H I S T O R I C A L   S T U D Y   O F


Market Entry Barriers, Discrimination and
Changes in Broadcast and Wireless Licensing


1 9 5 0   T O   P R E S E N T





Prepared for
The Office of General Counsel
Federal Communications Commission
by
Ivy Planning Group LLC
Rockville, Maryland

?

DECEMBER  2000


TABLE OF CONTENTS
Page

I.	EXECUTIVE SUMMARY	1
A.  Overview	1
B.	Summary of Key Findings	2
C.  Key Conclusions	3
II.	INTRODUCTION	5
A.	Purpose, Statutory Authority and Legal Basis	5
B. 	Historical Snapshot	7
III.	METHODOLOGY	9
IV.	FINDINGS	11
A.  Overview	11
1.  Broadcasting	12
2.  Wireless	16
B. Market Entry Barriers and Other Experiences	17
1.	Discrimination in Lending and Limited Access to Capital	17
2.	Discrimination in the Community As a Market Entry Barrier	50
3.	Discrimination in the Industry as a Market Entry Barrier	52
4.	Discrimination in Advertising	58
5.  	Effect of Deregulation and Consolidation	68
(a) Impact Upon Licensees	70
(b) Impact Upon the Public	78
6.	FCC  Actions/ Inaction and Discriminatory Effects	84
(a)	The FCC Does a Tough Job Well	89
(b)	FCC Inaction When Confronting Private Discrimination	91
(c)	Policies and Processes	96
(d)	Staff Responsiveness and Impact of Bureaucracy	97
(e)	Equal Employment Opportunity	99
(f)	Distress Sales	101
(g)	Comparative Hearings	102
(h)	Repeal of the Tax Certificate	106
(i)	Auctions	108
(j)	Interactive Video and Data Services (IVDS)	112
(k)	Abuse of the System	115
(l)	Inferior Licenses	116
(m)	Decision-Making and the Role of Key Market Participants	118
(n)	Ineffective or Unaffordable Advocacy	121
7.	Education, Training and Experience	123
8.	Perceived FCC Climate	124
V.	IMPLICATIONS OF THE FINDINGS	126
A.	Capital and Markets are the Drivers	126
B.	Absence of Critical Mass	126
C.	The Role of the FCC and Congress	126
D.	Discrimination	128
E.	Bidding Credits in Wireless Licensing	128
F.	Relaxation of Ownership Caps	129
G.	Loss of Community Service and Diversity of Viewpoints	129
H.	Potential Loss of Civic Participation, Democratic Values and Freedom of Speech	129
I.	The FCC is the Public Trustee of the Broadcast and Wireless Spectrum	130
VI.	CONCLUSION	132

APPENDICES

APPENDIX A - HISTORICAL TIMELINE	135
APPENDIX B - INTERVIEW GUIDE	152
APPENDIX C - DEMOGRAPHIC BREAKDOWN OF INTERVIEWEES	158
APPENDIX D - LIST OF INTERVIEWEES	160
APPENDIX E  IVY PLANNING GROUP PROFILE	168


I.	EXECUTIVE SUMMARY

A.  Overview

As part of the Federal Communications Commissions mandate to identify and eliminate market 
entry barriers for small businesses under Section 257 of the Telecommunications Act of 1996 
(hereafter referred to as 1996 Act), and its mandate to further opportunities in the allocation of 
spectrum-based services for small businesses and businesses owned by women and minorities 
under Section 309(j) of the Communications Act of 1934, the Commission commissioned Ivy 
Planning Group, LLC  to conduct this historical study of barriers to entry into broadcast and 
wireless licensing experienced by small, minority- and women-owned businesses from 1950 to 
the present.  This study is the first FCC-sponsored historical, anecdotal, qualitative review of the 
subject.

Other statistical or quantitative studies have focused on this subject matter and have often 
revealed similar findings.   However, this study offers different insights - the stories - of African-
Americans, Hispanics, Native Americans, Asian Americans, and Caucasians who have 
encountered market entry barriers.  It is important to hear from real people about their 
experiences in order to create context and meaning for the data that is provided from other 
sources.

This study was designed to put a face on and give a voice to the process of obtaining a broadcast 
or wireless license.  By creating a venue for these voices, the study allows people to say what 
their experiences were.  Each participant provided his or her story independently.  Some stories 
were fragmented and less coherent, while others were articulated clearly and concisely.  While 
the stories vary by year, length, race, gender, circumstance, and narrator, their respective voices 
provide distinctive yet recurring themes on identifiable market entry barriers.  In every case, the 
stories provide qualitative clarity and specificity to understand the process of obtaining a 
broadcast or wireless license from 1950 to the present. 

Ivy conducted individual telephone interviews with 120 key persons representing small, 
minority- and women-owned businesses that attempted (successfully or not) to acquire, sell or 
transfer a license during the years 1950  present, and 30 telephone interviews with key market 
participants (e.g., media brokers, lenders, attorneys, industry leaders, and/or FCC officials).  The 
findings indicate that there are unique and significant barriers to entry for small, minority- and 
women-owned businesses.  

B. Summary of Key Findings

Regardless of the tone and tenor of the many voices of this study, a troubling story line resonates 
among the interview stories that span a half-century.  Women and minorities faced pervasive 
discrimination, as well as small business market entry barriers, particularly in the fifties and 
sixties.  The FCC attempted to ameliorate that discrimination in the seventies, eighties and early 
nineties through the tax certificate, distress sales, comparative merit, and lottery preferences.  

Minorities and women made modest gains in broadcast ownership during this period, amidst 
persistent capital market discrimination and other small business market entry barriers.  
However, those gains were essentially reversed, in 1995, by both Congresss elimination of the 
tax certificate program and the Supreme Courts decision in Adarand, which made it 
significantly more difficult for race-specific rules and policies to be implemented by the FCC.  
The deregulation and the lifting of the ownership caps under the Telecommunications Act of 
1996 made these barriers nearly insurmountable for small, minority- and women-owned 
businesses attempting to thrive or even enter the broadcast industry.  

The FCCs and Congress actions or inaction on particular regulatory or market issues have 
exacerbated those barriers.  These actions and inaction include: the uneven enforcement of EEO 
policy; under utilized distress sales/license renewals; repeal of the tax certificate program; 
permitting use by non-minority men of minority and female fronts during the comparative 
hearing process; the lifting of the ownership caps; and minimal small business advocacy before 
the FCC.  

Today small firms face barriers erected by deregulation and consolidation in both wireless and 
broadcast.  Minorities and women confront those same barriers; and yet those obstacles stand 
high atop a persistent legacy of discrimination in the capital markets, industry, advertising, and 
community--and prior FCC policies, which worsened the effects of discrimination.

Based on those interviews, the findings revealed several factors that impeded and/or precluded 
small, minority-and women-owned businesses from entering, successfully competing and 
surviving in the broadcast and wireless industries including:  

? Discrimination in the capital markets causing limited access to debt and equity capital 
that would be adequate and affordable for minority-and women-owned businesses;

? Discrimination from the advertising industry against minority-owned and formatted 
stations; exclusion of minority and women-owned businesses from the powerful network 
of information, deals and deal makers; 

? Market deregulation and consolidation caused by the 1996 Act; 

? Lack of industry experience for women and minorities due to few employment 
opportunities offered by majority broadcasters and the failure of the FCC to enforce EEO 
rules; 

? Fractured or a lack of advocacy of small, minority- and women-owned communications 
businesses before the FCC, the courts and Congress; 

? Misuse of minority and gender ownership programs by non-minority firms to the 
disadvantage of female and minority ownership; 

? Congressional laws, court rulings, and FCC rules, regulations and policies, which have 
operated to the detriment of small, minority- and women-owned businesses. 

C.  Key Conclusions

Based on the shared experiences and perspectives of the study participants, Ivy has formed nine 
key conclusions concerning past, present and prospective market entry barriers: 

(1) Access to the capital markets is critical to the success of small, minority- and women-
owned businesses; 
(2) There is an absence of a necessary critical mass of small, minority- and women-
owned businesses in broadcast and wireless ownership; 
(3) Congress and the FCC erected and heightened market entry barriers inhibiting the 
establishment, growth and development of small, minority- and women-owned 
businesses; 
(4) Discrimination played an important role as an entry barrier, especially with respect to 
minority participation in broadcasting; 
(5) Bidding credits designed to increase the opportunities for participation in wireless 
auctions by small, minority- and women-owned businesses were ineffective and 
unsuccessful; 
(6) The relaxation of ownership caps has significantly decreased the number of small, 
women- and minority-owned businesses in this industry; 
(7) The declining participation of small, women- and minority-owned businesses in this 
industry has resulted in diminished community service and diversity of viewpoints; 
(8) The declining participation of small, women- and minority-owned businesses in this 
industry has also resulted in a loss of civic participation, democratic values and 
freedom of speech; and, 
(9) The FCC often failed in its role of public trustee of the broadcast and wireless 
spectrum by not properly taking into account the effect of its programs on small, 
minority- and women-owned businesses.

A single question may be heard amidst the many stories, recommendations, commendations, 
complaints, and perspectives offered: whose spectrum is it anyway?  In answering the question, 
the interviewees consistently responded that spectrum is a public good to be managed by the 
FCC in the public interest.  While interview subjects believe that maximizing auction revenue for 
the public purse is important, it is equally in the public interest to promote ownership diversity, 
preserve viewpoint diversity, and eliminate market entry barriers.

II. INTRODUCTION


A.	Purpose, Statutory Authority and Legal Basis

The purpose of this study is to provide a historical perspective on what market entry barriers, if 
any, small, minority- and women-owned businesses have faced in the acquisition, sale or transfer 
of FCC broadcast and wireless licenses. The study was designed to assist the FCC in 
implementing Section 257 of the Telecommunications Act of 1996, 47 U.S.C. 257 , which 
mandates that the FCC identify and eliminate market entry barriers for small telecommunications 
businesses, and Section 309(j) of the Communications Act of 1934, which requires the FCC to 
further opportunities in the allocation of spectrum-based services for small businesses and 
businesses owned by women and minorities.   

In addition, this study will assist the Commission in determining whether there is any evidence 
of discrimination that may establish a compelling governmental interest under Adarand v. Pena, 
515 U.S. 200 (1995).

In Adarand 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.  In order to demonstrate 
such an interest, the government cannot rely on general societal discrimination.  City of 
Richmond v. J.A. Croson Co., 488 U.S. 469, 509 (1989).  Instead, the government must establish 
that it is remedying either its own discrimination, or discrimination in the private sector in which 
the government has become a passive participant.  Croson, 488 U.S. at 504. 

Furthermore, the study was designed, inter alia, to assist the Commission in determining whether 
the FCC is or has been a passive participant to discrimination in the private market.  
Accordingly, the study will help determine whether there is the factual predicate and legal 
premise to adopt programs encouraging women and minority ownership of FCC licenses.  
Moreover, the study will enable the Commission to gather anecdotal evidence of discrimination, 
if any, faced by small, minority- or women-owned communications businesses.  

Section 257(a) of the 1996 Act, requires the Commission to complete a proceeding for the 
purpose of identifying and eliminating market entry barriers for entrepreneurs and other small 
businesses in telecommunications and information services.  To meet this mandate, the 
Commission initiated an omnibus Section 257 proceeding by adopting a notice of inquiry to 
identify and eliminate barriers for small businesses. See Market Entry Barriers Notice of Inquiry, 
11 FCC Rcd 6280 (1996)(NOI).   In this NOI, the Commission requested comments on, among 
other things, whether minority- and women-owned businesses encounter unique obstacles in 
the telecommunications market, and determined that discrimination could be a market entry 
barrier.   Following the NOI, the Commission released a Section 257 Report regarding the 
agencys implementation of Section 257,  wherein the Commission identified several obstacles 
that small businesses encounter, including access to capital, access to Commission decision 
makers, access to information, and Commission procedure.    The report also addressed the 
Commissions commitment to identify and remove market barriers experienced by women or 
minorities, but determined that the agency would have to fully evaluate the record to ensure 
compliance with constitutional requirements before the agency could take any action. The FCC, 
then, commenced a comprehensive examination, a series of market entry barrier studies, to 
further examine the participation of small businesses, including those owned by women and 
minorities in the provision of telecommunications services and the impact of the Commission's 
policies on access to the telecommunications industry.  

In rare cases, anecdotal evidence alone may be sufficient to constitute a compelling 
governmental interest.  See Wessmann v. Gittens, 160 F.3d 790, 801 (1st Cir. 1998)(anecdotal 
evidence alone can establish institutional discrimination that could serve as basis for race-
conscious action.only in the most exceptional circumstances.); Engineering Contractors 
Association, 122 F.3d 895, 925 (11th Cir. 1997)(anecdotal evidence standing alone in rare cases 
will suffice); Coral Constr. Co. v. King County, 941 F.2d 910, 919 (9th Cir. 1991).  In any event, 
the Supreme Court has recognized that anecdotal evidence of discrimination is important because 
it can bring the cold numbers convincingly to life.  International Brotherhood of Teamsters v. 
United States, 431 U.S. 324, 339 (1977).

Accordingly, this qualitative, anecdotal study is part of the Commissions comprehensive 
examination regarding market entry barriers and was commenced in conjunction with several 
statistical studies  and is designed to complement, illuminate and reinforce the findings of those 
quantitative studies. 
 B. 	Historical Snapshot

The Communications Act of 1934 created the Federal Communications Commission and 
provided the means and purpose of allocating frequency along the radio spectrum.  While the 
mission of the Agency has generally remained the same, the FCC has used several different 
means of spectrum allocation.

From 1950 until 1993 the FCC awarded licenses to mutually exclusive competing broadcast 
applications through comparative hearings.  If only one applicant applied, a singleton, the FCC 
awarded the license to that applicant without a hearing, provided the applicant met minimum 
requirements.  The FCC began distributing wireless licenses by lotteries in 1982.  Since 1993, 
the FCC allocates wireless licenses, for commercial use, solely by means of auction.  Starting in 
1999, broadcast licenses have also been awarded solely through auctions.

In addition to being awarded a license directly by the FCC, an active secondary market for 
licenses exists wherein they are bought and sold independent of the FCC.  Except for requiring 
FCC approval, the Commission is not generally involved in these transactions.

 At varying times and through varying means (see Statutory, Regulatory and Historical Timeline 
at Appendix A), ownership programs have been made available to small, minority- and women-
owned businesses to provide increased opportunities for them to participate in both broadcast 
and wireless license ownership. For licenses obtained from the FCC, various ownership 
programs have enhanced the comparative hearing, lottery and auction processes.  In the 
secondary market, tax certificates and distress sales have been implemented as opportunity-
creating mechanisms for small, minority and women licensees.

For essentially the first half of the 20th century, the broadcast industry was dominated by White 
males.  Most stations were owned by large corporations such as CBS and NBC and had been 
awarded by the government at no cost to the licensee.  The advantages and opportunities created 
by the initial award process provide the foundation for todays telecommunication industry.  

There was virtually nothing like todays ethnic programming on the air.  As late as 1943, radio 
still upheld its longstanding policy that African-Americans, in contrast to Whites, would not be 
referred to as Mr., Mrs., or Miss on any commercial network show.  Furthermore, African-
Americans were portrayed on the air as servants or as comical or ignorant characters. 


Against this backdrop, the following list of firsts is offered.  

? In 1922, Marie Zimmerman became the first White woman to own a radio license. 

? In 1947, station WDIA-AM in Memphis, Tennessee, became the first radio station to 
devote all its air time to Black programs. 

? It was not until 1949, when Jesse B. Blayton purchased WERD in the secondary market 
in Atlanta, that the industry had its first Black radio station owner. 

? In 1960, Andrew Langston, a Black man, started his more than 13-year process of 
acquiring a radio broadcast license from the FCC through a comparative hearing.  It was 
the first time that an African-American had filed an application with the FCC.  Mr. 
Langston was finally awarded his license in 1974.

? In 1973, the FCC issued a construction permit to WGPR-TV (UHF) in Detroit, the first 
Black owned television station. 

? The first Hispanic station opened in the middle 1950s.  The record of ownership is 
uncertain; the station operated in the southwestern section of the United States, in either 
Texas or New Mexico. 

? In 1989, after four years in a comparative hearing, Dorothy Brunson became the first 
African-American woman to own a television station.


III. METHODOLOGY


Ivy Planning Group, LLC conducted 150 telephone interviews during a four-month period.  The 
study analyzes these interviews, 123 of which were with key persons  representing small, 
minority- and women-owned businesses that attempted to acquire, sell or transfer a license 
during the years 1950 to present, irrespective of success; and 27 of which were with key market 
participants  active in the broadcast and/or wireless markets during the same time frame.  

We selected a total of 150 interviewees to enable us to talk to a meaningful cross-section of 
participants in the licensing process from 1950 to present.  (See Appendix C for a chart 
highlighting the demographic breakdown of the interviewees).

Using a knowledge of the market and random sampling, a list of interviewees was compiled 
relying upon various sources.   Approximately half of the interviewees who were licensees were 
selected based on their role and significance in the industry.  The balance of the licensees and 
unsuccessful applicants were selected at random from the information sources available to us.  

As we compiled the list of interviewees, we made every effort to ensure representation by year, 
method of license acquisition, type of license, type of FCC acquisition rules, race/ethnicity, 
gender, and size of business.  We acquired some of this information through the aforementioned 
data sources; our initial conversations with prospective interviewees provided us with the 
remainder.  

The list of key market participants was comprised of a sample of people who are known to have 
had a significant role in the industry and those participants whose names arose during the 
interview process.  Key market participants and current licensees identified earlier generations of 
licensees and applicants. 

As a further part of the study, Ivy  developed a timeline of key statutory, regulatory and 
historical developments which have affected the efforts of small, minority- or women-owned 
businesses to obtain licenses in both the primary and secondary markets.  The timeline includes 
rules, policies, court cases, and statutory regulations that impacted comparative hearings, 
lotteries, auctions, bidding credits, tax certificates, and distress sales.  Further, the timeline 
includes the number of small, women and minority licensees for selected years between 1950 
and present, when available.  (The Historical Timeline is attached as Appendix A.)

