
<td>1.13</td>
</tr>
<tr class="odd">
<td>Asian</td>
<td>3</td>
<td>7</td>
<td>42.9%</td>
<td>39.8%</td>
<td colspan="2">1.9%</td>
<td>0.5%</td>
<td>0.4%</td>
<td>1.25</td>
</tr>
<tr class="even">
<td>American Indian</td>
<td>1</td>
<td>4</td>
<td>25.0%</td>
<td>4.3%</td>
<td colspan="2">0.1%</td>
<td>0.2%</td>
<td>0.3%</td>
<td>.67</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Male</td>
<td>476</td>
<td>1279</td>
<td>37.2%</td>
<td>30.1%</td>
<td colspan="2">30.6%</td>
<td>78.5%</td>
<td>82.2%</td>
<td>.95</td>
</tr>
<tr class="odd">
<td>Female</td>
<td>130</td>
<td>277</td>
<td>46.9%</td>
<td>35.6%</td>
<td colspan="2">8.4%</td>
<td>21.5%</td>
<td>17.8%</td>
<td>1.21</td>
</tr>
<tr class="even">
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>

Relative win rate (party basis) = \# winning parties in-group / \# of
parties in-group.

Relative win rate (equity basis) = winning equity in group / total
equity for group

Absolute win rate = \# winning parties in-group / total \# of parties.

\% of winners = \# of winners / total number of winners

\% participation = \# of parties / total parties

Disparity ratio = % of winners / % participation

Table 10.

Population Weighted Win Rates (By race and gender) -- TV

+----------------------+--------------+-------------+---+----------------+
|                      | Population   |             |   |                |
|                      | Weighted     |             |   |                |
+----------------------+--------------+-------------+---+----------------+
| Group                | \% of        | \%          |   | Disparity      |
|                      | winners      | pa          |   | Ratio:         |
|                      |              | rticipation |   |                |
|                      |              |             |   | %winning       |
|                      |              |             |   |                |
|                      |              |             |   | ÷              |
|                      |              |             |   | %participation |
+----------------------+--------------+-------------+---+----------------+
| White male           | 74.0%        | 80.1%       |   | .92            |
+----------------------+--------------+-------------+---+----------------+
| White female         | 18.6%        | 15.3%       |   | 1.22           |
+----------------------+--------------+-------------+---+----------------+
| Minority male        | 5.2%         | 3.2%        |   | 1.63           |
+----------------------+--------------+-------------+---+----------------+
| Minority female      | 2.1%         | 1.3%        |   | 1.62           |
+----------------------+--------------+-------------+---+----------------+
|                      |              |             |   |                |
+----------------------+--------------+-------------+---+----------------+
| White                | 92.6%        | 95.5%       |   | .97            |
+----------------------+--------------+-------------+---+----------------+
| Minority             | 7.4%         | 4.5%        |   | 1.62           |
+----------------------+--------------+-------------+---+----------------+
| Black                | 1.9%         | 1.5%        |   | 1.27           |
+----------------------+--------------+-------------+---+----------------+
| Hispanic             | 3.2%         | 2.0%        |   | 1.60           |
+----------------------+--------------+-------------+---+----------------+
| Asian                | 0.5%         | 0.4%        |   | 1.25           |
+----------------------+--------------+-------------+---+----------------+
| American Indian      | 0.2%         | 0.2%        |   | 1.00           |
+----------------------+--------------+-------------+---+----------------+
|                      |              |             |   |                |
+----------------------+--------------+-------------+---+----------------+
| Male                 | 79.2%        | 83.3%       |   | .95            |
+----------------------+--------------+-------------+---+----------------+
| Female               | 20.8%        | 16.7%       |   | 1.25           |
+----------------------+--------------+-------------+---+----------------+

> \% of winners = \# of winners / total number of winners -- weighted by
> population in area of license
>
> \% participation = \# of parties / total parties -- weighted by
> population in area of license
>
> Disparity ratio = % of winners / % participation

Table 11.