The analysis of the interviews combined with the information contained in the historical timeline 
form the basis of this report.


IV.	FINDINGS


A.  Overview

The findings of this study may assist the FCC in fulfilling its statutory mandate regarding market 
entry barriers. Section 257 of the 1996 Act mandates that the Federal Communications 
Commission (FCC or the Commission) identify and eliminate market entry barriers for 
entrepreneurs and other small businesses in the provision and ownership of telecommunications 
services and information services, or in the provision of parts or services to providers of 
telecommunications services and information services. 

In carrying out the mandate, Section 257(b) states that the Commission shall seek to promote 
the policies and purposes of this Act favoring diversity of media voices, vigorous economic 
competition, technological advancement, and promotion of the public interest, convenience and 
necessity.  In addition, Section 309(j) of the Communications Act of 1934 requires the FCC to 
further economic opportunity for a wide variety of applicants, including businesses owned by 
members of minority groups and women.

The studys findings highlight significant barriers to entry for small businesses including 
minority- and women-owned businesses. The interviewees uniformly reported that the 
combination of these barriers has impeded and in many instances precluded these entities from 
entering, successfully competing and surviving in the broadcast and wireless industries.  
Interviewees specifically identified the following as market entry barriers.

? Discrimination in the capital markets causing limited access to adequate and affordable 
debt and equity capital for minority- and women-owned businesses; 
? Discrimination from the advertising industry against minority-formatted and -owned 
stations resulting in decreased opportunity for revenue generation, cash flow and access 
to capital;
? Exclusion of minority- and women-owned businesses from the powerful network of 
information, deals and deal makers thereby limiting access to license purchase 
opportunities and the capital to fund them; 
? Market deregulation and consolidation following the 1996 Act resulting in increased 
competition for national advertising dollars, inflated purchase prices for stations and a 
loss of diversity of voices and community focus;
? Lack of industry experience for women and minorities resulting from too few 
employment opportunities offered by majority broadcasters and the uneven enforcement 
by the  FCC of its EEO policies, thus rendering these groups ill-prepared to compete in a 
marketplace where industry experience and successful track records are critical elements 
for market entry and acquisition of capital; 

? Fractured or lack of advocacy by and on behalf of small, minority- and women-owned  
communications businesses before and within the FCC, the courts and Congress, thereby 
leaving the special needs of these licensees under-represented when new rules, policies 
and laws are proposed; 
? A series of FCC actions and inactions which have proven very costly for small, minority- 
and women-owned businesses, who could ill-afford the added financial burden, and have 
frequently had a discriminatory impact on these business owners, albeit purportedly 
unintentional; and
? Misuse of minority and gender ownership policies by majority firms, to the disadvantage 
of real minority and female ownership.

This study covers both broadcast and wireless licensing.  Background information on each is 
presented below to provide context for the discussion of the findings.


1.  Broadcasting

Small, minority- and women-owned broadcast licensees and those wanting to enter into 
broadcasting face significant barriers to entry and growth in todays market.  While there have 
always been challenges, and especially for women and minorities, the relaxation of ownership 
restrictions or caps by the 1996 Act has changed the landscape of broadcast properties because 
the statute allows a single entity to own, given the applicable market, a larger number of stations 
nationwide.

Historically, small broadcasters have served their local markets with a commitment to provide 
service to their respective geographic or demographic communities, gaining advertising revenue 
from both national and local businesses.  From 1950 until 1985, there was healthy competition 
among broadcast stations.  An individual or company could own only one AM, FM and 
television station in each market and a total of seven of each type nationally.   In stark contrast, 
today, an individual or company can own as many as 8 stations locally, based on the total 
number of stations in the local market; and there is no numerical limit in the national market but 
a limit on audience reach.  In earlier years when there were more stringent restrictions on 
broadcast ownership, small business owners were at least making a living.  Now it is 
significantly more difficult to do so.

While a number of interviewees had acquired their licenses through the FCCs comparative 
hearing process , most of the study participants had purchased their stations from previous 
license holders.  Many of those stations had inferior signals and were purchased out of 
bankruptcy, with the new owner, in his or her eagerness to own a station, sometimes taking on 
more debt than was prudent. 

Access to capital, on a timely basis and in quantities needed to acquire and grow their businesses, 
has always been a challenge for small broadcasting businesses.  Local banks often did not lend 
on broadcast properties because bankers did not understand the business of radio and television, 
saw the licenses as too risky (especially since they were not actually owned by the broadcaster 
and came up for renewal on a regular basis), and were unable and/or unwilling to collateralize 
their loans with the generally meager assets of the stations themselves. If broadcasters were able 
to get loans from conventional lenders, often other personal assets had to be pledged as 
collateral.  If one was lucky, the seller of the station was willing to take back a note for a portion 
of the purchase price.

The interviewees consistently reported that for minority and women licensees these market entry 
barriers have been compounded by the discrimination they have encountered in the capital 
markets, in the broadcasting industry itself, in the advertising industry, in the lack of 
employment opportunities, and as a result of various actions and inaction on the part of the FCC 
and Congress.

The 1996 Act has heightened these barriers to the point where it appears that it is almost 
impossible for small, minority- and women-owned businesses to enter the broadcast industry. 
Broadcast ownership is now determined by Wall Street stock instead of Main Street money.  
With the lifting of the ownership caps, there has been consolidation of ownership, primarily in 
radio, by large publicly-traded companies, driving prices up and smaller, independent owners 
out.  Where stations used to sell for between seven and twelve times projected cash flow, prices 
have now been inflated to 20-22 times cash flow.  Without significant equity capital, either from 
personal funds or outside investors, it is virtually impossible for individuals and non-public 
companies to acquire stations in todays market. 

The consolidation of stations precipitated by the deregulatory provisions of the 1996 Act has also 
consolidated advertising revenues in the hands of the large broadcast group owners, significantly 
limiting the ability of smaller broadcasters to earn the money necessary to successfully compete 
and survive in the business.  As a result, smaller station owners, many of whom are minorities, 
are being presented with two choices:  (1) to continue to operate their stations at personal 
financial risk, which many have done because of their deep commitment to serve and be a voice 
for their communities, or (2) to sell their stations, which others have done because they believe 
that it is going to be extremely difficult if not impossible to compete successfully against these 
large group owners in the future.

With the exit of local, minority radio station owners, consolidation is also having an impact on 
both the diversity of voices and service to the local communities.  With consolidation, the 
programming, both entertainment and public interest, has become more homogenized.  While 
group owners might have urban-formatted (Black) stations, for example, in particular markets, 
interviewees indicated that it is common for the news and community service programming 
provided by these stations to not be particularly geared towards the information needs of that 
specific Black community itself.  

Additionally, since news programming was often being produced centrally by the larger 
companies whose stations covered multiple markets, access by the audience to general local 
news and public service announcements was diminished.  Lastly, fewer opportunities exist for 
the voice of the minority population to be heard since some minority on-air personalities and 
other employees are being precluded by their employers from taking public stands on issues 
relative to their minority group.

These market entry barriers have been exacerbated by the FCCs action, or inaction, on certain 
regulatory or market issues. For example, they may include enforcement or unenforcement of 
EEO policy, distress sales/license renewals , use by non-minority men of minority and female 
fronts during the comparative hearing process , the lifting of the ownership caps, and minimal 
small business advocacy before the FCC. The actions and inactions of the FCC have been made 
worse with Congress repeal of the tax certificate program. 
And finally, the gains in station ownership that had been achieved by minorities in the latter 
1970s, 1980s  and early 1990s were essentially reversed by both Congresss elimination of the 
tax certificate program in 1995 and Adarand decision in 1995, discussed supra, which made it 
significantly more difficult for race-specific rules and policies to be implemented by the FCC.

Given the historical disadvantages faced by small, minority- and women-owned broadcasting 
businesses, the confluence of the repeal of tax certificates in 1995, the Adarand decision in 1995 
and the deregulation of the broadcast industry in 1996, it appears that it is nearly impossible for 
small, minority- and women-owned broadcasters to enter, survive and grow in the broadcast 
industry.


2.  Wireless

The barrier to entry in wireless licensing is primarily one of capital.  With the passing by 
Congress of the Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-66, 107 Stat. 388 
(1993) (codified, in pertinent part, at 47 U.S.C. 390(j) (1994)), the FCC was given the authority 
to distribute licenses through a competitive bidding process, or auction. With the enactment of 
Section 309(j) of the Communications Act, successful license applicants have to pay the FCC for 
the issuance of wireless licenses whereas before they were issued at no charge to the licensee.   

The financial burden of now having to pay for licenses coupled with 1) the enormous sums of 
capital needed to build out wireless systems and 2) limited access to capital, has severely 
disadvantaged small, minority- and women-owned businesses in the acquisition of wireless 
licenses.

Furthermore, the elimination of auction ownership programs for women and members of 
minority groups as a result of the Adarand case, has caused access to outside equity investors and 
vendor financing for equipment to practically disappear.

A more detailed discussion of these barriers in both broadcast and wireless licensing is presented 
below.


B. Market Entry Barriers and Other Experiences 

Through the years covered by this study, small, minority- and women-owned businesses in both 
broadcasting and wireless telecommunications encountered multiple market entry barriers.  They 
were erected by discrimination in the capital markets, in communities, in the advertising 
industry, and in the competitive marketplace; by the effects of deregulation and market 
consolidation precipitated by the 1996 Act; and by various actions and inaction on the part of the 
FCC, the courts and Congress.  It is important to note that while essentially all small businesses 
were negatively affected by these barriers, those businesses owned by women and especially 
those owned by minorities reported the greatest negative impact.


1. Discrimination in Lending and Limited Access to Capital

? Access to Capital is Key

. . . (O)ur number one criteria  is can they pay for it at the closing and will they pay the 
most.  And that kind of supersedes everything.  (Brian Cobb, media broker - BCobb512, 
p. 13)

Access to capital was clearly the most common and pervasive barrier to entry cited by 
participants in our study, both among licensees, as well as by most every key market participant 
(broker, lender, other intermediaries). In a market where access to capital is a critical component 
for entry and growth, lack thereof basically puts you out of the game.  Acquiring money for start-
up ventures is difficult enough.  If one is a woman or minority, the difficulties in acquiring 
capital, as the female and minority study participants told us, were exacerbated by discrimination 
on behalf of the various lending sources and intermediaries.  


? Access to Capital as an Obstacle for Small Business

Capital affects everything. The more cash-strapped a company is, the less it is able to invest in 
those things that help it grow and keep it viable.  These things include attracting and retaining 
top personnel; operating out of comfortable, efficient facilities; upgrading to and maintaining 
state-of-the-art equipment; retaining attorneys to ensure information flow and advocacy;  
promoting the business to listeners/customers and advertisers; and acquiring additional licenses 
to improve competitive advantage.

Access to capital is limited by lending sources lack of understanding of the broadcast and 
wireless businesses and their operations; by requirements for collateral in excess of operating 
cash flow; by increased cost of capital due to consolidation; by exclusion from information and 
deal-makers networks; and by advertising agencies and advertisers practices.  

Discrimination based on education might even play a role in limiting access to capital.  As a 
previous NTIA report on capital market discrimination indicated, at least in the pre-market 
consolidation era, the fact that minorities who acquired capital were better educated than 
similarly situated non-minorities may be indicative of discrimination.  The study found that 
education was more important for minorities acquiring capital than even the track record of the 
business for which the financing was sought.

Erskine Faush, a Black television station owner who acquired his license in 1989, puts it 
succinctly.

(I)ts always capital.  Now you know, we can theorize and rationalize all of this.  But 
when it comes right down to it, its the lack of resources. (W)hen you have a company 
with mega bucks, many of them being [publicly] traded, who have ready access to deals 
in the marketplace, even to make improvements, to do all of those things necessary to 
grow, to fertilize it if you please, without those resources just how do you make it a level 
playing field? (EFaush238, p. 15)

Mr. Faush goes on to say that hes not necessarily looking for a hand out but rather a reasonable 
foundation on which to compete fairly.

. . . (I)ts that access to capital.  Its that barrier.  And, you know, youre not necessarily 
looking for preferential treatment  and, yet, I could make a strong case to justify some 
[of it] because of past practices in the marketplace.  I could make a strong case for that, 
but I wont do that.   What I will say is this, that once you remove the barrier thats there, 
without help you cannot move, and thats the one of capital, you know, everything else  
once you do that, give me the wheels to put on my chariot -- do you understand what I 
mean  Ill drive it.  Ill run it.  

I dont mind getting in the race with anybody else at any other level and let it be on 
initiative, your drive, and all those things that you ought to have to be a good, viable 
business enterprise, you know.  You dont have to do that.  You dont have to go out and 
get the business for me.  Ill go get it.  Do you understand what Im saying?  (B)ut the one 
thing I cant get over is the fact that Im starting at the starting gate and Im expected to 
 make the chariot go and there are no wheels on it.  Give me some wheels and Ill get 
at the race line with everybody else and line up, and lets see who can run to the finish 
line.  (EFaush238, p. 26)


Similarly, Ernest James, an African American former licensee (who purchased his station in 
1985 and subsequently lost it in bankruptcy proceedings) makes these comments.

I had done all of the things that you need to do. I had done the engineering to ensure that 
the property that I needed would meet FCC requirements. But I failed, and the reason 
that I failed had nothing to do with my ability, proven by the fact that I am very 
successful running [seven stations for Clear Channel], and the stations that I run are not 
all urban formatted stations. . . (S)o my point is that it wasnt a matter of skill, it was a 
matter of access to capital.  (EJames268, p. 9)


? SBA Programs Do Not Ease Access to Capital

During various years, when the opinion molder rule was not in effect,  the Small Business 
Administration (SBA) was able to lend money for the acquisition of broadcast properties. 
Several of our interviewees were able to finance their station purchases using the SBAs loan 
guarantee program.  For example, Joyce Banks, a Black female radio licensee, recalled that SBA 
was available to help finance her acquisition, but she only learned of its availability through a 
state government official.  As she states:

But still ... so what happened is in contacting, I believe he was a state senator at the time, 
Paul Simon whom I had worked with for years, had come across  or one of his staff 
persons, I believe  that the SBA had just made the decision to loan money to radio 
stations.  And so a bank whom we had done business with for years then decided that, 
okay, with that guarantee, they would be willing [to loan us the money].  (JBanks175, pp. 
7-9)

Even though the maximum loan amount for broadcasting properties that the SBA will guarantee 
has increased over the years to its current level of $750,000, that is too low an amount in todays 
marketplace, as Manny Davila, Hispanic radio broadcaster, told us.

[The] SBA, you know, will lend you $750,000.  Well, wow, thats fine.  That means I can 
go and buy [a station in a small town in] Texas, man. but I cant buy in San Antonio.  
But, yet, the banks, if you want to borrow a couple of mil or a mil or something, no, they 
dont want to lend you that.  They dont  no, if youre not borrowing $3 to 5 million or 
$10 million, they dont want to talk to you. (MDavila 128, p. 42)

Pluria Marshall, Jr., an African-American radio licensee, suggests that the upper limit on SBA 
loans should be increased gradually from $750,000 to $1.5 million to $2 million.  As he said, 
with only being able to get $750,000, basically you couldnt buy much of anything for that 
amount of money.  (PMarshall115, p. 1)

All small businesses face these obstacles.  Minority and women licensees reported that because 
of discrimination, they experienced increased disadvantage.


? Discrimination As an Obstacle to Capital for Minority- and Women-
Owned Businesses

While small businesses typically have more difficulty getting bank loans, the minorities we 
spoke with shared stories of even greater difficulty because of pervasive and often subtle 
discrimination.  Bob Carl Bailey, an African-American who acquired his radio station in 1977 
said:

(F)inancing broadcast facilities or any business if that [financing] was tied to the success 
of the business,  is difficult  (p)articularly if youre small and even more difficult if 
youre Black.  Next to impossible. (Bob Carl Bailey, African-American radio 
broadcaster) (BBailey167, pp. 3-4)

James E. Wolf, Jr., another Black radio station owner who acquired his license in 1983,  shared 
the irony of him finally becoming bankable as a result of the windfall he is reaping from the sale 
of his broadcasting business.  Furthermore, he makes reference to the bankers willingness to call 
him Mr. Wolf, an appellation of respect that was obviously lacking before.  

The color of the skin I am in is the problem.  It has been and still is.  Now Ill tell you, 
since Ive gotten this big, large contract on my desk [for the sale of my station], 
everybody  I had one banker [who I earlier had tried to get financing from] tell me,  and 
this is verbatim.  The kind of deal that youve got, Im going to have to start calling you 
Mr. Wolf. But now I can get anything I want.  But I dont need them, you know.  I can 
get anything I want now.  You know,  Ive had so much notoriety in this community 
and all of the servicing work that Ive done, any loan  it had should have been, All we 
require is your signature, Mr. Wolf.  Thats what it should have been.  Thats what it 
should have been. (JWolf281, pp. 21-22, 27)

Andrew Langston, the first African-American to seek a license directly from the FCC in 1960, 
financed his radio station purchase out of my piggy bank  because the bank wouldnt loan 
any money.  Mr. Langston had 12 businesses at the time he was seeking financing for his radio 
station [in 1974].  He had extensive experience and a track record as a successful businessman.  
And still he could not qualify for a bank loan.  He was essentially told by the banks to be his own 
lender.

There was one time I had twelve businesses. . . I borrowed money from [my in-laws] . . 
[Banks] wouldnt loan me any money, because they told me I didnt need no money.  And 
that was true, I didnt need any money, I needed to wake up and think.  Because here I 
had a transportation business.  I had a public relations business, a promotion business, 
had an insurance agency.  I had revenues coming in from that and I turned around and 
looked and said what the hell?  I can loan this money to the station.  Which I did.  
(ALangston112, pp. 1,12)

Mr. Wolf also talked about how even with his industry and community recognition and 
prominence he was still not able to prove his creditworthiness to the banks.