Win Rates and Participation Rates (By race and gender) -- Radio

+-------------+-----+----+--------+-------+-----+----+----+--------+
| Total       | 1   |    |        |       |     |    |    |        |
| parties     | 526 |    |        |       |     |    |    |        |
+-------------+-----+----+--------+-------+-----+----+----+--------+
| Winning     | \#  | \# | Re     | Rel   | Ab  | \% | \% | Dis    |
| Parties     | of  | p  | lative | ative | sol | of | pa | parity |
|             | W   | ar |        |       | ute | w  | rt | Ratio: |
|             | ins | ti | win    | win   | win | in | ic |        |
|             |     | es | rate   | rate  | r   | ne | i- | %w     |
|             |     |    |        | (e    | ate | rs | pa | inning |
|             |     |    | (party | quity |     |    | ti |        |
|             |     |    | basis) | b     |     |    | on | ÷      |
|             |     |    |        | asis) |     |    |    | %p     |
|             |     |    |        |       |     |    |    | artici |
|             |     |    |        |       |     |    |    | pation |
+-------------+-----+----+--------+-------+-----+----+----+--------+
| White male  | 385 | 10 | 36.3%  | 31.7% | 25  | 6  | 6  | .98    |
|             |     | 60 |        |       | .2% | 8. | 9. |        |
|             |     |    |        |       |     | 3% | 5% |        |
+-------------+-----+----+--------+-------+-----+----+----+--------+
| White       | 119 | 3  | 38.9%  | 35.1% | 7   | 2  | 2  | 1.05   |
| female      |     | 06 |        |       | .8% | 1. | 0. |        |
|             |     |    |        |       |     | 1% | 1% |        |
+-------------+-----+----+--------+-------+-----+----+----+--------+
| Minority    | 39  | 1  | 37.2%  | 44.0% | 2   | 6. | 6. | 1.00   |
| male        |     | 05 |        |       | .6% | 9% | 9% |        |
+-------------+-----+----+--------+-------+-----+----+----+--------+
| Minority    | 21  | 55 | 38.2%  | 38.0% | 1   | 3. | 3. | 1.03   |
| female      |     |    |        |       | .4% | 7% | 6% |        |
+-------------+-----+----+--------+-------+-----+----+----+--------+
|             |     |    |        |       |     |    |    |        |
+-------------+-----+----+--------+-------+-----+----+----+--------+
| White       | 504 | 13 | 36.9%  | 32.4% | 33  | 8  | 8  | 1.00   |
|             |     | 66 |        |       | .0% | 9. | 9. |        |
|             |     |    |        |       |     | 4% | 5% |        |
+-------------+-----+----+--------+-------+-----+----+----+--------+
| Minority    | 60  | 1  | 37.5%  | 41.9% | 3   | 1  | 1  | 1.01   |
|             |     | 60 |        |       | .9% | 0. | 0. |        |
|             |     |    |        |       |     | 6% | 5% |        |
+-------------+-----+----+--------+-------+-----+----+----+--------+
| Black       | 28  | 67 | 41.8%  | 46.4% | 1   | 5. | 4. | 1.14   |
|             |     |    |        |       | .8% | 0% | 4% |        |
+-------------+-----+----+--------+-------+-----+----+----+--------+
| Hispanic    | 25  | 70 | 35.7%  | 42.9% | 1   | 4. | 4. | .96    |
|             |     |    |        |       | .6% | 4% | 6% |        |
+-------------+-----+----+--------+-------+-----+----+----+--------+
| Asian       | 2   | 4  | 50.0%  | 75.0% | 0   | 0. | 0. | 1.33   |
|             |     |    |        |       | .1% | 4% | 3% |        |
+-------------+-----+----+--------+-------+-----+----+----+--------+
| American    | 1   | 8  | 12.5%  | 8.2%  | 0   | 0. | 0. | .40    |
| Indian      |     |    |        |       | .1% | 2% | 5% |        |
+-------------+-----+----+--------+-------+-----+----+----+--------+
|             |     |    |        |       |     |    |    |        |
+-------------+-----+----+--------+-------+-----+----+----+--------+
| Male        | 424 | 11 | 36.3%  | 32.6% | 27  | 7  | 7  | .98    |
|             |     | 65 |        |       | .8% | 5. | 6. |        |
|             |     |    |        |       |     | 0% | 3% |        |
+-------------+-----+----+--------+-------+-----+----+----+--------+
| Female      | 140 | 3  | 38.8%  | 35.5% | 9   | 2  | 2  | 1.05   |
|             |     | 61 |        |       | .2% | 4. | 3. |        |
|             |     |    |        |       |     | 8% | 7% |        |
+-------------+-----+----+--------+-------+-----+----+----+--------+
|             |     |    |        |       |     |    |    |        |
+-------------+-----+----+--------+-------+-----+----+----+--------+

Relative win rate (party basis) = \# winning parties in-group / \# of
parties in-group.

Relative win rate (equity basis) = winning equity in group / total
equity for group

Absolute win rate = \# winning parties in-group / total \# of parties.

\% of winners = \# of winners / total number of winners

\% participation = \# of parties / total parties

Disparity ratio = % of winners / % participation

> Table 12.
>
> Population Weighted Win Rates (By race and gender) -- Radio

+---------------------+--------------+-------------+---+----------------+
|                     | Population   |             |   |                |
|                     | Weighted     |             |   |                |
+---------------------+--------------+-------------+---+----------------+
| Group               | \% of        | \%          |   | Disparity      |
|                     | winners      | pa          |   | Ratio:         |
|                     |              | rticipation |   |                |
|                     |              |             |   | %winning       |
|                     |              |             |   |                |
|                     |              |             |   | ÷              |
|                     |              |             |   | %participation |
+---------------------+--------------+-------------+---+----------------+
| White male          | 58.3%        | 56.0%       |   | 1.04           |
+---------------------+--------------+-------------+---+----------------+
| White female        | 11.8%        | 12.1%       |   | .98            |
+---------------------+--------------+-------------+---+----------------+
| Minority male       | 27.0%        | 26.7%       |   | 1.01           |
+---------------------+--------------+-------------+---+----------------+
| Minority female     | 2.9%         | 5.2%        |   | .56            |
+---------------------+--------------+-------------+---+----------------+
|                     |              |             |   |                |
+---------------------+--------------+-------------+---+----------------+
|                     |              |             |   |                |
+---------------------+--------------+-------------+---+----------------+
| White               | 70.1%        | 68.1%       |   | 1.03           |
+---------------------+--------------+-------------+---+----------------+
| Minority            | 29.9%        | 31.9%       |   | .94            |
+---------------------+--------------+-------------+---+----------------+
| Black               | 27.4%        | 17.8%       |   | 1.54           |
+---------------------+--------------+-------------+---+----------------+
| Hispanic            | 2.0%         | 12.4%       |   | .16            |
+---------------------+--------------+-------------+---+----------------+
| Asian               | 0.1%         | 1.4%        |   | .07            |
+---------------------+--------------+-------------+---+----------------+
| American Indian     | 0.1%         | 0.1%        |   | 1.00           |
+---------------------+--------------+-------------+---+----------------+
|                     |              |             |   |                |
+---------------------+--------------+-------------+---+----------------+
| Male                | 85.2%        | 82.7%       |   | 1.03           |
+---------------------+--------------+-------------+---+----------------+
| Female              | 14.7%        | 17.3%       |   | .85            |
+---------------------+--------------+-------------+---+----------------+

\% of winners = \# of winners / total number of winners -- weighted by
population in area of license

> \% participation = \# of parties / total parties -- weighted by
> population in area of license
>
> Disparity ratio = % of winners / % participation

In addition to the relatively simple win rates defined above, we
developed a relatively more sophisticated measure of potential win rate
disparity referred to as the "relative award rate (R)". The relative
award rate for minorities is the percentage of license awards to
minorities relative to average minority participation. The relative
award rate *R* is defined by the following equation:

![](media/image1.wmf){width="2.7222222222222223in"
height="0.4722222222222222in"}

where *N* is the number of hearings, *i* indexes hearings, *z~i~* takes
a value of one if the license in hearing *i* is awarded to a minority
and zero if not, and *m~i~* is the percentage of minority applicants in
hearing *i*. The relative award rate is defined analogously for
non-minorities, males, and females. These calculations take place across
the 230 hearings. The determination of whether a hearing is won by a
minority is dependent upon the count of minorities in the winning
application versus the number of non-minorities in the winning
application. When the number of minorities in the winning application
exceeds the number of non-minorities, the winning application is
considered as minority. Similarly when the number of females in the
winning application exceeds the number of males, the winning application
is considered as female.