I just really  positioned myself  Ive won every award that you can think of from the 
cities, economic development awards, from the State of Tennessee.  (W)e tried 
unsuccessfully so many times [to raise capital]. . . . (T)hese are the pressures really that 
made me actually sell at this time, you know.  Its because I just got tired of begging 
people, even though you prove yourself over and over.  Im on the Chamber [of 
Commerces] Economic Development Board.  Ive won the pinnacle award of the 
Chamber of Commerce.  Ive won the small business award.  Ive won every large award, 
industry award, that you can win here, but Ive never proved myself to banks.  (JWolf281, 
pp. 20-21)

Some minority owners found that the banks were unwilling to lend them money, but the banks 
used the information that they received from the minority applicants against them.  For example, 
William Galloway, a Black male radio licensee, recalled the following story:

We could not borrow any money, and to this day, we dont need any money. Because they 
just would not lend money to a minority, and especially in the radio business, because 
they found that banks are not familiar with lending money to broadcast radio stations, 
and I live in Buford, South Carolina.  And theyre not going to lend me any money for 
this radio station. They will now.   I was told no on 3 or 4 occasions, but someone found 
out, I guess in the bank, from a friend, I guess, because I was approached. They offered 
me $85,000 for the radio station and I said, well, first of all, how did you know I was 
trying to borrow $50,000? That was supposed to be confidential. Evidently it was not. I 
live in a small town. Everyone knows everybodys business. And so I said, well, if its 
worth 85 to you, why isnt it worth 50 to the bank? And of course I said, well Im not 
gonna sell. And I refused to sell. And I do not need any money at this point. My radio 
stations free and clear. I do not owe anybody any money. And the only reason is, 
because its free and clear, and Im afraid to borrow any money. Because, I can borrow 
more than I can afford to pay back.  And, since I have refused to sell, the good way to get 
me is to lend me more than I can afford to pay back, and call the advertisers, who are 
their friends, and say, look, lets not advertise. We can get Galloways station.  So thats 
a way for them to get it from me without my agreeing to sell.  (WGalloway183, pp. 4-5)


? Prominence and Prior Business Success Is Not Enough

As in Mr. Wolfs case, many minorities we spoke with were prominent in their communities, 
often had other successful businesses, aligned themselves with other leading individuals as 
equity investors, and still had great difficulty receiving the financing they needed.  Often they 
had to approach several lending institutions before they succeeded, if at all.  

Notable among them is Percy Sutton, who in 1971 co-founded Inner City Broadcasting.  At the 
time, Mr. Sutton was Manhattan Borough President, principal owner of the Amsterdam News, a 
leading Black newspaper in New York, and an owner of a cable television company.  As his son, 
Pierre Sutton, President of Inner City and Chairman of the National Association of Black-Owned 
Broadcasters (NABOB), reports:

We didnt have access to capital, we didnt.  We had an opportunity to purchase but we 
were unable to find a bank that would back us in [1971].  In fact we went to some 30 
banks in New York looking for backing and this was to buy an AM daytime radio station 
in Harlem. . . . (W)e were fortunate in that one of our shareholders had saved the life of 
Bunny Berkley, who was then the [child of the] Chairman of the Board of Chemical 
Bank, and thats how we got additional financing.  But it was just dumb luck.  He [the 
shareholder] was a counselor at summer camp and he had saved the life of the [child] 
from drowning, saved the life of this mans child.  Its kind of extreme access. (PSutton, 
pp. 1-2) 

Mr. Suttons poignant story illustrates the extreme lengths to which minorities had to go to 
secure financing almost 30 years ago.  These barriers compare to those faced by minorities today 
as a result of: market consolidation, the lifting of the ownership caps, the repeal of the tax 
certificate program, the issuance of the Adarand decision, and the ending of FCC minority and 
women ownership policies (comparative merit, installment payments and bidding credits).

Greg Davis, a Black radio licensee, who also has 25 years of experience, had a more difficult 
experience:

As minorities we found it  I found it extremely difficult, and even with my 25 years in the 
business, and even proven record having been there for 12 or 15 years.  It was still very 
difficult to get conventional financing.  So we ended up having to do venture capitalist 
money and so forth.  So the cost of capital has always been a very strong deterrent for 
minorities participating in the broadcast industry, whether its wireless, cable, television, 
or radioI want that to be very clear, that its not only the accessibility, but its also the 
cost of doing business.  Its been extremely difficult for us to come ahead. (GDavis202, 
pp. 4-12)

Richard Weaver-Bey, an African-American who owns both a real estate company and his radio 
station, which he acquired in 1981, had put together a team of highly visible partners - three 
lawyers and a doctor.    and still the bank would not lend to us.  The bank said they were 
doing what they called asset lending, and they questioned whether or not the radio station had 
the ability to sustain or to repay the loan.  Ultimately the bank agreed to do the loan, but only 
if it would be guaranteed 90% by the SBA. (RWeaver-Bey171, p. 7)

Jeffrey Hutton, a White small radio station owner, had a markedly different experience with his 
bank.  While Mr. Sutton and Mr. Wolf, with their visibility in the community and record of 
business success, were deemed uncreditworthy, Mr. Hutton got his loan, two years later in 1983, 
based on the fact that he was an upstanding citizen of the community. The contrast is stunning.

I went down to the bank [in 1983] and got a loan, and they gave me a loan based on two 
criteria.  Number one, the collateral I was able to put on the table and number two, my 
personal credibility because I was employed as a vice president of a local hospital in 
town when I went to my bank.  And so as a result I was what they call an upstanding 
citizen of the community and you know, served on a United Way board and things like 
that so they were really, as I was told later on, they were loaning the money to Jeff 
Hutton because of Jeff Hutton not necessarily because they thought that this business 
venture was going to fly and make money.  

(F)or a period of time when banks were in trouble back in the 80's, they didnt want to 
loan money to radio stations because it was too speculative.  But Ive been fortunate, 
both of the banks I dealt with have done so because of me and they understand my work 
ethic and how I do things.  . .  . No, I never had problems with banks.  I mean every time 
Ive gone to the bank and asked them to do something theyve done it. (JHutton383, pp. 5, 
6, 7)


? The Administrative Cost of Capital  Extraordinary Efforts to  
Secure Loans

Several minority interviewees indicated that it took extraordinary efforts to get loans.  They were 
sometimes turned down by several banks; they may have been treated disrespectfully by bank 
officials; they may have been unsuccessful and had to finance by other means; often their loan 
agreements required different or more stringent terms; and their deals received more detailed 
scrutiny.  

Art Gilliam, a Black radio owner who after visiting 10-15 banks in 1977 was able to get his loan, 
nevertheless, considers his experience a fortunate one.

Well, we were very fortunate. (W)e went to really, I guess ten or fifteen banks, and most 
of them said no.  And many of them right off the bat without looking at our proposal, but 
we did have relationships with some of the banks and the one that had financed [us] 
initially indicated they would do it along with the minority bank which wed done a lot of 
business with in the interim. (AGilliam117, p. 11)

Hispanics have had similar experiences with banks to those of African-Americans, as Manuel 
Davila (Daddy D), a second-generation Hispanic radio station owner and on-air personality, 
shared.

[W]e went to several banks [over two decades, from 1974 to 1996] and they all turned us 
down. . . . The banks wont lend you money because [they believe with Mexicans] all you 
do is drink and you all beat your wives and you have a lot of kids and you all have tattoos 
and you wear gold chains. [We] couldnt get money. (MDavila128, p. 26)

James Wolf, Jr., an African-American broadcaster, tells us further that he  got turned down 
by every bank, every traditional institution.   We were redlined and I started to sue  redlined.  
And we had proven that there was nothing in our history that suggested that we were going to do 
anything other than [be] good stewards of the money we were loaned at the time.  I got rejected 
all the way up until 1996, 12 years later. (JWolf281, pp. 20-21)

Many minority interviewees had similar experiences of being turned down by several banks, and 
in some instances despite their efforts to comply with the banks requirements and suggestions.  
For example, Greg Davis, a Black radio licensee recounts:

I went to almost nine different banks in various parts of the country, and my story was 
pretty  Ill tell you straight to the point.  It was a very long, tedious process.  And 
initially I would go to the bank, and one of the banks would tell me your business plan 
isnt thorough enough.  And Id correct everything that they would tell me.  Id go to the 
next bank and the next bank would tell me that you dont have enough experience.  I 
would correct that  I would tell you that it was very, very difficult initially to raise the 
capital to invest in our companyIt took six years. I started in 1980. No, they never 
loaned me the money. Id go back and correct it and they would say, no, were just not 
interested for a lot of reasons.  So access to capital has been a tremendously difficult 
task, at least from my perspective, in trying to start a company(GDavis202, pp. 4-12)

Certain minorities had to take out home equity loans in order to finance the purchase of their 
communications property.  For example, Leodis Harris, a Black male radio licensee, recalled the 
following:

The only way I was able to do it was to go into my home equity. I had some small 
purchase price, but the balance of it I had to get from a home equity loan. Especially 
with a new owner having no broadcast history, it was just almost, well, it was impossible.  
I had some big plans when I purchased the station, market studies and kinds of proposals 
for sales and so on.  However, they were based on my being able to get a loan, a bank 
loan, I was trying to get a loan of I think $585,000 or something of that sort. But of 
course I ended up not being able to ever succeed in getting that loan. With the station 
not up and with me not being able to show any kind of history or any kind of prospect 
except my hopes and dreams, it was difficult and all the banks turned me down. 
(LHarris276, pp. 1-4)

Even though some minorities had access to some personal capital, this access did not preclude 
discriminatory treatment.  For instance, Nancy Waters, a black female radio licensee, recalled the 
following:

When I went looking for money, you know, all the local banks had turned me down.  That 
was back in 79.  It didn't matter that my husband had $200,000 in profit sharing at the 
local bank.  They said that I didn't know broadcasting, and I was way over my head. 
(NWaters178, p. 5)

Some banks have treated minority applicants as if they were unsophisticated borrowers, 
irrespective of their level of sophistication.  For instance, Joyce Banks, a Black female radio 
licensee, recalls that: 

[I]t was just very difficult to start the business with advertising being very tight.  The 
banks  we had no history of broadcast experience, and though a lot of the bankers 
knew me, they still knew me in a light that didnt have anything to do with the radio 
business.  So as we put together loan packages some of them were quite insulting.  We 
would come  my husband accompanied me  we would go to some of the banks, and 
they would look at you like you need to put together this or that or the other.  We knew 
what to put together.  And it would surprise them, and yet they would not consider it 
because we were asking for quite a bit of money.  Again, we were asking for six hundred 
and some thousand dollars for a start-up business, and they were not willing to take the 
chance.  Well, just because some of the conversations, and I sincerely mean, were 
insulting. Now, well, you dont need to  well, you do have to put a plan together; we 
cant take things brought in a shoe box.  You know, people will bring  Not even 
noticing that there was a bound book with a planned budget and all of that sitting right in 
front of them. . (JBanks175, pp. 7-9)

Jim Winston, Executive Director of the National Association of Black-Owned Broadcasters 
(NABOB), relayed the fact that minorities often experienced more stringent loan terms than their 
non-minority counterparts.

There was always the ongoing problem being a minority buyer, the terms were always 
stiffer.  If you could get a lending institution to talk to you, the terms they came up with 
were always stiffer, so that minority buyers often found themselves having to sign a 
personal guarantee to the bank when they borrowed money against the station.  So, 
essentially, they would take a security interest in all the assets of the station, and would 
still come to the borrower and say, I want a personal guarantee from you on top of that.  
There always seemed to be the stories of guys who were buying their second or third or 
fourth stations, who were still being required to do personal guarantees. And, nobody 
was seeing anybody elses bank loan documents. But there was this view that the 
restrictions were  that personal guarantees stayed with our guys longer.  (JWinston502, 
pp. 24-25)

Some minorities indicated that the banks over-scrutinized their transactions in comparison to 
their non-minority counterparts. Pluria Marshall, Jr., Black male radio licensee, shares his 
experience.

I know friends of mine that are in the business that are able to go in and get deals done, 
and if I come in with the same kinds of deals, my deals get scrutinized ten times tougher 
And Im a real small operator. So it doesnt really matter how good, how well you can 
function in the business, I mean it just doesnt matter. A Black mans gonna have 
problems and thats it.  (PMarshall115, pp. 9-10)


? Limited Access to Capital:  Banks Dont Understand Broadcasting

Several interviewees observed that yet another obstacle to the access of capital is that banks 
simply do not understand the broadcasting business and are, therefore, reluctant to loan money to 
loan applicants attempting to start a broadcast business.  Bud Price, a White male radio licensee, 
recalls the following:

There were two banks in town.  One bank we filled the application out and he said, You 
know, if this was a hog farm, we know hog farms.  But we dont know anything about 
radio, so were going to turn you down.  So I went to the bank across the street and they 
looked over the application and he said, You know, the guy across the street whos 
president of the other bank told me that he doesnt know anything about radio and 
neither do we.  And I said, What do you need to know besides my willingness to pay, 
my cash flow, my ability to pay, my credit history? He said, Well, you know, if we have 
to have a fire sale and you go under, weve got to get that money back and we dont know 
anything about radio. None of that mattered when it came to financing a radio 
station, because it was a unique, one of a kind animal in the community and in the region, 
and they didnt know anything about it; and there was no access to typical lines of credit. 
You know, the only people I know talking of wild success stories are on the corporate 
level, that are buying a lot of radio stations, dumping a lot of people, curtailing the 
services, operating it much leaner and, you know, trying to make a little profit off a lot of 
stations rather than a living wage off of one station. (BPrice243, pp. 6, 45)

The primary asset of a broadcast company is generally its cash flow from advertising revenue.  It 
is not unusual for smaller broadcast companies, especially in smaller markets, to encounter 
difficulties in acquiring debt financing, as they are often seen as higher-risk borrowers based on 
the size of their operations and their ability to generate cash. These companies rarely own the 
hard assets  buildings, equipment, inventory - that banks generally use to collateralize business 
loans.  Furthermore, since a broadcast license is subject to FCC and public scrutiny upon regular 
renewal every eight years, banks do not consider the license adequate or appropriate collateral. 

Absent these business assets, a banker often requires the licensee to secure the loan with other 
personal assets such as real property, marketable securities or compensating bank balances (e.g., 
stocks and bonds, treasury bills, certificates of deposit, etc). An alternative or addendum to 
personal assets as collateral was often an increased interest rate on the loan to compensate the 
lender for the perceived additional risk. In the absence of business or personal assets, licensees 
were largely unable to secure loans for either acquisition or working capital purposes. The more 
comfortable the lender was with the borrower, though, the more he was inclined to look to the 
operations (cash flow) of the business rather than to hard assets for his security.

Our study found that while historically small broadcasting and wireless telecommunications 
businesses have had difficulty gaining access to affordable and sufficient capital, discriminatory 
practices in the banking industry have disadvantaged minority- and women-owned businesses 
more so than White male-owned small businesses.  Additionally, when required to pledge 
personal assets as collateral for loans, minorities are frequently confronted with an added market 
entry barrier due to historic disparities in intergenerational wealth transfers.  If mortgaging the 
proverbial farm is necessary to secure a bank loan, a minoritys farm, if they have one at all, is 
likely to be smaller than that of their White counterpart.

S. Jennell Trigg, a communications attorney, highlighted the fact that the Small Business 
Advisory Committee show[s] that minorities have less collateral and less personal equity 
before they entered into business than non-minorities.   So they're always starting off at a deficit 
when it comes to cash.  And the longer it takes to acquire the property, the more legal fees.  And 
again, at one point, you reach a point of no return.  If you give up, you've got nothing to show for 
it You're pouringbad money into good. (JTrigg536, p. 30)

Charles Cherry, an African American who acquired his first station in 1988, summed it up this 
way.

[Banks] dont understand broadcasting and they look at it strictly [on the basis of] 
collateral . . . . And then, of course, debt is always tough because if you go to a 
conventional lender they dont understand how radio works. . . (t)heyre looking at hard 
assets . . . and weve had people say, you know, we dont lend on cash flow.  [But its my 
cash flow thats going to pay you]. (CCherry262, pp. 3, 19)

Robert Fink, a White small town radio broadcaster who bought his station in 1998, echoes these 
comments when he says, . . . (Y)ou go to the small local banks, like we would have here, and 
theyll at least be polite and let you make a presentation, but they deem it too risky because they 
dont understand the [broadcasting] business.

Amador Bustos, President of Z-Spanish Broadcasting, a successful Spanish-language broadcaster 
with 33 radio stations nationwide who first went into the radio business in 1992, had similar 
experiences when he was first starting out. 

[We went to your traditional banks], the Bank of America, the Wells Fargo, the people 
that we knew.  That was the only banking relationship that we had at the time.  Being in 
the broadcast industry and not in the finance industry we didnt know any investment 
bankers or anybody in New York or anything.  So we just went to the traditional 
commercial banks.  And since broadcasting does not carry a lot of assets  its just the 
value of the franchise and the license  they did not understand that kind of financing.  
They didnt like the collateral of the broadcasting industry. (ABustos12, pp. 10-11)

Minority broadcasters might be uneasy about educating the banks about the broadcast industry in 
order to get a loan, probably because banks could use the information to the minority applicants 
disadvantage.  For instance, Pablo de Jesus Colon, a Hispanic male radio licensee, recalls:

In 1982, when the $400,000 note ballooned, and we didnt have any money,  we went to 
a couple of banks, Id say, one bank, they took forever to give you a no answer.  Yes, we 
had the Fleet Bank. OK, and the Fleet Bank told us that I think it was a troubled credit, 
[and they] couldnt give us the loan. The other bank was Founders Bank, and we were a 
little upset at this bank, because wed prepared a 5-inch binder book with all the 
information on our radio station from the beginning, in 1989 to 1993.  And when we 
talked to the bank, to the officer at the bank, he was very excited, because we had given 
him so much information about the radio industry and he came out and announced to us 
that he had never done a loan for radio, for broadcasting before.  But he had another 
Anglo group that was trying to get a loan from the same bank, and he said, now this 
information that you have given me, gives the opportunity to read and get myself 
knowledgeable about this industry, so that I can work out these loans.  But the other 
people got the loan and we didnt.  So we prepared this man with enough information to 
make a right decision and the other loan for the Anglo group, and our information was 
not good enough for us to get a loan. (PColon244, p. 8)


? Limited Access to Capital:  Broadcast Station Assets 
Undervalued As Collateral 

Even when owners who were known in the community had businesses with sufficient hard assets 
to use for collateral, as was the case for African-American Erskine Faush, minority owners were 
still not successful in getting bank financing.

(E)ach of us, my partner and I, the two Blacks, we put in $40,000, which was all we had. 
[We went to] (a)t least three or four [banks] and were getting virtually the same story.  In 
some instances, I can remember a couple of them at least going through the motions of 
coming out and looking at the[station] property [which we owned]. This station had 
some real assets, its studio and the property on which the studio sits.  So it was not just 
the intangibles that are associated with the broadcast industry.  Therefore, there was 
some real tangible assets and the station had enjoyed some years of operation so it had a 
track record in terms of its credit rating and paying its bills and that sort of thing.  

We were both indigenous to the soil, to the extent that we also had personal records.  In 
addition to being a broadcaster I am a minister and have pastored the largest Black 
Methodist church in this area.  And I retired from that after 20-1/2 years there.  So we 
were not new or novices, and we had personal credit records, you know, if personal 
guarantees were necessary.  So everything was there, I would think, by any yardstick or 
measure in a general situation, that would qualify us for the loan. [And still we were 
unsuccessful.] . . . (I)f you measure us by any yardstick that you measure the general 
population, I could find no reason not to justify granting the loan.  So what else is left 
[but discrimination]? (EFaush238, pp. 3, 4-6)

William Saunders, a Black FM station owner, who acquired licenses in 1971 and 1983, had 
similar experiences.  He owns free and clear 34 acres of land right on the water which is 
probably worth 20 times the amount of the loan of $250,000 he is seeking, but we cant get [the 
loan].  His waterfront property is somehow considered inadequate collateral to provide comfort 
to the banks he is dealing with. Due to delays in finding money, his business has been put into 
receivership.

Even when some minorities had appraisals of their broadcast properties, banks sometimes still 
refused to loan them money.

 (W)e did go to a couple of banks that had loaned money to radio stations.  We found 
that out and approached them because we werent talking to a new entity.  They would 
tell us that the collateral in this type of business was  that we didnt have enough to 
make them comfortable, even when we had letters from  one from an appraiser, one 
from a person who had offered to buy us before we even started.  And the appraisal was 
saying that the license in itself at that time was worth about $800,000 (JBanks175, pp. 
7-9)


? Limited Access to Capital:  Personal Assets as Collateral

Since broadcast lending is based on cash flow versus hard assets, it was not uncommon for 
license holders to have to secure their loans with other personal assets.   Michael Carter, a White 
radio station owner who first acquired a license in 1977, told us that .  .  . [he] had to mortgage 
a farm in order to provide collateral to cover his loan . . . because [the banks] dont value the 
FCC licenses.  It was terrible. (MCarter230, pp. 2, 3, 4)

In talking with Dale Gehman, a Native American radio station owner who acquired his license in 
1991, he tells of how his father mortgaged the family home and put up the assets of their 
furniture businesses to get a loan.  

[My dad] mortgaged our house  for the tower site property, and then the assets of the 
furniture business [which was] the only way the leasing company would [provide the 
loan]  I mean, at least he could help pay the payment if we couldn't.  And, of course, he 
never had to . . . I guess looking at any other minority trying to get in those days, in the 
early '80s there, he was hopeless.  I don't see how anybody could have done it with the 
banks.  The banks are just impossible. [We also] tried the Small Business Administration 
and really got nowhere there. (DGehman132, pp. 10-11)

But for Native American tribes, gaining access to capital is very complicated because of their 
unique status.  For instance, Jim Casey, a communications attorney, states:

The primary barrier, not surprisingly, is capital.  Tribes have a very difficult time raising 
capital, because of the nature of their assets.  Their assets are typically held in trust by 
the Federal Government.  They cannot be pledged in a financing arrangement.  So they 
start out at a disadvantage in getting financing.  Another difficulty they have with 
financing is their sovereign immunity status.  They are often put into a position to waive 
their sovereign immunity in order to get a financier to work with them. (JCasey535, p. 6)

William Saunders, a Black radio station owner, talks about his struggle to acquire much needed 
capital for his two stations from 1971-1983 and everything he put at risk to do so.

I ended up with the two stations and really could not get the capital that I needed to make 
it run. I needed operating money, I needed stuff for promotion, I need a lot of things, and 
we just couldnt get any of it. And we went into a deal, that happens to minorities most 
times, I bought 49% of the FM station and then my partner, or the White guy that I was in 
the partnership with, had a real bad reputation, but a lot of stuff was against him that I 
didnt know and I couldnt find out even from the White friends that I had. They all said 
he was a good guy. But he wasnt. 

And eventually, the bank attempted to foreclose on him. But [they] allow[ed] me to take 
over the note, because thats the only way I would have been able to get money. They 
would not loan me the money but if I would take over what the station owed, which was 
about $631,000. And what I did, like a fool, I signed on as guarantor for it, and as a 
guarantor, it brought in my AM station, and it brought in my house and my real property 
and everything, and the bank got a receivership on it for all of my real property and the 
two stations.  (WSaunders163, pp. 4-6)

When evaluating loan applications, lenders look to the cash flow from the business to determine 
borrowing capacity and to adequately cover debt service.  Accordingly, they will often ask to 
review a companys business plan and cash flow projections. If lenders believe the projections to 
be too optimistic, they will discount (reduce) them.  As a result, the amount of money that the 
loan applicant can borrow, if they can borrow at all, is less. For radio stations, cash flow comes 
from advertising dollars.  Reflecting the frequent experience of urban radio broadcasters with 
discriminatory practices in the advertising industry, it was not uncommon for licensees who had 
urban-formatted stations to experience discounting of their cash flows by lenders.  Charles 
Cherry, an African-American radio licensee, highlighted this point.

The bankers do what the industry does, which is they discount  if you are trying to go 
into an urban format, they discount the buying power, the purchasing power, of the 
market that youre trying to serve.  (CCherry262, p. 14)


The discounting of minority-formatted stations is worse than would appear at first glance.  If 
banks discount the buying power of minorities and advertisers diminish cash flow by also 
discounting advertising buys and/or refusing to advertise on minority formatted stations, the 
broadcast property is undervalued in at least two respects.  Accordingly, debt capital is all the 
more difficult to obtain.


? Limited Access to Capital:  Use of Personal Capital in Lieu of 
Bank Debt

Several interviewees shared how they had to get creative with raising funds for the purchase and 
operation of their stations.  Many used cash savings and proceeds from the sale of other personal 
and business assets.

Jose Molina, a Hispanic owner of both radio and television properties, tells how in 1970 he 
purchased a one-bedroom house in an undesirable section of Hollywood, California for $25,000, 
with $3,000 down.  Most weekends, his buddies and he, for the cost of lumber, worked on the 
house until it grew to four bedrooms.  He then refinanced his mortgage to pull $80,000 out of his 
house and combined that with $70,000 of private equity to make his $150,000 down payment.  
The lady [seller] carried $500,000 in a 10-year note.  So I didnt have to go to banks because I 
knew I wouldnt qualify.  She carried the paper. . . . (T)his person was a cream puff. . . . (T)he 
time period that she gave me was a godsend.  Ten years. (JMolina121, pp. 9-10)

Since many minorities were not able to secure bank financing, they had no choice but to sell or 
mortgage other holdings to generate the cash needed to buy or build out their stations.  In order 
to buy his low power television station in 1983, Eduardo Cabellero, a Hispanic licensee, tells us, 
 . . . the money I raised has been mostly by virtue of selling my business and getting some 
personal loans, not necessarily business loans, but my personal loans and giving it to the 
company.  (ECaballero123, pp. 12, 13)

While White male-owned small business licensees typically had an easier time securing bank 
financing, they were not immune to having to pledge assets in excess of those owned by their 
stations and invest significant capital themselves.  Robert Fink and Bob Darling, White radio 
station owners who acquired their station in 1998, had to put in 75% of their own money and 
borrowed the remaining 25%.  I mean they wouldnt take the station as collateral.  I  had to 
put up  everything I had ... my home, I had some rental properties, and I had to sign those 
over.  Literally everything I owned.  (RFink235, pp. 12-13)

John Tupper, a White TV station owner, also used his own capital to finance his business in 
1995. 

We probably could have gotten funding had we personally signed for the loan and 
provided some other collateral to back up any debt that we would have incurred to build 
the stations.  But the assets themselves were not bankable collateral to stand on their 
own. . . . So we decided to bank it ourselves instead of paying interest to somebody else 
when in fact we would have had basically the same assets tied up either way as 
collateral.  (JTupper216, p.6)


? Women Experienced Discrimination as Well

Historically, many women were of the opinion that banks were uninterested in helping them 
finance their acquisition of a communication property.  For instance, Ruby Unger, a White 
female radio licensee, stated:

It would seem real clear to me during that whole process and in my years with AWRT 
[American Women in Radio and Television] and other womens groups and small 
business womens groups  it really did make a difference in those days if you were going 
for funding and you were a woman, boy, you had a tough, tough road, a very big, uphill 
battle.  Yeah.  It just  you know, when youre sitting across from a banker whos a man  
if youre a White man you have a much better chance, and obviously all the numbers 
bear that out.  I mean, it was something like one or two percent of all of the radio and TV 
stations in the United States were owned or managed by women.  I mean, come on. 
(RUnger367, p. 10)

Similarly,  Bernadine Nash, a Black daytime AM station owner whose late husband bought their 
Boston radio station in 1980, offered her experiences. 

I think [being a one-station business owned by a Black female has] made it virtually 
impossible [to raise outside capital]. . . .I mean, I think that certainly being small is a 
distinct disadvantage, and I think that would be the case for anyone, regardless of 
whether or not they are male, female, Black, White, whatever.  Just because the tenor 
within the industry is that bigger is better.  However, the additional burden of being 
female . . . (Y)ou know, the reality is that when you are owning and operating your own 
business and youre a female and youre small . . . and a minority, they dont take you 
seriously.  (BNash118, pp. 11, 14)  

Francine Rienstra, a White station owner in Arizona, spent an exceptionally long time in the 
application and comparative hearing process from 1987 to 1993 using up a great deal of her 
money to wage that fight.  As a result, she had to go into a Local  Marketing Agreement (LMA 
 alternatively referred to as a Lease Management Agreement), giving someone else the right to 
use her license and broadcast facilities for their own benefit in exchange for a monthly fee.  

[We went after the LMA in the first place because] it was the need for funding.  No one 
wanted to fund a radio station.  No banks in town wanted to fund a radio station. . . . I 
did talk to venture capital people, and a lot of the people that I talked to only wanted to 
do large deals.  They didnt want to do a small deal because, really, I didnt need a whole 
lot of money to get the station up and running.  I was asking for about $1 million. . . . And 
I did try that route [talking to the SBA].  I did talk to  in fact, I talked to some of the 
national SBA people, and they would not lend to broadcast or print industries.  
(FRienstra360, pp. 17-18)

When Ms. Rienstra, who had put together an all-woman team to apply for the license, went to the 
banks she had these experiences which were compounded by the fact that she and her partners 
were women..

So, I put my group together.  We had pooled our money together.  We had put together a 
business plan, and I had started meeting with three to four people for financing through 
local banks here.  And I had gone to three banks, the first of which was one of the larger 
banks in town, and I literally got laughed out of the office.  Because they took one look at 
me and assumed that I didnt know what I was doing. So that was the first bank that I 
went to.  The second bank that I went to insisted that if I were going to try to get a loan or 
even to apply for a loan, that I needed to have, not only all of my partners signatures, 
but I had to have all of our husbands signatures.  And we were an all-women group.  
Now, granted we live [in a community property state].  But by the same token, I dont 
know that they would have asked a man that.  That was the second bank.  And the third 
bank said that they do not loan for such risky ventures.  (FRienstra360, p. 1-3)

Bennett Kessler, a White female radio licensee, relays a story of how the banks were particularly 
unhelpful to her because she was a woman.

Im about to get my first bank loan. But the banks were very unhelpful I will say that 
the banks I felt were not helpful to women. That was my general impression and also, the 
story that I heard from other people.  But it is my general impression, it has been my 
general impression in this area, which I guess you could call kind of a redneck area, that 
a woman named Bennett is really not going to do that well.  I try to explain that it was my 
great-great grandmothers maiden name.  That helps a little bit (BKessler313, pp. 
13,18)

Patty Ruiz, a Hispanic female television licensee, states:

I think it was a lot easier for a man to get financial backing than it is for a woman.  Oh, 
yeah.  I think those barriers are finally coming down a little bit, but at that time, you 
know, seven, eight years ago that was tough(PRuiz452, pp. 14-15)

Not all minorities and women had the same difficulties highlighted above.  Some were in the 
right place at the right time.  Johnny and Opal Shaw, Black radio owners, gave their bank an A+  
[although they also spoke of the challenges in getting their loan]. Originally, Mr. Shaw was 
general manager of the radio station he ultimately purchased in 1987.  The station owner got into 
financial trouble and offered to sell the station to Mr. and Mrs. Shaw.  They financed the 
purchase of their station with personal savings, seller financing and a loan for approximately 
60% of the purchase price from their local bank.  Furthermore, when it was time to upgrade and 
buy new equipment, their bank was willing to refinance their loan. (DSutter205, p. 5)

Mr. Shaw feels that his ability to get a loan quickly to purchase a station from his boss was the 
result of the prior owner putting in a good word for Mr. Shaw with the bank.  I was a little bit 
surprised [at their willingness to loan me money].  I think [the sellers] had something to do with 
me probably getting that loan as quick as I did because  you know, I dont have evidence of 
this, but I want to feel like they said, hey, look, we really need to sell this station, and this guy 
does have the capabilities of running it.  Hes had the experience and so forth, and we need to 
get it off our hands, and we need you to help him get it. (JShaw185, p. 3)

He went on to give his bank high marks for the opportunities he was given, especially because he 
was a minority.

I have to say at this point in time that I think, as an African American, I would have to 
give my bank an A+.  My bank has worked with me very well throughout this whole 
process.  But weve always been responsible to them.  But at this juncture I think they 
realize that its okay, you know, they can trust us and we can trust them.  So our bank has 
done well. (JShaw185, pp. 17-18)


? The Importance of An Informal Industry Network to Success in 
Acquiring Capital

A number of study participants told us how important it was to have contacts with lenders and 
equity investors along with personal financial sophistication to help overcome the market entry 
barrier of limited access to capital.  Tyrone Brown thinks that  . . .today, finance is the most 
important thing.  The most important thing is you [have to] understand finance because you 
[have to] put together a financial package and not only understand it but you need contacts in 
the field. (TBrown510, p. 13)

John Thomas, a Black radio licensee who acquired his station in 1992, believed that his previous 
banking experience and relationships made all the difference in his ability to eventually get a 
loan for his station.

(M)y banking experience and the relationships that I had developed over the years in the 
banking industry helped me tremendously.  I did have a small amount of capital, but 
primarily all of the money was from bank financing. . . . [But] it was [still] difficult 
because, again, I came in, I did not have any experience operating a radio station.  
Second, the station was in bankruptcy, so it was very, very difficult to convince people 
that it was worth putting money behind.  But I was persistent and I just kept looking for 
ways to put the deal together, and eventually it happened.  (JThomas277, p. 4)



? White Males had Greater Ease and Success Securing Debt 
Financing

Like White radio broadcaster Jeffrey Hutton above, several of the White male licensees we 
spoke with had very different experiences compared to those of their minority and female 
counterparts. Wireless license owner Dennis Miller, who is White, has had positive experiences 
with banks helping to fund his companys expansion, even going so far as to have lenders eager 
to provide capital.  Mr. Miller shares [As we have grown, raising capital has been] very easy to 
do. Weve gone to traditional banks. Real Telephone Finance has been providing our financing 
now for the last three  years. Part of that was CoBank, but we have investment bankers there, 
very anxious to provide us funds.  Well actually, weve grown and weve been very successful in 
our enterprise here, and so as you get more successful, you get on more radar screens. 
(DMiller147, pp. 5-6)

Trent Boaldin, another White male wireless license holder who acquired his licenses from 1976-
1999, similarly had a relatively easy time raising money for his new venture.  Unlike his female 
and minority counterparts, who typically approached multiple lenders and still received very 
little, if any, assistance from bankers to ensure their success in acquiring a loan regardless of 
their backgrounds and personal financial strength, his bankers were helpful in suggesting to him 
how he might improve his chances of getting a loan.  In addition to their wireless holdings, his 
family also owns cable television and wireline telephone in his rural market.  

We approached three lenders. . . They had some suggestions for changes to make to the 
assumptions and improvements to make in the plan.  So we incorporated the various 
suggestions from each one that we talked to, revised the plan, and sent it back. . . . (A)nd 
then at that point we got the indication from one of them that they were willing to go. . . . 
Were pleased with what weve got. (TBoaldin307, pp. 9, 10)


? Increased Cost of Capital for Small, Minority- and Women-Owned 
Businesses

One way for a banker to mitigate the risk of lending is to charge a higher interest rate for those 
loans that are perceived to be more risky.  Business size, type, operating history, and age impact 
perceived risk as does the track record and personal creditworthiness of the borrower.  Often for 
small businesses, the higher interest expense noticeably impacts their viability and opportunity 
for growth.  For new businesses, the increased cost of capital can render their business plans 
unworkable.