The calculation of the relative award rate is also performed using
equity as the determinant of control of the application.

The value of *R* must lie between one and minus one. If minorities are
on average awarded licenses in proportion to their participation, *R*
will be zero. Thus, we define "no disparity" as *R* = 0. If minorities
are awarded licenses less than suggested by their percentage of
applications, *R* will be negative. If minorities are awarded licenses
more than suggested by their percentage of applications, *R* will be
positive.

The measure *R* has the statistical advantage, among the more
sophisticated measures we considered, of being defined as a population
mean. For a population of hearings, we can estimate the population mean
of *R* by taking a sample of hearings, determining minority status for
each application and for the winning application in each sampled
hearing, and computing the sample mean corresponding to *R*. The sample
mean is an unbiased and consistent estimator of the population mean
![](media/image2.wmf){width="0.16666666666666666in"
height="0.18055555555555555in"}. Further, if the sample is drawn
randomly the sampled hearings are independent, and the variance of the
sample mean can be derived and computed with relative ease. The sample
mean and variance can be used to perform a statistical test of the
hypothesis that *R* = 0, i.e. the hypothesis of no disparity.

In contrast to some other measures that are presented later, such as the
"winner take all win rates", the relative award rate is calculated over
hearings and measures success in hearings relative to average
participation in hearings.

This is our preferred measure because the calculation of *R* is based on
the relative minority participation within a *hearing*. This controls
for competition within hearings of different sizes (number of
applications) and places minority participation and win rate within the
context of its particular hearing. Other measures presented in this
paper do not take advantage of hearing groups but, rather, calculates
win rates for applications and parties as if they are independent of one
another.

Table 13 presents the relative award rates for All Broadcast, TV, and
Radio for non-minorities, minorities, males, and females (using the
count of participants in each group as the determinant of which group
controls the winning application).

Table 13.

Relative Award Rates

(Using majority based on body counts to define winning group)

  --------------------- -------------------- -------------- --------------
                        All Broadcast        TV             Radio

  Male                  .09                  .09            .09

  Female                -.09                 -.09           -.09

                                                            

  Non-minority          .014                 .01            .015

  Minority              -.014                -.01           -.015
  --------------------- -------------------- -------------- --------------

Table 14 presents the relative award rates for All Broadcast, TV, and
Radio for non-minorities, minorities, males, and females (using the
majority equity definition as the determinant of which group controls
the winning application).

Table 14

Relative Award Rates

(Using majority based on equity to define winning group)

  --------------------- -------------------- -------------- --------------
                        All Broadcast        TV             Radio

  Male                  .02                  .03            .02

  Female                -.02                 -.03           .-.02

                                                            

  Non-minority          .003                 .02            -.006

  Minority              -.003                -.02           .006
  --------------------- -------------------- -------------- --------------

According to these two tables, the relative award rates for males are
higher than those for females. The non-minority relative award rates are
slightly higher than minority based on using a definition where the
counts of the parties from each group in the application determine the
winning group of the application. Using the alternative definition where
the group with the most equity is defined as the winner of the winning
application, there is little difference between non-minorities and
minority relative award rates.

Standard errors for the estimates in Tables 13 and 14 are shown in Table
II.1 in appendix II. Calculation of the 95% confidence intervals for
these estimates suggests that there is a statistically significant
difference between the male and female relative award rates shown in
Table 13 (where the count of parties in each group determines the group
who controls the winning application). This is the only instance where
there is a statistically significant difference in any of these relative
award rates. There are no statistically significant difference between
the relative award rates for minorities and non-minorities.

It is important to note here that the period examined in this study was
the period during which the FCC awarded credit for minority or female
participation.[^19] Thus, one might expect that minorities and women
would have similar success rates to non-minorities.

# VII. Win Rates and Disparity Ratios by Race and Gender, Based on Definition of Control

Table 15 shows the number of applications that each group controls from
an equity perspective. We refer to the number of these applications as
"winner take all" since we make an assumption that if this application
wins, then it is a win for this particular group.

We classify a particular group as controlling an application if and only
if that group owns greater than 50% of the equity associated with an
application. We classify a particular group as having won a hearing in a
winner take all setting if and only if that group owns greater than 50%
of the equity in the winning application for that hearing.

According to this definition of control, non-minorities control 670 or
90.5 % of all applications while minorities' control 70 or 9.5 % of all
applications. For radio, non-minorities control 451 or 91.3% of radio
applications and minorities control 8.7%. For television, non-minorities
control 89% of TV applications and minorities control 11%.

Table 15.

Applications where Group has Majority Equity

(by Gender and Minority Status)

+------------+---------+----------+------+----------+-----+----------+
|            | All     | Parti    | R    | Parti    | TV  | Parti    |
|            |         | cipation | adio | cipation |     | cipation |
|            | Br      | Share    |      | Share    |     | Share    |
|            | oadcast |          |      |          |     |          |
+------------+---------+----------+------+----------+-----+----------+
| Total      | 740     |          | 494  |          | 246 |          |
+------------+---------+----------+------+----------+-----+----------+
| No         | 670     | 90.5%    | 451  | 91.3%    | 219 | 89%      |
| n-minority |         |          |      |          |     |          |
+------------+---------+----------+------+----------+-----+----------+
| Minority   | 64      | 8.6%     | 38   | 7.7%     | 26  | 11%      |
+------------+---------+----------+------+----------+-----+----------+
|            |         |          |      |          |     |          |
+------------+---------+----------+------+----------+-----+----------+
| Male       | 600     | 81.1%    | 385  | 77.9%    | 215 | 87.4%    |
+------------+---------+----------+------+----------+-----+----------+
| Female     | 109     | 14.7%    | 79   | 16.0%    | 30  | 12.2%    |
+------------+---------+----------+------+----------+-----+----------+

\*Ties are excluded from these counts so shares will not sum to exactly
100%.