When asked how the size of his business and the fact that it was a new venture impacted his cost 
of capital, Mr. Boaldin responded,  I dont know what the exact difference would be, but I 
imagine its very significant, yes. . . . [The interest and terms that we got] obviously fit into the 
business plan.  I think its just the nature of a small business. Thats one of the down sides of a 
small business.  But, you know, small business has lots of upsides.  That just happens to be one of 
them thats always an issue.  (TBoaldin307, pp. 9, 10)

The higher cost of capital for small businesses was also noted by other study participants.  
Anthony Chase, an African-American radio and wireless licensee who acquired his licenses from 
1992 to 1994, says that a higher cost of capital for small businesses comes with the territory, and 
you just have to learn to work with it.  

. . .(M)y sense is that the [cost of capital] is always very high for start up businesses and 
its certainly no exception in my case. Its very high. Its a real barrier to entry in the 
business. And you know, you just [have to] suffer through it and hope that your first deal 
doesnt necessarily become your last because you have to pay pawnshop rates to get into 
the business.  (AChase119, p. 6)

Minorities told us that they perceived they were paying a premium for capital, perhaps more than 
their White male small business counterparts.  Mary Helen Barro, a previously successful 
Hispanic radio broadcaster who acquired licenses from 1987 to 1992 and is now in bankruptcy 
primarily because she was not able to obtain adequate financing, tells us that she had a very 
difficult time raising capital. I was a minority woman. If I did get [the money] it was very 
expensive. I had to go to venture capitalists; the banks just didnt want to assist us at all.  
(MHBarro190,  p. 3)

Dorothy Brunson, one of the first Black women in broadcasting and a current owner of a UHF 
television station which she started operating in 1989, also had to pay a higher interest rate for 
her borrowed capital.

Every time weve had to borrow money, weve had to borrow it at 15%, 16% interest 
rates because the history and the growth of the station and the level of profitability was 
not there in the early stages.  So people still look at us as high risk. . . . And so you, 
youre constantly paying extra dollars to be able to do the basic things that most people 
can do with 5 or 6 or 7% dollars, and the same dollars would cost us 12%, 15%. 
(DBrunson105, p. 9)

As discussed, interest rates are reflective of the perceived risk involved in the transaction.  
Charles Cherry, an African-American licensee, thinks that race probably adds an additional 
risk factor, but [he] cant say that thats the sole sort of determinative in these kinds of deals. 
[His] gut tells [him] that hes paying a high price [because he is a minority]. (CCherry262, p. 
13)



? Minority Small Business Investment Corporations (MESBICs)

Those minority study participants who had to deal with Minority Enterprise Small Business 
Investment Corporations (MESBICs)  shared their negative experiences with the process.  W. 
Don Cornwell, an African-American who is a former senior executive at the investment banking 
firm of Goldman Sachs and current President of Granite Broadcasting, a publicly-held television 
broadcaster, told us his story.

Oh, it's awful [dealing with MESBICs in 1988].  You know, disorganized and not reliable 
as investors.  We had a group of MESBICs that committed to put up about $2 million in 
the group.  I did not want that in the deal because all the experiences I had had with my 
prior life of helping other small guys get financed, because I used to do that just as a 
sideline on a pro bono basis when I was [a senior executive] at Goldman [Sachs].  And 
my experience had always been that these guys were not good for the money, but I was 
[approached] by a guy who ran one of these, who I had known, and I got a lot of smoke 
blown at me, how I was the kind of guy they really needed to back, and you know, this 
was going to be professional and blah-blah-blah.  

Anyway, the long and short of it all is that they waited until a month before it was time to 
close, and then they started imposing demands, and I conceded to one of them which was 
a pricing change, which was in their favor, and against my best interest.  But then they 
started to try to take, in effect, control of the company.  And to be candid with you, one, I 
wasn't going for it; but, two, I had a couple of my other investors, including Goldman 
Sachs, basically tell me that they wouldn't be in the deal if these terms were put in the 
deal [by the MESBIC].  So it was just not a good experience. 

 I've been told that this industry has cleaned its act up a little bit, and it's better.  Some of 
the people who were part of this group after I basically kicked them out -- because I did, 
they were shocked, because they're used to having people who are frankly on their knees, 
and because of my background, I knew how to raise capital.  And so I kicked them out, 
which shocked them.  (WDCornwell103, pp. 22-23)

Pierre Sutton also had an experience with a MESBIC in 1971 that was more costly than it might 
have been with a different lender or if he had not had to use a MESBIC, especially since he had 
to give up equity in his company to get the financing.  Now, however, with the companys track 
record, his experience has changed.

Initially I dont think [my cost of capital was the same as for non-minorities]; I know they 
werent.  My cost of capital was high getting started because [the MESBIC] said I had to 
give up points, I had to give up 10% of the company.  I eventually bought those back.  In 
fact, I got that back before we went out and bought additional radio stations.  But, no I 
had to give up points, I had higher interest rates, because it was a MESBIC.  I was 
getting charged what banking business would consider usury rates.  . . . but I cant say 
that now, I know that now were not getting the same kind of treatment either because 
were better, were more established, having been in business 20 years, 25 years, we 
know what were doing almost 30 years. And we have a good track record.    Were just 
not going to take it any more, you know.  (PSutton110, p. 14)

Merrill Charles, a Black male radio licensee, is of the opinion that some MESBICs may take 
advantage of minority borrowers.   

I don't want to characterize all of the MESBICs  but I think it was very clear that a lot 
of these organizations that were designated as, you know, SSBIC's, and you know, got the 
SBA certification and all of that to loan money were definitely taking advantage of their 
opportunity to supply funding for people.  I mean by taking out heavily on warrants and 
kickbacks for them as a result. (MCharles458, p. 9)


? Increased Station Prices Brought on By Consolidation Further Limits 
Access to Capital and Raises Barriers to Entry

As our study participants told us, capital has historically been difficult to raise for small 
businesses.  It appears that it has been nearly impossible for minorities and women.  Lacking 
access to capital, the ability of these businesses to enter the broadcasting and wireless markets 
has been curtailed.  With the consolidation of the broadcast market, the economics of the 
industry have changed, resulting in significant implications for small, minority- and women-
owned businesses.  The most notable change is the dramatic escalation in prices that apparently 
has made it nearly impossible for them to either acquire new stations or enter the industry for the 
first time. 

The restructuring of the market, with its increased station prices, has also necessitated a 
restructuring in the sources of capital needed to finance purchases.  For those needing cash to 
buy stations, as compared to having stock to trade, the bar has been raised just that much higher.  
Frank Montero, former Director of the FCCs Office of Communications Business Opportunities 
(OCBO) offers this perspective.  

. . . (P)rices for stations and the like have gotten so high that while there is still difficulty 
in getting access to capital, at the same time, you know, the brass ring is pulling farther 
and farther away from them because the prices are going up faster than the supplements 
to capital are appearing.  And, likewise, whats tied into this is that lenders or potential 
investors see what the dynamic in the marketplace is, namely that markets are being 
carved up into larger but fewer large competitors, and so they are becoming more and 
more reluctant to, absent some sort of a mandate, invest in these new entrants to the 
market when they know that this new entrant is essentially going to be a relatively small 
player competing against larger and larger competitive players in the marketplace and 
that the viability of that venture is questionable as to whether they are really going to be 
able to succeed. (FMontero509, pp. 9-10)

With stations now selling in the multi-million dollar price range, anyone trying to enter the 
market today has to find not only debt financing but equity capital, as well.  These new financing 
requirements raise a different set of market entry barriers for would-be entrants.  

Lenders of debt typically look to the interest income generated from the loan to cover their risk, 
charging higher rates as their perceived risk goes up.  However, there is only so much they will 
lend on broadcast properties regardless of the cash flow.  With stations selling for upwards of 20-
22 times projected cash flow, and with media lenders only willing to lend up to 5-7 times cash 
flow, station purchasers have to raise equity capital equal to approximately 15 times cash flow.  
Given the size of the deals, it is almost certain that prospective purchasers will have to look to 
venture capitalists to fill the lions share of this gap, with the balance coming either from 
personal funds or private equity investors other than traditional venture capitalists. 
Understandably, there are very few individuals who can play at this level.

One of the paradoxes of dealing with media lenders and venture capitalists, especially these days, 
is that they are generally not interested in funding deals that are smaller than $10 million, nor are 
they interested in single-station, single-market opportunities, unless perhaps they are in a top 10 
market.  This does not bode well for the individual or group that wants to start out in a small 
market with a small station.  As Robert Fink, a White radio licensee tells us, their financing 
options are drying up.

 (T)he banks wont look at you if youre not looking at $10 million deals.  Okay?  And 
most of these stations in the small markets, youre looking at anywhere from $300,000 to 
maybe a million dollars in the small market situation.  Were too small for them to worry 
about.  And thats the biggest complaint that we small broadcasters still have [is that 
there is] virtually no outside assistance, and I have tons of friends in the business over 
the years, and I am sure they would just echo my comments.  We have to almost always 
go out and just find it through private individuals; in other words, all the money in our 
station basically is what Bob and I put into it.  Were too small for the big guys that are 
in the broadcast; theyre into the big corporations.  And the saying in radio is that if you 
dont have a $10 million deal, they wont give you the time of day.  (RFink235, pp. 9-10)

Diane Sutter, a successful White television broadcaster, echoes these thoughts and provides 
additional insight.

Single stations are very difficult for anyone to do, but a first-time entrepreneur especially 
because most of your equity companies as well as your banks, dont like to have all of 
their risk in one place.  Theyre much happier if they can spread the risk amongst other 
[broadcast] properties so that you dont have to rely on one single station to support the 
debt service.  So theyre very difficult to do. The hardest thing to do, probably, a single-
station deal. Theyre also usually small. And most of your private equity funds as well as 
venture capital and other sources ignore the group of potential people that you can do 
business with because of the size of the deal.  So . . . a combination of factors makes it 
more challenging to try and finance a single-station deal.  (DSutter205, p. 4)

Ernest James, a former radio station owner who now works for Clear Channel, the largest 
broadcasting group owner, wanted to buy a portion of the stations that Clear Channel was 
required to divest when they merged with AM/FM.  Even with his successful track record 
running stations, the size of the package he would have had to put together to be competitive in 
todays market was way beyond his reach.  He estimated that in order for a start-up venture to be 
competitive he would have needed to raise a half billion dollars to buy multiple stations. 

I am not able to buy stations because in order to buy a station now or buy a group of 
stations the capital that I would need access to would approach half a billion dollars to 
really start a company and be competitive.  . . . (T)he stations I wanted to buy from Clear 
Channel would have cost and I looked at them and my original request was going to be to 
buy 37 stations, it ended up, I kept whittling it down and whittling it down until I was 
trying to buy a package of 11 stations, and even 11 stations was approaching a billion 
dollars, and then at 20 times multiples, I mean, nobody was going to give me that money.  
So OK, maybe I could raise half a million, or maybe a million would be my seed money to 
the deal, but [thats nothing as my share on a billion dollars].  (EJames268, pp. 28-29)

In the secondary market, the ability to access information about opportunities to buy and sell 
stations determines ones success; and in todays market, access to that information is created 
and maintained through access to capital.  The distribution of previously issued licenses by 
means of a private market structure necessarily begets a process driven by financial resources.  
This need for capital too often proves prohibitive for small and capital-starved businesses to 
adequately compete.


? Limited Access to Capital:  The Impact of Wall Street on the 
Type and Size of Transactions

Another change precipitated by deregulation which has heightened market entry barriers for 
small, minority- and women-owned businesses is the move away from mom-and-pop local 
broadcasters to a situation where the broadcasting industry is mostly owned by large publicly-
traded companies.  These group owners have two advantages over their smaller counterparts:  (1) 
they have stations to trade with each other if they need to divest in certain markets; and (2) they 
often buy and sell stations, as well as whole groups, using stock.  In both instances they are in a 
position to receive more favorable tax treatment than if they had done an all-cash transaction, 
which is what smaller, non-public broadcasters would have had to do.  Dale Gehman, a Native 
American former radio licensee, summarizes it this way.

Its just a conglomerate [game] now, and they use stock market money, and any facility 
of any size [goes to] the highest bidder, and the price [is so high] -- there's no way I can 
get in right now and pay the price that you'll get for an FM station in any kind of 
medium- to smaller-size market, and pay that money back on any kind of 10-year, 20-
year amortization.  It's a speculative price right now.  [W]hats really hurting is the big 
conglomerates are giving stock, so they beat the taxes.  So theyre getting a little bit of 
cash, lots of stock, no big capital gains tax up front.  The stock market is going crazy.  
They're making fortunes.  And a little guy without access to capital from the market, I 
don't know how you possibly could do it. I can't figure out a way [to finance it] right now.  
That's why I'm not in it, quite honestly.  And I know there's some bond money.  I think, 
with my track record and showing what we did, I think at some point I can get in, but it's 
going to be extremely hard even with my history of raising that kind of capital. 
(DGehman132, pp. 35-36)

Manuel Davila, a Hispanic radio station owner, shares this observation when he says, unless 
youre lucky, and actually got a station in a big market a long time ago, we dont have a chance. 
. . . Where [will a small guy] get $40 million?  (MDavila128, p. 52)


? Limited Access to Capital:  Buyers Need Money in Hand - Time is 
No Longer Given to Raise Capital 

Because the market is super-heated and there is acquisition frenzy, only those people who can 
quickly bring money to the table are even considered potential purchasers for properties.  If you 
couple the fact that it generally takes much longer to raise venture capital than it does debt 
financing with the market reality that enormous sums of equity financing are now required, you 
end up with a situation where only the big players who are already in the market and have large 
coffers of cash and/or stock to trade can participate in the buying of stations. The days of the 
small business owner being given time to raise the needed capital for station acquisition are long 
gone.

Art Gilliam, an African-American radio licensee who started acquiring stations in 1977, makes 
the point.  

I found out about the opportunity [to buy an AM station in 1977] through a broker.  At 
that time, quite different from now, if you made an agreement with a seller, you had more 
time to go and find the funds.  Today, in the environment in light of the 
Telecommunications Act, if youre not there with the funds in hand, then youre not going 
to be a viable buyer. (AGilliam117, p. 1)

Bruce Dickenson, a media broker, shares his perspective that the speed with which a deal has to 
get done depends on the actual broadcast property.  Certainly, with  a very expensive property 
you must have your money ready. . . . The smaller and less attractive the property, the more time 
people potentially have to put together their financing.  [Since] we dont get paid until we get a 
deal done, it behooves us to pick deals that we think we can get done . . .  (BDickenson517, pp. 
5-6)

John Tupper, a White television licensee who acquired his station in 1995, adds:

[Regarding smaller companies acquiring stations], the biggest issue from the standpoint 
of the seller of the station is which group is most likely to close the deal. . . . And, you 
know, obviously if you are dealing with a company that has the capability of just writing 
a check to acquire the station, thats very different than dealing with someone who has to 
align venture capital and bank debt financing to put together a transaction. . . . And, 
there are those who are very successful in putting together their venture capital and bank 
financing to acquire stations, and once theyve done a few they seem to be able to do that 
repeatedly.  There are others who arent so good at it and, therefore, you take more risk 
in trying to do a deal with them.  And it, becomes a decision that both we and the seller 
have to make as to with whom we want to do business.  (JTupper216, p. 27)


? Consolidation, Brokers and the Old Boys Network

Diane Sutter, a White former television station owner, who has bought and sold one television 
station and is now in the market for another, explains the chicken-and-egg nature of current 
financing realities as well as the need to have in place relations with high-quality brokers, lenders 
and venture capitalists.  

You cant get the money until you have the deal.  And you cant get the deal, until, 
especially with a new company, until theyre sure youre going to have the money.  Well, 
Id love to sell it to you, Diane, but you know, show me your money.  Now the thing that 
really helped me was that when I went to someone, even when I was in the middle of 
doing the first deal, but not having gotten done yet and I was looking for other stations, 
and they say well, whos your money?  And I can say Bank Boston or Burr Egan, two 
well-known quality firms that people go Oh, OK, youre real. Youre for real. I can 
probably sell it to you.  (DSutter205, pp. 20-21)

In this market of rapid turnaround on media properties, not only do brokers, lenders and equity 
partners weigh in on the prospective buyer.  The seller often approves the list of buyers prepared 
by the broker.  It is up to the broker to make the seller feel comfortable with the list prior to 
sending out marketing materials, solicitation of offer letters and confidentiality agreements.  If an 
entry on the list is for someone with whom the broker has not yet done business, it puts the 
broker at risk with his client, the seller, to push for its inclusion.  Brian Cobb, a media broker 
explained his process as follows:
. . . (T)hey will almost always ask as they go through the list, if they dont recognize a 
name, theyll say, Who is that?  You know, I have to tell them who it is and have to 
demonstrate that this person belongs on the list.  If I dont have a good answer, theyll 
tend to take it off, and the answer usually is do they have the money. . . . (I)t gets down to 
a conversation of do they have it, can they get it, or do you think they can get it.  (M)ost 
of the times theyll leave it on the list [if I can vouch for the person], but some people just 
say, No, I dont want to go through with it.  Take them off the list.  (BCobb512, pp. 17-
18)


? Financial Sophistication and Track Record are Paramount

As the consolidation in the broadcast market has driven up prices and gobbled up properties, the 
criteria for consideration as a viable candidate for receipt of multi-million dollar debt and equity 
financing has become more heavily weighted towards proof of significant industry experience or 
a successful track record managing and growing a business enterprise, sophistication with 
financing means and methods, a vision for multi-property holdings, and a desire and/or 
willingness to participate in an exit strategy that brings significant returns and on-going upside 
potential to debt and equity partners

With the need to acquire equity capital, the selection criteria for who gets funded becomes more 
complicated than those used to qualify bank borrowers.  With debt financing, the lender usually 
looks to the cash flow of the business and his collateral to cover his risk and repay his money.  
Venture capitalists have no such protection.  They are giving the business owner their money on 
the expectation that 1) their investment  will multiply many times over in three to five years and 
2) the company will be in a position to either go public or be acquired.  This requirement puts 
enormous pressure on both the business plan and the quality and track record of the management 
team.  These two elements become paramount to the venture partners willingness and desire to 
invest equity capital.  In todays market, if a team or individual business owner lacks this success 
profile, money is virtually impossible to obtain.

Robert Fink, a White radio broadcaster, explains:

 (I)ts a business that is totally dominated by the management of the company, and a 
successful station can be a failure the next day if its not the right management in there.  
And so acquiring capital has just been extremely difficult for anybody that again doesnt 
have the borrowing power to talk big time, so its really left the small market people or 
people trying to enter into the business without much, without any help at all, really.  I 
mean, we have not gained, in my opinion, in the position that we were in since I started in 
the business way back when the banks wouldnt even talk to you at all.  Now its just the 
big guys.  If youve got a $10 million deal and we think you are strong enough to buy a 
station in a major market, well talk to you.  But people like ourselves arent strong 
enough for that, so were stuck in the small markets (RFink235, pp. 9-10)

Bruce Dickenson, another media broker, shared with us his primary criteria for evaluating 
potential buyers.  He was quick to say financial capacity, integrity, proven track record.  To 
get the process started in creating a relationship with a broker, a critical task if one has the desire 
to participate in todays broadcast market, Bruce suggests that the buyer give us a call, let us 
know theyre looking for [properties]. . . . To be honest, its a process of learning about them 
and as we learn about them we start to make judgments about their ability to do what theyre 
trying to do.  Who theyve surrounded themselves with in terms of deals, financial folks.  You 
know its clearly a process to get anybody to the point of making an offer to us on a multi-million 
dollar property.  Bruce adds known quantities, where you dont have to educate the people very 
much, are more desirable than brand new buyers. (BDickenson517, pp. 1-2, 6)

Diane Sutter, a successful White former television owner who purchased her first station in 1997, 
was unique among our interviewees.  She was the only female who, as a result of her 
employment with Shamrock Broadcasting, Roy Disneys company, had developed a significant 
employment track record as well as a network of key market intermediaries in broadcasting.  Ms. 
Sutter relates that her past work experience as a group executive with Shamrock made all the 
difference in the world when she went to raise both debt and equity capital.  With Shamrock, Ms. 
Sutter was involved in mergers and acquisitions, among other things, dealing with the station 
owners, banks and venture capitalists she would eventually have to approach for her own 
television deal.

One of the things that I had that was working in my favor, which was very unique, and I 
was very fortunate to have this, is that I had spent six years at the corporate office of 
Shamrock prior to [owning my own station]. And my responsibilities at Shamrock was 
working with the banks . . . When they were doing financing deals, I was part of those. I 
already had one, the access to the information of what it took do these kinds of things, 
which, as I say, I was very fortunate, because there arent many women at all who get 
that opportunity, and two, I had the relationship.  (DSutter205, p. 5)

Building credibility with a banker or venture capitalist is key, which is why it is even more 
difficult for new entrants into the marketplace, and especially difficult for minorities and women.  
If you add to that the extremely high prices for stations in todays market, borrowing becomes 
almost impossible.  Tyrone Brown, an African-American communications attorney and a former 
FCC Commissioner, highlights this point when he says If youre a minority or a woman in this 
country, while youre probably better off than you are anywhere else in the world, the fact of the 
matter is you still have to get up earlier and go to bed later in order to get ahead.  Dont ever 
forget that.  Because somebody will remind you of it in a way that will be hurtful  you really 
[have to] bring something to the table that is more than ordinary.  It really is a capital game 
today and youve got to convince the people who youre asking to turn over money to you that 
youve got something that most other people dont have. It is true if youre Black or youre a 
woman and you go and talk to these investment bankers. (TBrown510, p. 29)


Media broker Brian Cobb echoes that point.

Youve got to show your financial credibility . . . [This is] a big handicap for somebody 
starting out that doesnt have a lot of money or maybe has certain talents but doesnt 
have the sophistication in the financial area to put that package together.  (BCobb512, p. 
14)

George Dobbins, an African-American who acquired his wireless license in 1996, sums it up this 
way when he questions Why would you want to provide the dollars for a small start-up 
company when youre already providing the dollars and playing with the companies that [are] 
already in place?  (GDobbins362, p. 7)

Rev. Everett Parker, with the United Church of Christ and a pioneer in the area of civil rights and 
communications policy, shares Mr. Dobbins view.

 (W)hen the time comes, really the thing that youre interested in  it really comes 
down to the point of is Citibank going to give $50 million or $100 million or a billion 
dollars to what they consider to be an untested group when they can get somebody who 
they think is tested to borrow that money?  (EParker504, p. 20)

Others spoke about the need to prove themselves with the banks and to develop a track record.  
Of course, it helps if you can get a loan in the first place.  Dennis Miller, a wireless license 
owner who is White and acquired his first license in 1990, shares his perspective.

(W)ere reasonably aggressive on our business plans and were meeting them.  I guess if 
theres one thing that a new entity needs to do, thats to create that track record with the 
financing community. You need to meet your projection.  Make them realistic and meet 
the projections. . . . (O)ne of the investment bankers I think characterized it the best - that 
theyre betting on jockeys, not on horses.  And as a management team, you need to be 
able to instill confidence in these folks that you can actually deliver on this business plan.  
(DMiller147, pp. 5-6)

But even with industry experience, some minorities have complained that they still were not 
treated seriously.  For instance, Peter W. Fong, an Asian-American wireless license applicant, 
recalled:

It just seemed like we dont have any track record, and it is very difficult for people to take 
us creditably.  You have to start somewhere, and we are not coming off from some 
Chinese restaurant, you know, jumping into telecommunications.  I myself have 15 years 
working with the telephone company, and my partner had 25 years, and so we know what 
we are doing, but still it ... it is just very difficult for people to take us seriously. 
(PFong365, p. 11)

Don Cornwell, an African-American who is President of Granite Broadcasting, which owns 11 
television stations, understands how this process of building credibility works.  He acknowledges 
that those who get to play are already the players.   So how does one get to be a player?

. . . what tends to happen is that once you get in the game the brokers discover you.  The 
brokers don't particularly want to call you until they know you can actually buy 
something.  And once you've bought something, to them, that's prima facie evidence that 
you can do it. . . . The guy who's not known, who has no properties and is starting out, is 
almost going to have to convince the broker -- not "is almost" -- is going to have to 
convince the broker that they've got the financial wherewithal to do the deal.  So that 
means that they've got a bank reference that they can point the person to, or they've got 
an equity partner that has financial wherewithal that they can point the broker to, et 
cetera.  They've got to do some fancy talking to get to that next step.    
(WDCornwell103, pp. 16, 17)

As the market has consolidated, properties become more expensive, and deals have to close more 
quickly, the job of the gatekeepers (the brokers, lenders, investors, sellers) becomes more 
important and has the potential to be more exclusionary.  The tendency is to work with who they 
know, people they have done business with before.  And in a lot of instances, except for a few 
notable exceptions, that does not include women and minorities. 

The interviewees reported that in the wake of consolidation, the club (brokers, bankers, 
lenders, and investors), into which minorities and women were rarely invited prior to 
consolidation, has become even more exclusive.  This market-driven exclusion rests upon 
decades of historical disadvantage that has existed since the infancy of the broadcast industry.  
Allowed to run unchecked, the market has created a clear insider/outsider, have/have not 
environment.

Don Cornwell says that hes not aware of any [discriminatory practices].  It doesn't mean that 
they don't exist.  Look, it's a club.  And I think that people have to understand it's a club.  I work 
pretty hard to get at least on the periphery of the club so I know most of the broadcasters.  And 
when you're in the club, then you hear about things, okay?  You hear about what's for sale, what 
it isn't, et cetera. I think that's no different than the old thing about well, the deals get done on 
the golf course and so forth. So the answer to your question is, of course, there's discrimination, 
but could I give you a specific example?  No.  When asked what the price of admission was to 
the club, Mr. Cornwell answered as follows: I think the price of admission is admission.  You 
know what I mean?  In other words, I think that the folks at Radio One are in the club now.  
They've got a billion dollars of property, you know, or more.  I think the guy who's trying to get 
started is going to really have to rely on the pressure of the FCC and others to crack the door 
open a little bit, to give them a chance to get a shot.  And there they have to have both access and 
capital to actually ever have anything happen.  (WDCornwell103, pp. 24-26)

Erwin Krasnow, a communications attorney, explains exactly how the contracting process may 
differ for those without a track record and for those about whom the banks have doubts about the 
applicants ability to close the deal.

If there are any doubts about someone closing, the contract process is miserable, because 
the seller, because theyre very, very unsure about the buyers qualifications asks for, 
usually will ask for a much higher percentage of the purchase price to be put in as 
escrow as liquidated damages. to protect themselves in case the deal doesnt go 
through.(EKrasnow500, pp. 11-13)


? Racial and Gender Stereotyping in the Capital Markets

None of the interviewees recounted a specific example of discrimination by brokers or larger 
media lenders, but that is not surprising given the limited contact between and among the groups.  
The brokers and large lenders interviewed indicated that they had worked with very few or no 
women and minorities.  

The women and minorities, however, all observe examples of exclusion from this old-boys 
network.  If barriers for women and minorities do exist, many are precipitated by the perceptions 
about the ability of women and minorities to raise the required capital in the stated time frame.  
Brian Cobb, a media broker, offers his observations:

. . . I cant name an instance where I have seen that it was a rejection because of [race or 
gender].  But on the same token, with a female buyer or a minority buyer a seller will ask 
more questions and want more documentation as to the financial capability. . . . I dont 
think its a matter of prejudice on  its not overt prejudice.  Its a matter of  its a 
perception that [minorities and women] may not have as much money to close, so they 
ask more questions.  (BCobb512, pp. 21-22)

Whether it is considered prejudice or not, a seller who subjects minority buyers and/or female 
buyers to greater scrutiny and requires additional documentation based on ethnic or gender 
stereotypes is engaging in discrimination.  The fact that this heightened and discriminatory 
scrutiny is not considered prejudice but due diligence speaks to both the subtlety and profundity 
of the problem.

Sometimes when brokers have had bad experiences with a few minorities, they might have 
reservations about dealing with other minorities.  For instance, John Lauer, a media broker, 
indicated:

There aren't as many minority buyers.  And sellers go to the obvious places that would 
know big advantage.  They'll take the best deal that comes to them.  Well, like I said there 
are more of them, number one, that have money.  Also, in some instances  and this has 
happened.  I've seen this happen.  Blacks, minorities  say Blacks, minorities, get to the 
point where they are ready to close and are out of money, even though they've warned 
them that's been my experience. Letter of credit, letter from a bank, between the time 
that they make the deal, the time the deal is ready to close, the bank has changed its mind 
and the lender has changed its mind.  Backing out. (JLauer533, pp. 18-19)
Henry Rivera, a communications attorney, past FCC Commissioner, and Chairman of the Board 
of the Minority Media Telecommunications Council, tells us  (I)ts hard to say that [brokers 
practices are in fact discriminatory]. I think its pretty easy to see what the effect of  the way they 
do businesses has been, but its hard to say that that is driven by discriminatory intent;. [and 
they want a deal that can close]. . . so they dont want to deal with minorities typically. . . .They 
dont because again, they do not see minorities as a potentially good buyer.  I dont think its 
because they dont like Black people. . . . . Thats my perception at least.  I dont think theyre 
being overtly discriminating.  (HRivera516, pp. 28-29)

Jim Casey, a communications attorney, observes that Native Americans also confront racial 
stereotypes.

Gettingfinancing in the [Indian] country is very difficult for a number of reasons.  The 
asset, not being able to pledge.  We will say that the asset is one very big problem.  
Sovereign immunity is another big problem.  Just the hesitancy to do business with 
Indians is another.  The assumptions are that they can't afford it, they are not going to 
pay their bill, and you're dealing with a very poor population so there's simply assumed 
to be a very high risk when it comes to a loan or financing. (JCasey535, p. 21)


? The Inability to Obtain Financing Forces Some Broadcasters to 
Sell Their Stations

For many minorities dealing with the inability to obtain financing, their choice is  either to sell 
their stations or lose them.

James Wolf, Jr., an African-American radio licensee, decided to give up the fight and sell his 
station since he could not raise the financing that he needed to successfully operate in a changing 
competitive environment.

I was probably the only African-American that had a hot [adult contemporary] format.  
And I never could get this money financed to get out of my LMA.  And I stayed in it for 
two years, up until 98.  And I was so frustrated with  you know, because I wasnt able 
to get the monies I needed to do the financing.  And I just really been with all these big 
conglomerates, like Capstar, AM-FM Radio, coming at me and offering big bucks.  I 
said, why am I killing myself.  I cant get what I need.  I might as well just go and sell it, 
you know.  (JWolf281, p. 28)

Even Granite Broadcasting, a public company run by Don Cornwell, an African-American, was 
forced to sell stations to raise the capital needed to purchase other more desirable properties.

We sold two properties in Michigan to a company called Freedom Newspapers, and in 
all candor we're not sellers of properties.  It's a reluctant thing we do.  We decided to sell 
those two Michigan properties because we were in the process of buying a station in San 
Francisco and we needed the money to do that, and we would rather have kept the 
properties and just bought San Francisco, but we didn't have the capital.  So we made 
that decision.  (WDCornwell103, p. 20)

Others, like William Saunders, an African-American radio licensee who acquired his most recent 
station in 1983, also chose to sell properties they would rather have kept.  Mr. Saunders saw the 
sale to Clear Channel as an opportunity to get out of debt, not necessarily to make enormous 
profit on the sale.  Ultimately, in 1998, he had to sell his AM station that had been in the 
community for 50 years.

 (W)e were able to actually do a sale of the AM to satisfy most of the debt for 
everybody, and thats how I again, got Clear Channel[in the deal]. . . . (M)y AM station 
was what they wanted for a talk program. . . . and so they offered me just about enough 
money to pay off my debt and to take that, because I would prefer having the AM instead 
of the FM.  You know the AM had been in the community for about 50 years at that time 
from 1947, and its been the only station that Blacks have had access to. In our area so 
we wanted that more than anything else, but they didnt want [that], they had 4 or 5 FMs 
in the market at that.  I lost it all in 1998, December of 1998.  (WSaunders163, pp. 4-6)


? Luck Played a Part in Some Acquisition Opportunities

From our interviews, it was clearly evident that small businesses and especially minorities were 
having significant difficulties getting access not only to capital but also to purchase 
opportunities.  Some, however, had luck with either financing or station acquisition and took 
advantage of it.

Pierre Sutton, and African-American who earlier spoke of his companys difficulty in raising 
capital for their first station in 1971, was later presented with opportunities by those in his 
network of industry-related professionals.

 (O)ne time I bought a radio station from a guy in Philadelphia because I was sitting 
down at lunch with the President of the bank [that was courting us at the time] in 
Philadelphia and he asked me if I knew the owner of this particular radio station in 
Philadelphia that wasnt paying him. And I said, yeah, Ive known him for years.  How 
would [you] like to own his radio station?  And so he put me together with him and we 
worked out something so we became majority owners of that property. Another time a 
friend of mine, Stevie Wonder, called and said that theres a guy who used to work for me 
as a newsman who is in trouble in Ft. Lauderdale, Fl with his radio station. And so I 
wind up getting that station from him.  (PSutton110, p. 15)

Pierre Sutton shared another story about his father, Percy Sutton, impressing a radio station 
owner with on-air reporting at the time of the 1967 Harlem riots.  As a result of that experience 
the owner told the senior Mr. Sutton that if he ever elected to get out of the [radio] business, he 
would like to be able to sell to [my father].  And my father was currently still in public affairs, in 
politics, and so he couldnt do it. So I had the opportunity to play.  (PSutton110, p. 9)
? The Impact of Limited Access to Capital on Operations 

Even with occasional luck, most minority participants had to struggle to bring capital into the 
business.  Since advertising revenues were generally not on par with their White counterparts, 
cash had to be generated elsewhere through such means as personal loans to the business or 
mortgaging of personal assets.  Without sufficient capital, the ability to acquire the necessary 
equipment, to recruit and retain top talent, and to promote the business was diminished.  

Erskine Faush, an African-American television licensee, explained it this way.

Well, Im saying that if you need personnel, if you need promotion, if you need 
equipment, whatever it is that you need, goes back  you know, you cant keep good 
personnel unless you have the salary level where you can attract and keep good people.  
In many instances even if you have entry-level people and take them right out of college, 
right out of school, you bring them in, you train them and, of course, once they get to a 
certain level then the others with the resources can hire them away from you.  Capital  
Im saying whatever area you want to get into, it is capital.  (EFaush238, p. 16)

George Dobbins, an African-American wireless licensee, also expressed his concern over the 
effect limited capital was having on his ability to attract and retain a good management team.  As 
capital sources told us, the quality of management was a major determinant of a businesss credit 
worthiness.

Well, capital wont solve every problem.  The other problem is management and 
expertise.  But if you have the capital you can employ the expertise, just go out and do  
the way I do now in business is if we see a sharp, young person we want in our business 
we come up with a deal to bring them in.  But if you dont have the capital its difficult to 
manage the management team.  You know, the management team is making money  
theres a demand for sharp people in the telecommunications industry now.  So if they 
are out there making a significant income, theyre not about to go with a broke company.  
(GDobbins362, pp. 7-8)


2.	Discrimination in the Community As a Market Entry Barrier

Several female and minority interviewees spoke of resistance and downright discrimination that 
they encountered in their communities when they were first starting out as well as through their 
years of operation.  Such things as disputes over tower locations slowed down licensees ability 
to start up their stations.  Menacing calls from racially biased groups made programming and 
selling more difficult.  Local politics interfered with the acquisition of financing.

Most poignantly, James Wolf, Jr., an African-American, was confronted by the Ku Klux Klan 
over the positioning of his microwave tower.  The fight was taken to the courts.  His life was 
threatened in the process.

The [White community] had never really had local autonomy in Black broadcasting, 
never a voice in Black broadcasting, and they didnt know what that meant.  . . . The 
White community, they were just totally opposed to us, you know.  As a matter of fact we 
ran into confrontation with the [Ku Klux] Klan and all of that.  We had some major stuff 
in this small community here that were in.  