By gender, females have majority ownership for 109 or 14.7% of
applications, which is split between 79 (16%) for radio and 30 (12.2%)
for TV. Males control 600 or 81.1% of applications, which is split
between 385 (77.9%) for radio and 215 (87.4%) for TV.

Table 16 shows the number of winning applications controlled by each
group (see panel 1), and the total number of applications controlled by
each group (see panel 2) where control is defined as owning greater than
50% of equity. It also shows the total number of applications with
participation by each group, regardless of control (see panel 3).[^20]
The number of applications (panel 1) will be used as the numerator in an
alternative measure of relative win rates and disparity ratios while
number of applications in panels (2) and (3) will be used as the
alternative availability measures for the denominator of the relative
win rates and disparity ratios.

Table 16.

Winner Take All Applications

(Applications by Gender and Minority Status where Group has Majority
Equity)

<table>
<colgroup>
<col style="width: 16%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 5%" />
<col style="width: 12%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 9%" />
</colgroup>
<tbody>
<tr class="odd">
<td></td>
<td colspan="3">Winning (1)</td>
<td colspan="3"><p>Total (2)</p>
<p>(Narrow Availability Measure)</p></td>
<td colspan="3"><p>All Apps Regardless of Control (3)*</p>
<p>(Broad Availability Measure)</p></td>
</tr>
<tr class="even">
<td></td>
<td>All</td>
<td>Radio</td>
<td>TV</td>
<td>All</td>
<td>Radio</td>
<td>TV</td>
<td>All</td>
<td>Radio</td>
<td>TV</td>
</tr>
<tr class="odd">
<td>Non-minority</td>
<td>213</td>
<td>145</td>
<td>68</td>
<td>670</td>
<td>451</td>
<td>219</td>
<td>705</td>
<td>474</td>
<td>231</td>
</tr>
<tr class="even">
<td>Minority</td>
<td>24</td>
<td>17</td>
<td>7</td>
<td>64</td>
<td>38</td>
<td>26</td>
<td>122</td>
<td>72</td>
<td>50</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Male</td>
<td>191</td>
<td>125</td>
<td>66</td>
<td>600</td>
<td>385</td>
<td>215</td>
<td>694</td>
<td>458</td>
<td>236</td>
</tr>
<tr class="odd">
<td>Female</td>
<td>38</td>
<td>28</td>
<td>10</td>
<td>109</td>
<td>79</td>
<td>30</td>
<td>374</td>
<td>239</td>
<td>135</td>
</tr>
</tbody>
</table>

\* This measure has the property that applications will have no unique
classification for any one group

Counts for each demographic group in (1) and (2) are based on having
majority equity in an application.

Counts in (3) are based on having any participation by a demographic
group in an application.

Counts in (1) and (2) exclude ties.

Table 17 presents a relative win rate based on the winner take all
definition of success and using the narrow measure of availability, i.e.
only the applications for which the demographic group has majority
equity. Table 17a shows the disparity ratio using the narrow measure of
availability.

Table 17.

Winner Take all Relative Win Rate using

Narrow Availability Measure (1) / (2)

+--------------------------+----------------+------------+------------+
|                          | All            | Radio      | TV         |
|                          |                |            |            |
|                          | Broadcast      |            |            |
+--------------------------+----------------+------------+------------+
| Non-minority             | 31.8%          | 32.2%      | 31.1%      |
+--------------------------+----------------+------------+------------+
| Minority                 | 37.5%          | 44.7%      | 26.9%      |
+--------------------------+----------------+------------+------------+
|                          |                |            |            |
+--------------------------+----------------+------------+------------+
| Male                     | 31.8%          | 32.5%      | 30.7%      |
+--------------------------+----------------+------------+------------+
| Female                   | 34.9%          | 35.4%      | 33.3%      |
+--------------------------+----------------+------------+------------+

These calculations are based on data from Table 16; e.g.

> Minority TV 7/26=26.9%.

Table 17a.

Disparity Ratio Using

Narrow Availability Measure

+--------------------------+----------------+------------+------------+
|                          | All            | Radio      | TV         |
|                          |                |            |            |
|                          | Broadcast      |            |            |
+--------------------------+----------------+------------+------------+
| Non-minority             | .98            | .97        | 1.01       |
+--------------------------+----------------+------------+------------+
| Minority                 | 1.16           | 1.35       | .88        |
+--------------------------+----------------+------------+------------+
|                          |                |            |            |
+--------------------------+----------------+------------+------------+
| Male                     | .99            | .98        | .99        |
+--------------------------+----------------+------------+------------+
| Female                   | 1.08           | 1.07       | 1.07       |
+--------------------------+----------------+------------+------------+

Disparity ratio = % winning / % availability

e.g. .Minority Broadcast = (24/237) / (64/734) = 1.16

Table 18 shows a relative win ratio based on the winner take all
definition of success and using a broader measure of availability than
the measure used in Table 17. Based on this measure, minority and female
controlled applications have a lower probability of winning a license
than non-minority and male controlled applications. Table 18a shows the
corresponding disparity ratio. The broader measure of availability is
based on including all applications with representation in the group,
regardless of who controls the application from an equity perspective.
The idea behind this ratio is that availability should include all who
are ready, willing, and able to bid on a license.

Table 18.

Winner Take all Relative Win Rate using

Broader Availability Measure (1) / (3)

+--------------------------+----------------+------------+------------+
|                          | All            | Radio      | TV         |
|                          |                |            |            |
|                          | Broadcast      |            |            |
+--------------------------+----------------+------------+------------+
| Non-minority             | 30.2%          | 30.6%      | 29.4%      |
+--------------------------+----------------+------------+------------+
| Minority                 | 19.7%          | 23.6%      | 14.0%      |
+--------------------------+----------------+------------+------------+
|                          |                |            |            |
+--------------------------+----------------+------------+------------+
| Male                     | 27.5%          | 27.3%      | 28.0%      |
+--------------------------+----------------+------------+------------+
| Female                   | 10.2%          | 11.7%      | 7.4%       |
+--------------------------+----------------+------------+------------+

> These calculations are based on data from Table 16; e.g.
>
> Minority TV: 7/50=14%

Table 18a.

Disparity Ratio using

Broader Availability Measure (1) / (3)

+--------------------------+----------------+------------+------------+
|                          | All            | Radio      | TV         |
|                          |                |            |            |
|                          | Broadcast      |            |            |
+--------------------------+----------------+------------+------------+
| Non-minority             | 1.05           | 1.03       | 1.10       |
+--------------------------+----------------+------------+------------+
| Minority                 | .69            | .80        | .52        |
+--------------------------+----------------+------------+------------+
|                          |                |            |            |
+--------------------------+----------------+------------+------------+
| Male                     | 1.28           | 1.24       | 1.37       |
+--------------------------+----------------+------------+------------+
| Female                   | .47            | .53        | .36        |
+--------------------------+----------------+------------+------------+

Disparity ratio = % winning / % availability

Based on using the broader definition of availability in the relative
win rates and disparity ratios, there is a statistically significant
difference between both non-minority and minority relative win rates and
disparity ratios and between male and female relative win rates and
disparity ratios. The results from Tables 18 and 18a rely on broader
definitions of availability that includes all those who have
participated in the process, regardless of whether they have the
capability of controlling the application from an equity perspective.

# VIII. Level of Competition within Hearings

While another part of the analysis, which is presented in a companion
report, will control for various differences in the characteristics of
applicants, we will also provide here some basic data on the level of
competition within hearings, i.e. the number of applications of various
groups within hearings. The purpose of presenting these data is to get
an idea of how competitive each hearing is based on the number of
applicants. It will be interesting to determine if there are any
differences in the number of applications in hearings with and without
minority participation.

The following tables show the average number of parties in applications
and the average number of applications in hearings by minority status
and gender. Examination of these averages may be suggestive of the odds
of winning a hearing based solely on the number of competing
applications.

Table 19.

Average number of parties in applications by Race and Gender

+--------------------------+----------------+------------+------------+
|                          | All            | Radio      | TV         |
|                          |                |            |            |
|                          | Broadcast      |            |            |
+--------------------------+----------------+------------+------------+
| All Applications         | 4.2            | 3.1        | 6.3        |
+--------------------------+----------------+------------+------------+
| White                    | 4.3            | 3.1        | 6.6        |
+--------------------------+----------------+------------+------------+
| Minority                 | 5.9            | 4.5        | 7.9        |
+--------------------------+----------------+------------+------------+
|                          |                |            |            |
+--------------------------+----------------+------------+------------+
| Male                     | 4.4            | 3.2        | 6.5        |
+--------------------------+----------------+------------+------------+
| Female                   | 5.5            | 4.2        | 8.0        |
+--------------------------+----------------+------------+------------+

Averages are based on using only applications with

at least one party that is in group

Based on all applications, there tend to be more parties in applications
with minority or female representation than there are for applications
with white parties (5.9 for minority, 5.5 for female, and 4.3 for
white). This is a sizable difference. For winning applications, the
difference is even greater; there are 8.3 parties in winning
applications with minority representation, 6.5 parties for winning
applications with female representation, and only 5 parties for winning
applications with white representation.

Table 20

Average number of parties per winning application

by Race and Gender

+--------------------------+----------------+------------+------------+
|                          | All            | Radio      | TV         |
|                          |                |            |            |
|                          | Broadcast      |            |            |
+--------------------------+----------------+------------+------------+
| All Applications         | 4.9            | 3.4        | 8.0        |
+--------------------------+----------------+------------+------------+
| White                    | 5.0            | 3.5        | 8.3        |
+--------------------------+----------------+------------+------------+
| Minority                 | 8.3            | 4.8        | 13.0       |
+--------------------------+----------------+------------+------------+
|                          |                |            |            |
+--------------------------+----------------+------------+------------+
| Male                     | 5.1            | 3.6        | 8.4        |
+--------------------------+----------------+------------+------------+
| Female                   | 6.5            | 4.5        | 10.2       |
+--------------------------+----------------+------------+------------+

Averages are based on using only applications with

at least one party that is in group

Table 21

Average number of minority parties per winning application

by Race and Gender

+--------------------------+----------------+------------+------------+
|                          | All            | Radio      | TV         |
|                          |                |            |            |
|                          | Broadcast      |            |            |
+--------------------------+----------------+------------+------------+
| All Applications         | .5             | .4         | .7         |
+--------------------------+----------------+------------+------------+
| White                    | .4             | .2         | .7         |
+--------------------------+----------------+------------+------------+
| Minority                 | 2.3            | 2.1        | 2.7        |
+--------------------------+----------------+------------+------------+
|                          |                |            |            |
+--------------------------+----------------+------------+------------+
| Male                     | .5             | .4         | .8         |
+--------------------------+----------------+------------+------------+
| Female                   | .7             | .4         | 1.1        |
+--------------------------+----------------+------------+------------+

Averages are based on using only applications with

at least one party that is in group

Table 22

Average Number of white parties per winning application

by Race and Gender

+--------------------------+----------------+------------+------------+
|                          | All            | Radio      | TV         |
|                          |                |            |            |
|                          | Broadcast      |            |            |
+--------------------------+----------------+------------+------------+
| All Applications         | 4.4            | 3.1        | 7.2        |
+--------------------------+----------------+------------+------------+
| White                    | 4.6            | 3.3        | 7.6        |
+--------------------------+----------------+------------+------------+
| Minority                 | 5.9            | 2.8        | 10.3       |
+--------------------------+----------------+------------+------------+
|                          |                |            |            |
+--------------------------+----------------+------------+------------+
| Male                     | 4.6            | 3.2        | 7.6        |
+--------------------------+----------------+------------+------------+
| Female                   | 5.9            | 4.1        | 9.2        |
+--------------------------+----------------+------------+------------+

Averages are based on using only applications with

at least one party that is in group

Table 23 shows that there are also differences between the number of
applications in hearings with and without minority participation. For
those hearings where a minority is represented within an application,
there are on average 3.7 applications per hearing. For those hearings
with female participation, there are an average of 3.4 applications per
hearing, while for those hearings without minority participation, there
is an average of 3.2 applications per hearing. This suggests that the
odds of winning a license may be lower in hearings with minority or
female participation.