(T)hey tried to stop the erection of our microwave, free-standing tower.  (W)e got hung 
up in court, in court battles and so on.  Finally we surmised that we needed to bring the 
media involved in it, so we brought a local television station in[to] it, and I brought the 
newspaper in[to] it and I brought [in] others from other communities inside of this 
zoning median.  We took pictures of all the towers around the town which were hazards, 
and we showed where our tower was going to withstand winds of 220 miles per hour.  
And they finally, after looking down the cameras and all, said  they granted it.  But we 
had threats . . . phone calls from the KKK that said dont build this, dont open this up, 
you know.  It was a lot of life threatening stuff that I went through, you know.  (JWolf281, 
pp. 11-12)
 
Dale Gehman, a Native American, saw it as  a political situation where you've got a license, 
you're going to service the community, then you become an influence in the community, and I 
think there's a lot behind the scenes that we learned later that we were blocked in every move we 
made, unfortunately. (DGehman 132, p. 5)

Willie Walls, a Black radio station owner, stated that his number one obstacle in 1962 when his 
station was organized was that it was a time of some integration, and we had a problem being 
Black owned and operated, listing ads, and you know,[we] had opposition.  (WWalls403, p. 4)

Others, like James Wolf, Jr., had experiences of being pressured to change their format away 
from urban and toward something less minority focused.  He told this story .

[Steve, a White male and one of Mr. Wolfs partners] wanted to . . . go country and 
western, but he compromised it and tried to fuse in pop.  And so I had to stand up.  I 
stood up  and they had a new program director that we had brought in, which is a White 
program director from Alabama.  And he had nothing but real red neck in him.  So he 
was glad to do [country and western].  So what I did, I walked in after about 20 hours, 
not quite a day, of listening to it, and I told him to put everything back just the way he 
found it, and to pack his stuff and go back to Alabama.

 Steve was a part of our organization then, you know, and we had to demonstrate that 
since these great White fathers had helped me to get this money to sustain and so on and 
so forth, one of the conditions that they wanted was him to be in as a general manager 
and . . . It was one of those situations where we had challenges, because they were 
getting pressures from the White community, because they didnt like the Black music, 
you know.

 Steve had lost a lot of his friends because of the nature of the beast that we had 
created, you know.  And so he was just trying to justify  Im still White, you know.  
Look here, I can change this, you know.   Thats what that was all about.  (JWolf281, 
pp. 18-20)


3.	Discrimination in the Industry as a Market Entry Barrier

Not only was discrimination experienced in the capital markets and in the communities, but 
minority and women licensees also encountered discrimination within the industry itself, coming 
from other station owners or from employment practices among the large broadcasters.


? Discrimination in Media Portrayals and Coverage of Minorities

Rev. Everett Parker, with the United Church of Christ and a long time civil rights activist in the 
area of communications policy, shared stories of how WLBT (Mississippi) reported news about 
African-Americans in the 1960s.  It highlights the extensive power of the broadcast medium to 
affect community views and actions. The following comments by Rev. Parker and Mr. Faush 
provide a historical context for the market entry barriers that African-Americans have faced in 
their attempts to become broadcast licensees.

Well, in all of the South stations referred to Blacks only by their last name.   And women 
just the same.  They refused to give Blacks the opportunity to present their views on 
political issues of great importance to them, such as at that time of school desegregation.  
WLBT, when Meredith was admitted to the University of Mississippi, the manager of the 
station got on the air and told the people, You get up there and stand shoulder to 
shoulder with the governor and you keep that nigger out of Old Miss, and they did.  
They took their ax handles and their pistols and they went up there and you know there 
was a riot and I think some people were killed.  The manager of WLBT [told people to do 
that].

 For WLBT, when the Brown v. The Board of Education was decided and Justice 
Thurgood Marshall  was on the Today Show, WLBT put up a sign, Sorry, cable 
trouble.  And when the kids from Tougaloo College sat in at the Woolworth store in 
Jackson, WLBT covered it for NBC but did not carry it, and things of that sort.  And that 
was true all over the South. . . . (Y)ou could go all over the South and it was the same.  
(EParker504, pp. 6-8)

Broadcasters discriminated against their listeners in ways other than just what news they reported 
or how they presented it.  Rev. Parker shared that The broadcast industry at the time  back in 
the 60s  had no interest in Black people as [an] audience.  They said  well, this manager at 
WLBT, later after he lost his job and everything, he says, Well, if I thought those Negroes had 
any money to spend Id have given them time.  (EParker504, pp. 13-14)

? Discrimination in the Workplace

Mr. Faush, an African-American television station owner, talked about his experiences with 
segregation during his earlier days in broadcasting.

 (I)t goes back to the days of segregated everything and what all that involves, whether 
youre talking about public facilities or access to anything.  So I came through all that 
era and was here, you know, through the demonstrations and everything.  (W)ed always 
had the hope [of becoming owners], okay.  But obviously the fact that certain gains were 
made in certain areas would certainly increase that hope that youd finally get to the 
point where youd talk about ownership rather than just being employed.  

[The segregation that I experienced did stand in the way of that hope] of course.  Being 
realistic, youre looking at getting Black-owned, Black-programmed radio stations that 
were all owned by Whites.  I mean, no matter what hope you have, youre looking at 
something that is in front of you.  And you know if your hope takes on any reality at all 
and so forth, you know that something has got to have a dramatic change.  

You know, we worked inside the radio station where you had Black and White toilets.  I 
mean, not just outside but inside, you know.  The owner of the station and the White 
employees had their restroom; the Black employees had theirs.  I mean, you came in one 
door and they went in another door, yet, youre in the same facility.  Now how blatant 
can it be?  You dont have to go out on the street anymore to see a sign separating people 
on a bus, behind a water fountain that said, Colored, or White.  (EFaush238, pp. 
19-20)

Nancy Waters, a Black radio licensee, talked about her difficulties earning respect from her staff 
when she first acquired her station.

With me being Black, I had no respect from the staff when I started.  White men  they 
would address my husband.  You know, I'd say to him, you have to come up and get on to 
them, because they won't listen to me about this, and won't listen to me about that.  So I 
was dealing with the double bias everywhere I went. (NWaters178, p. 16)

While not nearly as blatant, Rev. Parker told us that discrimination still exists in the hiring 
practices of large companies.

Well, you certainly see [discrimination] in a [large] company (T)hey could . . . .certainly 
have a policy of even just fair promotion, which would open upper management spots, 
middle management spots, to anybody who has the capability, and they could hire for 
that purpose.  And any one of these companies could do that.  Certainly they 
discriminate.  How is it that only White males get onto the decision making level?  Maybe 
a women here and there.  Look at the boards of directors of these companies.  They have 
maybe one or two women and they are mostly window dressing.  But how many of these 
big companies really have important people of color on their boards of directors?  Just 
go over all of these communications companies.  (EParker504, p. 27)

Even in small broadcasting companies, disadvantaged groups have difficulties with employment.  
Stuart Martin, a White male television licensee, articulated a perception that may hamper the 
advancement of women within broadcasting. 

The issue on Equal Employment and Fair Employment of women in this business has 
been self-correcting.  For instance, in our news department, our problem is finding White 
males. Its almost like horseback riding. Its being dominated by women.  I dont know 
why.  And all come in and are very eager until they approach 30, then all of the sudden, 
somehow or other they seem to drift off in marriage. What happens is, of course, they get 
along and all of the sudden, they begin to get the urge to have a family and once they 
have a kid or two, they find its a hell of a lot more rewarding than pacing around after 
stories.  Over and over again I see that. (SMartin212, pp. 17-18)


? Ethnic and Gender Marginalizing Practices by Competitors

Minorities have also had their share of difficulties with competitors.  Again, Erskine Faush, an 
African-American, shares his recollections of how ratings were distorted by his White 
counterparts.

I can remember the time when we were number one in the market.  But when the 
[audience share] ratings came out  . . .  the general market stations would put up 
billboards.  And perhaps they were number three or four or whatever, and they would 
call themselves number one in the market and with an asterisk by it.  In fine print at the 
bottom it would say, excluding ethnic stations.  They just couldnt bear the thought of 
a Black, even programmed, facility being number one in the city.  (EFaush238, p. 9)

Such practices have the effect of marginalizing minority-formatted stations, justifying discounted 
advertising or no advertising on those stations. 

Given the difficulty of acquiring stations, some minorities, just to get started with their 
community-specific programming, bought time on others stations.  Andres Neidig, a Hispanic 
radio owner, called all 42 stations in Denver to try to buy time to produce a Hispanic show, and 
none of them made any time available for him to buy, even the stations that were losing 
money.  The general response he got was Hell, no.  Im not going to put a Mexican program 
on the air.  (ANeidig426, p. 18)

Bernadine Nash, an African-American radio broadcaster, talked about the marked difference in 
her experiences trying to buy stations both during and after the repeal in 1995 of the Tax 
Certificate program.

Well, it was a no-brainer for people in this market [to find me for tax certificate deals] 
because Im the only [minority here].  So, if they wanted  I mean there is only one 
person within the market that they would call.  So that was a no-brainer for them.  

On the other side of it, and this is where I realized after the tax certificate went away, 
that the more institutionalized issues around race began to surface.  Because there were 
actually two properties that I knew were for sale, that I was interested in (b)ecause my 
goal had been to  get a 24-hour signal.  I didnt care if it was AM, FM, whatever.  

And I would put calls in and then not get calls back, and then I would get a little pissed 
off, so . . . then I would like decide, it would become a challenge, so I was determined to 
get through.  And I would finally get through and I would be told either that the property 
was no longer available, or I was given a purchase price that seemed irrational to me.  
And after maybe the second time, I had a friend of mine do that game you do sometimes 
in housing.  And we got different answers.  We got different answers [in terms of both 
availability and pricing].  (BNash118, pp. 17-18)

Ms. Nash and a friend not known to the local broadcasters both inquired about the availability 
and pricing of stations; thereafter they compared the answers. In so doing, Nash employed a 
technique, widely recognized by the courts, for ferreting out illegal bias, namely discrimination 
testing.  The fact that her friend received more favorable answers, in terms of availability and 
pricing, underscores not only the importance of the Tax Certificate but why discrimination 
makes it necessary.

Nancy Logan, President of American Women in Radio and Television (AWRT), recalls hearing 
about the experience of a woman who had been marginalized by a group of local broadcast 
competitors. 

I remember hearing this woman on the NAB panel speaking about having a difficulty in 
her marketplace being [that she owned only] one station and, plus, that she was a woman 
owner, and that the guys who ran the stations in town that were groups would, you know, 
literally gang up on her in the business way, in the market. (NLogan523, p. 14)

Some women, like Patty Ruiz, a Hispanic female television licensee, told us she had to prove 
herself in the male-dominated communications industry.

The truth of it is there's a lot of barriers; it's a man's world especially in the 
communications industry.  You really have to struggle to make them, not only believe in 
your capabilities, because you are woman, and because you are a minority.  You know, 
you were always banging your head against the wall.  You had to really prove yourself to 
show that you knew what you were doing and knew the industry and loved the industry.  I 
mean you got to love and have a passion for the industry to survive. (PRuiz452, pp. 14-
15)

She expounded on how she had to prove herself as a woman so that others could take her 
seriously:

Also, I think the engineering studies were, you know, you had to really know what you 
were talking about, because you're dealing with  talk about a man's world.  And so you 
had to constantly prove yourself, and make sure that you understood the lingo and 
everything that goes with it.  That they took you seriously, that they just didn't think, you 
know, this girl doesn't know what the hell she's doing.  So you had to work twice as hard 
to read and learn about engineering.  The sites and where, you know, the towers would 
go, and the height and reach, all that great stuff that comes with it. (PRuiz452, pp. 14-15)

In addition to being excluded by local group owners, S. Jennell Trigg, a communications 
attorney, opines on the inability of minorities and women to rely on the National Association of 
Broadcasters (NAB) for guidance. 

I know for small licensees that were not members of groups, independent stand-alones; 
[but] if you were minority, you certainly didn't have a voice at NAB.  You were dependent 
on NABOB.  If you were woman owned, you really couldn't depend on NAB, you had to 
deal with American Women in Radio and Television. there are all kinds of politics 
going on with NAB that the small guys, and if you're minority, you get lost in my opinion. 
(JTrigg536, pp. 37-38)


? Restricted Access to Information and Opportunity

Getting into the deal flow is a critical step in the acquisition process.  Deal flow refers to being 
in the loop to receive information about purchase opportunities.  This information can come from 
sellers, lenders, brokers, and investors.  It is all in who you know.

Diane Sutter, who has managed to get herself into the deal flow for television station purchase 
opportunities talks about the lack of incentive for sellers to seek out women and minorities as 
prospective buyers.

Well, the problem still exists that you cant find stations that you can afford to buy 
whether youre male or female, and at the same time, its even harder for the women and 
minorities because generally theyre not in the deal flow arena. And because theres no 
reason to sell it to a woman or a minority, because there are no Tax Certificates 
available today, theres no incentive to sell it to any of us, so why not just keep it in the 
family? And everybody, and you know, its like Monopoly. Everybody sits at the board 
and they shuffle their hotels around. You know, Ill trade you a Boardwalk and a Park 
Place for St. James Place, and (a get out of jail free card). . . . I think its especially 
difficultand Im atypical because Ive had a lot of things that have worked in my favor. 
But someone else going in to do this, today, with consolidation? I think its enormously 
difficult.  (DSutter205, pp. 19)

Brian McNeill, a media investment banker, talks about his experience with women and 
minorities and how he judges their ability to participate in a deal.

 . . . (W)e look at deals dispassionately based on quality of management, the quality of the 
purchase price and how much upside there is.  But you know, having said that, . . . it 
seems to me, but Ive never actually done this statistical arithmetic, [that] the bulk of the 
deals we see are more from, I think more men are in the business, so I get more plans 
from men than women, and minorities are still minorities so we see more plans from 
Caucasian men and companies than we do from minorities.  So I dont really know the 
statistical breakdown.  (BMcneill513, p. 7)

Diane Sutter shared more of her experience when she  told us that when I hired Bank Bostons 
M&A department to do my  investment banking for me  . . .one of [the two people I was working 
with] said to me that I was the first woman client they had ever had. . . . And when I went to the 
[venture capital] firms, I think it is safe to say that not one of them had invested in a women 
entrepreneur in broadcast. (DSutter205, pp. 8-9)

Willie D. Davis, a Black male radio licensee, observes that minorities are often the last to know 
about broadcast deals because they are not a part of the network; and that by the time minorities 
find out, the deals have become public and the negotiations have already taken place.

Most of the deals sometimes theyre done kind of behind the scenes and they only 
[be]come public pretty much [when] the filing with the FCC takes place. In other words, 
the negotiations many times have started very much on an inside track and it only 
becomes public when they file.  Well, as you probably would surmise, not being heavily 
plugged into that network, I would say its almost fair to say that minorities are the last 
to know. (WDavis120, p. 15)

Mutter D. Evans, a Black female radio licensee, echoes that observation by pointing out that 
[y]ou dont know what properties are available unless you [are] in the inner circle. Whos 
always been in it?  Those who control.  White men. (MEvans275, p. 26)


? Access to Station Purchase Opportunities Through the Informal 
Network of Owners

Manny Davila, a Hispanic radio licensee, talked about how stations for sale passed among the 
members of the good old boy network.    What made it difficult for him is that (t)here wasnt 
a lot of minority ownership.  It was basically conservative Anglo, you know, and hey, this guy 
will sell it to this guy, this guy will sell it to  and it was basically almost like a little group there.  
(MDavila128, p 15)

In contrast to Mr. Davilas experiences, Robert Fink, a White radio station owner, shared how 
easy it has been for him to find properties for sale through his network of other station owners 
and brokers.  Even if he were to enter a new market, he expressed confidence that he could find a 
broker who would be willing to work with him.

(I)n fact, I never used a broker to find anything I bought.  Its just kind of being in the 
business and keeping your eyes and ears open and, you know, hearing scuttlebutt and 
hearing that this person might be for sale and that type of thing.  And thats always kind 
of been, you know, its a small group, we broadcasters, and you talk to friends and you 
get an idea, and you think, hey, I might want to go there, and I hear that so-and-so is 
having some problems.  And you talk to them.  And so, its really kind of old-fashioned, 
just exploring and seeing what you are doing.  Now thats for me, because Ive been so 
active here in California basically, that I have the network.  If I were to buy or look for a 
station in Michigan, I would obviously have to go to a broker because I dont know 
anybody there.  (RFink235, pp. 16-17)


4.	Discrimination in Advertising

Discrimination in the advertising industry against minority-owned and formatted stations has 
been well documented in recent years, most notably in the report prepared by the Civil Rights 
Forum on Communications Policy for the FCC, When Being No. 1 is Not Enough:  The Impact of 
Advertising Practices on Minority-Owned and Minority-Formatted Broadcast Stations 
(submitted in January 1999).  Our study revealed similar findings as reported below.

The small, minority and women broadcast licensees that we spoke with frequently cited routine 
discriminatory behavior on the part of advertisers and advertising agencies based on:

? the race or ethnicity of a broadcast licensee,
? the minority audience targeted by a format,
? the operational size and scale of a licensee (e.g. WalMarts common refusal to 
purchase local advertising other than through national agency representatives), 
and
? whether a licensee could afford to subscribe to rating services (e.g. Arbitron).


? Advertising Dollars are the Life Blood of A Station

Advertising dollars are the lifeblood of a station.  Ad revenues provide the much needed working 
capital to pay for on-air and behind the scenes professionals, local news crews, new or upgraded 
equipment, syndicated programs, community sponsorships, general station promotion, and return 
on the owners investment.  Further, since stations are valued at a multiple of their cash flow, any 
diminishment in advertising revenue reduces many times over the market value of a broadcast 
property.

If one takes into account the market entry barriers created by limited access to capital 
experienced by small, minority- and women-owned radio stations and couples it with the 
discrimination that they have traditionally experienced from advertisers, one begins to 
understand how serious a problem this discrimination is for these business owners.  The 
combined lack of resources severely impacts their ability to compete, grow and, quite simply, 
survive.  Further, in the face of industry consolidation, the value of their stations suffers to a 
point where, if they decide or are forced to sell, the proceeds from the sale may well be less than 
the station would be worth if it were owned by or formatted for non-minorities.