Table 23

Average Number of Applications per Hearing

by Race and Gender (where there is at least one party of type)

+--------------------------+----------------+------------+------------+
| Hearing with at least    | All            | Radio      | TV         |
| one party                |                |            |            |
|                          | Broadcast      |            |            |
+--------------------------+----------------+------------+------------+
| White                    | 3.2            | 3.2        | 3.3        |
+--------------------------+----------------+------------+------------+
| Minority                 | 3.7            | 3.8        | 3.5        |
+--------------------------+----------------+------------+------------+
|                          |                |            |            |
+--------------------------+----------------+------------+------------+
| Male                     | 3.2            | 3.2        | 3.3        |
+--------------------------+----------------+------------+------------+
| Female                   | 3.4            | 3.4        | 3.4        |
+--------------------------+----------------+------------+------------+

Averages are based on using only applications with

at least one party that is in group

The corresponding average number of applications per hearing when there
is at least one application in the hearing that is controlled by a group
is shown below. Recall that control is defined as having greater than
50% equity.

Table 24

Average Number of Applications per Hearing

by Race and Gender (where group has control)

+--------------------------+----------------+------------+------------+
| Group with at least one  | All            | Radio      | TV         |
| application              |                |            |            |
|                          | Broadcast      |            |            |
+--------------------------+----------------+------------+------------+
| White                    | 3.3            | 3.2        | 3.3        |
+--------------------------+----------------+------------+------------+
| Minority                 | 4.0            | 4.0        | 4.2        |
+--------------------------+----------------+------------+------------+
|                          |                |            |            |
+--------------------------+----------------+------------+------------+
| Male                     | 3.3            | 3.2        | 3.3        |
+--------------------------+----------------+------------+------------+
| Female                   | 3.9            | 3.9        | 4.0        |
+--------------------------+----------------+------------+------------+

These results are similar to those in the previous table. It appears
that minority and female controlled applications may face more
competition in the form of a greater number of competing applications in
the comparative hearing.

# Appendix I: Information Collected from Form 301 for the Development

# of Utilization Ratios

## General Hearing Information

1.  Docket number

2.  Number of Applications

3.  Community

4.  Channel

5.  Frequency

6.  Service (select one) : ¨ AM ¨ FM ¨ TV

## APPLICATION (form 301) INFORMATION

For each Application:

1.  Name of Applying Organization:

2.  Number of Parties

3.  Date Application Filed

4.  Winner ¨ Yes ¨ No

5.  Merger ¨ Yes ¨ No

6.  Dismiss: ¨ Yes ¨ No

7.  Appeal: ¨ Yes ¨ No

**For Each Party to an Application:**

1.  Party Name

2.  Party number

3.  Position

4.  Ownership (percentage of ownership)

5.  Voting (percent of control)

6.  Gender (pick one) ¨ Male ¨ Female

7.  Minority status: ¨ Yes ¨ No

8.  Race/Ethnicity: ¨ Black ¨ Hispanic ¨ Asian ¨ American Indian/Eskimo

# Appendix II. Standard Deviations of Estimates Presented in Tables

Note that all of the ratios, averages, and other calculations presented
in this memo are not exact calculations generated from the population of
comparative hearings. Instead, all of these calculations are estimates
based off of a sample of comparative hearings drawn from the population.

For this reason, when discussing the results of this memo it is
necessary to account for the uncertainty associated with any estimate.
This uncertainty is stated in terms of the standard deviation of the
estimate. Let us refer to the estimate as "p" and the standard deviation
as "s". Then, for each of the estimates in this memo, it is appropriate
to state that we are 95% confident that the true population value lies
in the range:

\[ p -- 1.96 \* s , p + 1.96 \* s\]

Hence, knowing the standard deviation associated with each estimate is
critical. The standard deviations associated with several of the more
central estimates are provided in Tables II.1 and Table II.2. Table II.1
provides the standard deviations for several of the win rates presented
in the report. Table II.2 provides the standard deviations for several
of the averages presented in the report.

Note that the standard deviations of the population proportions in Table
II.1 are relatively straightforward to calculate. These population
estimates are in the form of a binomial estimate. The standard deviation
of a binomial estimator is simply a function of the sample proportion
and the sample size.

The calculation of the standard deviation associated with the winning
percentages in Table II.1, on the other hand, is complicated. The
winning percentages are in the form of ratio estimates. The standard
deviation of a ratio estimate is a complicated function of the sample
variances and co-variances of components of the ratio calculation and
the sample size.[^21]

We accounted for the finite sample size correction when calculating the
standard deviations of the population proportions and the estimates of
the winning percentages.

Table II.1

Standard Errors Associated with Selected Estimated Rates

  -------------------------------------- ------------ ---------- -------- ------
                                         Standard                         
                                         Deviations                       

  Estimates                              All          TV         Radio    
                                         Broadcast                        

                                                                          

  Relative win rate for non-minority     0.76%        0.92%      1.46%    
  males                                                                   

  Relative win rate for minority males   2.11%        6.09%      0.97%    

  Relative win rate for white females    1.96%        2.23%      3.68%    

  Relative win rate for minority females 5.63%        10.03%     3.59%    

  Relative win rate for non-minorities   0.71%        0.86%      1.37%    

  Relative win rate for minorities       2.05%        5.23%      1.00%    

  Relative win rate for blacks           2.69%        8.92%      1.18%    

  Relative win rate for Hispanics        3.28%        7.74%      1.69%    

  Relative win rate for Asians           6.54%        13.43%     3.64%    

  Relative win rate for American Indians 20.40%       22.64%     43.45%   

  Relative win rate for females          1.85%        2.20%      2.79%    

  Relative win rate for males            0.72%        0.92%      1.04%    

                                                                          

  Participation rate for white males     0.60%        0.70%      1.01%    

  Participation rate for minority males  0.37%        0.31%      0.90%    

  Participation rate for white females   0.49%        0.63%      0.66%    

  Participation rate for minority        0.20%        0.20%      0.45%    
  females                                                                 

  Participation rate for whites          0.42%        0.36%      0.95%    

  Participation rate for minorities      0.42%        0.36%      0.95%    

  Participation rate for blacks          0.30%        0.21%      0.78%    

  Participation rate for Hispanics       0.27%        0.25%      0.67%    

  Participation rate for Asians          0.11%        0.11%      0.24%    

  Participation rate for American        0.06%        0.07%      0.07%    
  Indians                                                                 

  Participation rate for females         0.52%        0.65%      0.77%    

  Participation rate for males           0.52%        0.65%      0.77%    

                                                                          
  -------------------------------------- ------------ ---------- -------- ------

Table II.1 (cont.)

Standard Errors Associated with Selected Estimates

  -------------------------------------- ------------ ---------- ---------
                                         Standard                
                                         Deviations              

  Estimates                              All          TV         Radio
                                         Broadcast               

                                                                 

  Party defined winning differential                             
  (table 13)                                                     

  Minority                               1.07%        2.00%      1.50%

  Non-minority                           1.07%        2.00%      1.50%

  Female                                 1.67%        2.50%      2.20%

  Male                                   1.67%        2.50%      2.20%

                                                                 

  Equity defined winning differential                            
  (table 14)                                                     

  Minority                               1.20%        2.20%      1.30%

  Non-minority                           1.20%        2.20%      1.30%

  Female                                 1.70%        2.70%      2.20%

  Male                                   1.70%        2.70%      2.20%

                                                                 

  Winner Take All (Narrow Measure --                             
  table 17)                                                      

  Minority                               2.70%        2.77%      3.94%

  Non-minority                           1.29%        1.69%      1.67%

  Female                                 1.16%        1.27%      1.64%

  Male                                   1.26%        1.65%      1.64%

                                                                 

  Winner Take All (Broader Measure --                            
  table 18)                                                      

  Minority                               4.22%        4.76%      5.87%

  Non-Minority                           1.34%        1.76%      1.73%

  Female                                 2.80%        4.73%      3.29%

  Male                                   1.42%        1.77%      1.88%

                                                                 
  -------------------------------------- ------------ ---------- ---------

Table II.2

Standard Errors Associated with Selected Estimated Averages

  ---------------------------------- -------------- ---------- ----------
  Estimate                           Standard                  
                                     Deviations                

                                     All Broadcast  TV         Radio

  Average parties per application                              

  all apps                           0.17           0.38       0.14

  When at least one party is:                                  

  Minority                           0.63           1.26       0.58

  White                              0.17           0.40       0.14

  Male                               0.17           0.39       0.14

  Female                             0.28           0.59       0.24

                                                               

  Average parties per winning app                              

  Overall                            0.38           0.96       0.28

  When at least one party is:                                  

  Minority                           1.33           2.50       1.03

  White                              0.40           0.99       0.30

  Male                               0.41           1.01       0.30

  Female                             0.60           1.32       0.47

                                                               

  Average apps per hearing                                     

  Overall                            0.13           0.24       0.16

  When at least one party is:                                  

  Minority                           0.28           0.42       0.38

  White                              0.13           0.25       0.16

  Male                               0.13           0.25       0.16

  Female                             0.15           0.28       0.18
  ---------------------------------- -------------- ---------- ----------

Consider some examples how uncertainty impacts the interpretation of the
estimates in this report. Consider the (unweighted) relative win rate
for whites, 37%, and minorities, 36.9%. The standard deviation
associated with the measure for whites is .76%, a very small standard
deviation. The standard deviation associated with the corresponding
estimate of the minority win rate is a larger 2.11%. This implies that
we can be 95% sure that the true population relative win rate for whites
falls in the range (35.48%, 38.52%). The corresponding range for
minorities is (32.68%, 41.12%). The measure for minorities is less
precise because there are fewer minority parties in our sample.

Note that there exists significant overlap between the two 95%
confidence intervals stated in the above example. This implies that we
can not reject the hypothesis that the two true population relative win
rates (the one for whites and the one for minorities) are equal to each
other. In fact, this in ability to reject the hypothesis of equality
applies to a significant percentage of all the "win rates" stated in
this memo.

Consider the example of the winner take all relative win rate, for all
broadcast hearings, with the broader definition of availability. Using
the statistics in Table 18, the win rate for whites is 30%, with a
standard deviation of 1.29% (see Table II.1) and the win rate for
minorities is 21%, with a 2.8% standard deviation. This implies that we
can be 95% certain that the true population value for whites falls in
the range (27.42%, 32.58%) and the true population for minorities falls
in the range (18.42%, 26.6%). Note that these confidence intervals do
not overlap. Hence, we can assert, with 95% confidence, that the true
population values for these two statistics are not equal. Using the same
methodology one can show that there is a statistically significant
difference between the win rate for men and women for the same specified
win rate formula.

[^1]: After comparative hearings, the FCC used auctions to award
    licenses. The first auction took place in 1999.

[^2]: While the FCC's Request for Proposal focused on utilization, and
    participation, we also measure disparity. We define utilization
    differently than it is defined in the FCC's RFP. The RFP describes
    utilization as the percentage of wins for each racial group, e.g.
    wins for group divided by the number of participants for group.
    While we make this calculation, we refer to it as a win rate rather
    than utilization rate. The standard literature on utilization refers
    to a utilization rate as the percentage of licenses won by each
    racial group. E.g. total wins for each group divided by total awards
    (for all groups combined). Participation (or availability) refers to
    the percentage of total availability that is comprised of each
    racial group. Disparity is a measure of utilization relative to
    availability. Typically in the literature on disparity studies, if
    the disparity ratio is substantively less than 1, say .8, then it is
    not unreasonable to suspect the possibility that discrimination may
    be present.

[^3]: There are two companion pieces to this study that were prepared by
    KPMG. The first is "History of the Broadcast License Application
    Process". This report describes the license application and award
    process in great detail. The second companion study prepared by
    KPMG, "Logistic Regression Models of the Broadcast License Award
    Process for Licenses Awarded by the FCC", presents models of the
    license award process that attempt to determine how race, gender and
    other factors influenced the allocation of licenses awarded by the
    FCC.

[^4]: This section is an abbreviated discussion. More detail is provided
    in the KPMG report, "History of the Broadcast License Application
    Process".

[^5]: Communications Act of 1934, ch. 652, 48 Stat. 1064, 73rd Cong., 2d
    Sess. (1934) codified as amended at 47 U.S.C. §151 et seq. (1937).

[^6]: Lawmakers anticipated the possibility that disputes might arise in
    the process of awarding broadcast licenses. Section 309 (a) of the
    Act grants authority to the FCC to assign any dispute over a license
    to a judicial hearing: If upon examination of any application for a
    station license or for the renewal or modification of a station
    license the Commission shall determine that public interest,
    convenience, or necessity would be served by the granting thereof,
    it shall authorize the issuance, renewal, or modification thereof in
    accordance with said finding. In the event the Commission upon
    examination of any such application does not reach such a decision
    with respect thereto, it shall notify the applicant thereof, shall
    fix and give notice of a time and place for the hearing thereon, and
    shall afford such applicant an opportunity to be heard under such
    rules and regulations as it may prescribe.

[^7]: See Omnibus Budget Reconciliation Act of 1993. Pursuant to this
    Act, the FCC received the authority to conduct auctions. Also note
    that competitive bidding was not required for broadcast license
    awards in which only one applicant expressed interest.

[^8]: The FCC also requested an analysis of the period before minority
    preferences were in place. However, the cost of acquiring the
    necessary data prior to the minority and female preference period
    would have been prohibitive. KPMG examined the records in the FCC
    archives and determined that there was insufficient data on race of
    applicant. Therefore, analysis of this period would require KPMG to
    locate and survey license applicants using contact (name and address
    information) that was 20 or more years old. Based on a pilot survey
    of secondary market participants who sold a broadcast station
    between 1993 and 1999, KPMG estimated that only a 3.2 percent
    response rate could be achieved. Based on this experience and due to
    the fact that these contact information were approximately 20 years
    old, it was highly unlikely that KPMG would have been able to
    collect sufficient data for the pre-preference period; therefore
    this part of the study was terminated.

[^9]: While financial information was not necessary for the construction
    of success ratios for groups in attaining broadcast licenses
    (utilization ratios), it was necessary for developing a regression
    model of the award process based on the factors and policies
    identified by the FCC as important to the award of a broadcast
    license. Although the selection of these time periods was guided by
    the requirements of the regression model, these periods are also
    useful for the construction of utilization ratios. Both of these
    time periods encompass the period when minority preference policies
    were used by the FCC in the award of broadcast licenses.

[^10]: The data collected for the development of the utilization ratios
    was limited to a few key items. A more comprehensive data collection
    was performed for a subset of these hearings for the regression
    model.

[^11]: While we use the words participation and availability almost
    interchangeably in this document, there is a distinction.
    Participation refers to the people who have actually participated in
    the comparative hearing process. While we use this as a measure of
    availability, we should also point out that this measure could be
    biased downward if discrimination was responsible for inhibiting
    participation. More information on this issue is provided in section
    IV, "Definition of Win Rates, Availability ....".

[^12]: While we have included a population weighted measure here, there
    are many other factors that we should control for. KPMG's companion
    report performs this more rigorous analysis.

[^13]: 488 U.S. 469, 109 S.Ct. 706; City of Richmond v. J.A. Croson
    Company (1989) U.S. Supreme Court

[^14]: The disparity measure that we calculate is widely used by state
    and local governments when calculating disparity in the award of
    public contracts. This measure is not necessarily the best measure
    for the purpose of measuring disparity in the award of licenses,
    which unlike recurring public contracts, are only awarded on a
    one-time basis. Our preferred measure is the relative award rate
    that is presented in Table 13.

[^15]: Without collecting data from the period before preferences were
    in place, it is not apparent how much additional minority and female
    participation has resulted from the FCC's stated policy of providing
    credit for minority and female participation in applications.
    However, it has been established that ownership of broadcast
    licenses was as low as 10 out of 7,500 radio stations and none of
    the more than 1,000 television stations held in 1971 (see TV 9 Inc.
    v. FCC, 161 U.S. App. D.C. 349, 347, n. 28, 495 F.2d 929, 937 n. 28
    (1973)).

[^16]: We define a hearing as consisting of two or more applications. We
    define each application as consisting of one or more parties. For
    our purposes the word "party" and the word "individual" are
    synonymous.

[^17]: It is assumed that the discrepancy between total minority
    reported and the sum of the finer reporting level (by race) is
    equally distributed across the race categories.

[^18]: Place and County Subdivision Population Estimates,
    http://www.census.gov/population/www/estimates/citypop.html

[^19]: See footnote 8

[^20]: Participation, in this instance, is simply defined as the
    presence of at least 1 party of that demographic group in an
    application.

[^21]: See Cochran, William G., [Sampling Techniques]{.underline}, New
    York: John Wiley & Sons, Inc., 1977 page 164, formula 6.44 for the
    estimate, and formula 6.45 for the variance of the estimate.