? Personal Attacks and Racial Slurs

Minority broadcasters have long had to suffer personal discrimination that was blatant and 
insulting.  Not only were advertising dollars withheld because of this discrimination, but also 
minority owners had to endure personal attacks and racial slurs.  To the extent that such attacks 
and slurs were general indicia of the status and standing of minorities and women in the market, 
they are instructive.  James Wolf, Jr., an African-American radio broadcaster, shared his 
historical and more recent experiences with us.

 (W)e had comments made to some of our [Account executives  AEs].   [Some business 
owners] said, We dont want those kinds of folks in our business. [So they wouldnt do 
advertising on our station..]  Well, see, they would say it to my White AEs.  They would 
never say it to my African-American AEs.  They would always come back and tell me, you 
know.  But they never said it to African-Americans. 

 Now recently my brother got  he faced some discrimination.  He works in operations 
here.  And he had a client that said that  I normally dont want niggers coming in my 
business.  He said, But you seem like youre kind of nice.  He said, I think Im going 
to buy some advertising from you.  Youre kind of different from them, you know.  Im 
just going to give you a little advertising just because of your attitude.  But I normally 
dont care for niggers coming in my business.   He said that.  And my brother said he let 
him write that contract up.  He said he wrote that contract.  He was so mad.  He said, 
Man, Ive taken more time  than Ive taken in a long  that happened last year as a 
matter of fact.  (JWolf281, pp. 37-38)

Jose Molina, a Hispanic radio and television licensee who acquired his licenses between 1980 
and 1997, had experiences that were not as blatant as Mr. Wolfs, yet the feelings of 
discrimination were there just the same.

Overtly, no [I didnt experience discrimination because of my minority status].  But 
sometimes I walked away [from sales meetings with prospective customers] with a feeling 
with, hmm, what could have happened here?  [I dont exactly know what gave me that 
feeling.]  I guess that if you are, I dont know, maybe like in that Bruce Willis movie, the 
Sixth Sense, you know. . . . (I)ts almost impossible to put words on when somebody treats 
you real, real nice, you know, ha ha ha, that sort of thing. [If I had to draw an analogy of 
what it was like], (a)t the beginning it would have been like The Jeffersons show. 
Remember that?  Just like George Jefferson, who is a buffoon.  Thats how you would feel 
coming out of a meeting;[and if I felt that the discrimination was not present, it] would 
feel like youre coming out like Top Gun.  But it wasnt one of these cruel types of 
discriminations, you know what I mean, [like] Jim Crow. . . . (I)ts very subtle.  
(JMolina121, pp. 16-17)


? Disparity Between Market Share and Revenue Share

More often, the discrimination took the form of withholding advertising buys from the 
stations.  It was not uncommon that stations would be ranked in the top five in terms of audience 
share but be positioned well below that level in terms of share of advertising dollars. 

William Saunders, an African-American whose radio station was No. 1 in the market as far as 
listeners, yet he could not get his fair share of advertising dollars.

Well in the marketplace, two things were happening. Our station ended up being number 
1 in the market, but we still couldnt get advertising. They said you [have to] be a certain 
place in the [ratings] book, a number between 1 and 4. And no matter where [we got] in 
the book, and our station WPAL AM was number 1 in the whole area, and still we 
couldnt get that crossover advertisement, so it really didnt [matter], and we needed the 
capital to make it run. And it put a strain on the corporation.  (WSaunders163, p. 4)

Andrew Langston, an African-American radio licensee who was a pioneer in the industry, had 
similar experiences being No. 4 in the market with his station.

Im No. 4  in this market and Ive been there for 18 months.  Thats a year and a half Im 
locked in it.  The number one station is WHAM . . .. , No. 2 station is . . . a country 
station, No. 3 station is . . . a hip-hop, thats a rock and roll station.  No. 4 is [my 
station,] DKX.  Now, Im not (just ) saying that to you.  Heres the classic frustration.  
Now am I No. 4  in income?  No.  And am I No. 5, No. 6, No. 7, they make it all the way 
down there, am I No. 9 is income?  Hell, no.  All right?  Thats what is unfair here and 
how in the world can you let agencies which some way or another do this and then they 
like Blackball you.  You dont get this, you dont get that.  (ALangston112, p. 4)


? The Katz Memo  Its Implications for Minority Broadcasters

As recently as last year, Tom Joyner, a well-known and well-regarded African-American radio 
personality with a popular, widely-syndicated morning radio program, released an internal memo 
that had been written at the Katz Advertising Agency (the Katz memo) which essentially said 
that media buyers should not place ads with minority-formatted stations since their clients were 
looking to advertise to prospects, not suspects.  As one might imagine, the disclosure of that 
memo caused a giant ground swell inside and outside of the industry.  Richard Weaver-Bey, an 
African-American broadcaster, responded to the Katz memo this way.

[T]he Katz memo was sort of the final spike in the coffin, and that was just last year . . . 
that that memo came out.  And thats where a large advertising agency in New York is 
saying to its people dont buy Black media.  I mean, when you say that and then you look 
at stations that are sixth or seventh in the market in the ratings by Arbitron and 24th or 
25th in ad revenue, it says that there is blatant disregard for the stations that are owned 
by minorities or geared to minority listeners.  I mean, it cant be anymore poignant than 
that when you look at the facts.  You know, many people are saying why are African-
Americans or minority people always crying, but the facts are the facts.  (Rweaver-
Bey171, p.8)

Broadcasters like Black radio station owner Art Gilliam see part of the problem as lack of 
awareness on the part of advertisers and agencies.  He thinks there is an opportunity to educate 
the public about African-American markets and spending power.

I think the advertising community operates in the general framework as the rest of society 
in the sense that many of the advertisers, particularly the agencies, have not much 
awareness of African-American markets or their value.  So that if you have a real good 
sales staff, they can go out and talk directly to retailers and many of those retailers if they 
have an interest in Black markets, will be responsive and some can be convinced of the 
importance of that market.  

But within the agencies, theres a lot less of that and over the years weve experienced 
that and unlike radio, where there are certain EEO requirements which put in place 
people who understand African-American markets, that doesnt apply in the advertising 
business and consequently if you have for example a lily White advertising agency, that 
has no awareness of Black media, Black markets or anything along that line, then youre 
going to have a harder time convincing them to buy Black radio. So theres no question 
that there is, I dont, I wouldnt necessarily even call it discrimination, but just an 
absence of awareness in that market.  (AGilliam117, p. 20)

Charles Cherry, a fellow Black broadcaster, shares Mr. Gilliams views.

. . . As far as trying to market the station to other folks. . . you have to educate them in 
reference to the fact that Black people are a viable market, because a lot of folks just 
dont understand that.  They just dont believe that Black people buy anything. And you 
would think that people who deal with numbers and understand what statistics say could 
see the purchasing power of Black America, the allure to Black America, the high level of 
listenership, the susceptibility . . . or the effectiveness the advertising has on the 
purchasing power and the habits of Black America -- (CCherry262, pp.6, 32)


? Discounted Pricing for Ads on Minority-Formatted Stations

In addition to withholding advertising altogether, many minorities have had to accept discounted 
pricing on their advertising spots.  Dorothy Brunson, the first African-American woman 
television broadcaster, shares that (t)here has never been an equal process in terms of 
advertisers.  If you have 10 listeners who happen to be Black, they may be worth $2.00; if you 
have 10 listeners who happen to be White, they may be worth $5.00.  (DBrunson105, p. 5)  As 
Ms. Brunson continued, she indicated that she understood that this was the way it was and 
learned to take that into account in the operation of her stations.

This dramatic disparity in prices for ads was not unique to Ms. Brunsons experience.  William 
Saunders, another African-American broadcaster, had similar experiences and shared the choices 
that he had to make as a result.

Normally our price [for advertising spots] would be lower . . . (p)robably sometimes 
50%. . . . We wouldnt even attempt Wal-Mart; its not even worth raising the effort. But 
get down to just car dealers, large car dealers, here, and I dont know if you know much 
about South Carolina, but the coast of South Carolina, where we are, Blacks have always 
been 40-50% of the area, and some of the counties now are still 80% Black. And the area 
where we live, Blacks buy about 70% of the cars. These are their estimates, not ours. We 
think its higher than that. But the advertiser goes to the other stations or to, I mean these 
companies sponsor golf tournament and fishing things and all kinds of stuff that has no 
relationship to my market or my business and the African American community gets 
nothing out of spending their money with these merchants.  

So thats where the problem lies.  And even when we do something, like I just did a deal 
with Rick Hendricks, hes the largest dealer here in the Charleston area, automobile 
dealer, and we wanted to do an education program called Focus on Education, a half an 
hour a week.  And for a year to run this program, it would cost us $13,000.  And we went 
to them with it and they said well anytime that we want to do something with the 
community or we if want to reach the community, we always want to do it with you, and 
we want to just buy advertisement, then we go to these other people.  Dont make too 
much sense to me, but they ended with the numbers, but they came back to me and said, 
well, our advertising people are saying that the program on your station would only be 
worth $5200. So what they do in a sense, they put a price on my product. And you either 
take it or you leave it.  And you know what we did was you know we wanted the program 
so we said that WPAL will sponsor that other part of that $13,000, but not changing our 
price.  (WSaunders163, pp. 8-9)

Some people, such as Bob Carl Bailey, an African-American radio licensee who acquired his 
station in 1977, took bolder actions vis--vis their communities.  Mr. Bailey risked alienating one 
of his largest advertisers when his station was critical of one of his biggest food chain 
advertisers for the low numbers of Black people its hired in the management ranks of the store.  
Nine locations, very few Blacks .  . . so how the hells he going to write me a check when I take 
that kind of stand against him? he asks.  Furthermore, his station insisted that Black people be 
hired by the Census Bureau to be the enumerators in the Black neighborhoods.  That hurts you 
financially,  he offered.  


? National vs. Local Advertising Revenue

For radio broadcasters, it is important to receive a significant percentage of their advertising 
revenue from national accounts vs. local advertisers.  The national advertisers are more able to 
afford advertising than their local counterparts and advertise with more regularity and frequency.  
Historically, minorities have had difficulty acquiring national accounts.  Some, like Willie Walls, 
an African-American radio station owner, felt it was because they did not move in the same 
circles with those who made advertising decisions.

Well, the discrimination was, basically, that we were not able to get national accounts 
and some local accounts that maybe a counterpart  of another race, would do.  
Because they had inside contacts with people.  They ate with them, they worshipped with 
them, which we did not do.  And they had a better chance of getting ads and 
advertisement that we sometimes did not get.  (WWalls403, pp. 4-5)

Richard Weaver-Bey, an African-American who in addition to his radio station owns a real 
estate business and is active in his community, noted that the lack of contact with the right 
people has impacted his ability to gain advertising revenue.

I was right here in the Hartford area and I run a real estate business as well.  What I had 
planned to do was to take control of the radio station and use my community contacts and 
a number of boards  I sit on a little better than half a dozen boards of directors from the 
Chamber of Commerce to the school board, to the Board of Education to Community In 
The Arts organization.  So I thought that there would be enough community contacts for 
me to be able to encourage people to advertise and thereby getting enough revenue to 
make our station profitable or at least break even.  

But unfortunately thats not the case that we minority media are finding around the 
country.  Were finding   that when stations that are owned by minority individuals, 
whether theyre first in the marketplace or not,  theyre not generally first in ad revenues, 
because ad revenues basically are doled out by large advertising agencies and many of 
those deals are made on the golf courses and in the country clubs, and thats not really 
the area that is frequented by minority individuals or females. (RWeaver-Bey171, p.2)

Johnny Shaw, a fellow Black broadcaster, felt that because local, independent stations are 
providing service to their communities, there ought to be some regulations put into place to say 
that independent owners, especially if they pull good numbers, if theyve got the listenership, 
ought to get at least a fair, what I would term as, a fair share of those national dollars. And 
when I say national dollars, I speak in term of agencies and, not just local people because youve 
got to understand local business, small businesses cant afford to spend a whole lot of dollars for 
advertisement.  Im talking about, you know, your big conglomerate companies who can spend 
those dollars.  I think some of those dollars should be shared with us. (JShaw185, pp. 15-16)

Mateo Camarillo, a Hispanic radio licensee, discussed how being in smaller markets coupled 
with his minority status and minority programming markedly affected his ratio of local to 
national advertising.  He raised the issue of how advertising reps are compensated for placing 
ads.

[Our radio stations] were in the obviously smaller markets in [California].   One of the 
problems of having [stations in smaller markets is that] the percentage of local vs. 
national support is very skewed so that its . . . heavily laden with local support as 
opposed to the typical formula 60-40 national to local, its more closer to 100% local. 

And theres a, and I wont say conspiracy, but theres also the media reps, [who] have an 
incentive just to stay with big cities. And so even though they may represent you, your 
representation is not a very strong advocation for the smaller markets. So the media reps 
play a role in the finances and the ability of a medium- to smaller-market stations being 
able to get national advertising, which is a real problem in this industry.  And I dont 
have a solution, but Im just saying is that there are very few Hispanic media reps, so the 
understanding of that issue is not as clear as it ought to be. 

And the consolidation thats taking place, even marginalizes those few that are, so they 
have to concentrate on the larger markets where the consolidation is taking place. So the 
smaller and medium-sized markets, which is where the area of Hispanic ownership of 
licenses happens to be because they cant afford the bigger cities unless they themselves 
have the wherewithal to become a public entity, the majority of Hispanic licensees are 
having to struggle.  Thats why I got out of broadcasting.  Thats why this year I sold the 
end of my stock and I actually started shifting away in 95. (MCamarillo375, pp. 18-19)


? The Impact of Rating Services Practices on Minority Broadcasters

Another variable that factors into whether and at what level small broadcasters receive 
advertising revenues are the audience rating services such as Arbitron . Sampling practices, 
geographic market definition and the cost of the service are all impediments for minorities in the 
ratings game.  

Ed Gomez, a Hispanic radio licensee, shared his experiences with Arbitrons efforts to capture 
the Hispanic audience listening patterns and the reactions of other Arbitron members to the 
companys efforts to accurately capture the data.

Arbitron was another thorn in our side.  Arbitron  when Arbitron instituted a 
methodology that they called personal placement and retrieval  PPR meant that over a 
survey period they had a policy of sending so many diaries into high density Hispanic 
areas and high density Black areas.  Well, both the Blacks and Hispanics, and 
particularly the Hispanics, were terrible at returning the diaries.  They just, you know  
they would agree to do it and then they wouldnt do it.

And it was hard for Arbitron to get back any semblance of diaries from the Hispanic 
communities.  So they instituted personal placement and retrieval, and they would hire 
people here in Albuquerque to go into the south valley, which is a high density Hispanic 
area, or the north valley, and put in, you know, 50 diaries.  And it was a four-week 
survey.  They had to keep the diaries.  In between the four weeks, these people were 
required to call or even go back and make sure that the people were not having any 
difficulties with the diaries and making sure that they were keeping them; And at the end 
of the survey period, go and get them, retrieve them.

Well, all of a sudden, stations in large Hispanic markets began to generate some really 
high numbers; some high rating numbers.  Because they were finally really measuring 
the Hispanic markets.  Well, the general market members of Arbitron began to complain, 
and they said, you know, you shouldnt play favorites.  I mean you are doing this simply 
to help the Spanish stations, and they didnt want that to happen.  So they dropped that 
methodology and went to something else it was just going back to what they did before.  
And so, if you didnt have 80% of the population Hispanic in your market, you lost all of 
your numbers. And that was, in my opinion, blatant discrimination  (EGomez370, pp. 
34-36)

Many like Black radio station owner James Wolf, Jr. were confronted with the impact of 
Arbitron ratings on their ability to secure local advertising dollars.  Without the ratings, which 
one had to be a member of Arbitron to use in selling efforts, advertisers could use that as an 
excuse for not buying time on a particular station.

Well,  Ive had difficult times with much of the advertisers, especially locally.  Unless 
youve got the numbers, you know, the Arbitron numbers, you know, you still are not 
going to do well, you know. . . . Oh, they bought from us because we always had the 
numbers, you know. [But] we were brutalized on the local [advertising] end of it.  
(JWolf281, pp. 37-38)

Art Gilliam, an African-American radio licensee, talked about how Arbitrons definition of 
metropolitan areas can severely impact the smaller, low power broadcaster.

The Arbitron rating area, therefore, what they consider their metro becomes an 
important factor for us, because if they expand what they call the metro, it impacts 
stations with less power. Now, our position is, and has always been, that the objective 
way to determine the metro is to let the government determine what that metro is, which 
the government does define standard metropolitan areas, whereas Arbitron, at the 
request in many instances of its subscribers, can expand the metro and has done it in the 
past, beyond what is the actual government defined metro and that creates a hardship for 
stations with less power. 

And I dont know to what extent the FCC or government could play a role in that but it 
gets very expensive to take it through the Department of Justice or try to claim anti-Trust 
or anything like that, but its definitely an area that its time to consider, especially given 
that there are offenses taking place now.  (AGilliam117, pp. 22-23)

Johnny Shaw and Richard Weaver-Bey, both African-American broadcasters, talked about the 
prohibitive cost for small broadcasters of being a subscriber to Arbitron and the fact that if you 
do not subscribe, you cannot quote your Arbitron ratings when you sell advertising.  Since 
advertising agencies, who place the bulk of national advertising dollars, almost always use 
Arbitron ratings as variables in the buy decision, lacking such ratings is a severe handicap for 
those who cannot pay the price of admission.  

Johnny Shaw offered these experiences.

And thats what hurt us the most as independent owners who are trying to  [get 
advertising dollars]. We cant even afford to invest in Arbitron because it costs so much 
money.  And Im not complaining about Arbitron,  (t)he least I can get by with to buy 
the Arbitron figures is $10,000.  (JShaw185, p. 16.)

Richard Weaver-Bey echoes these comments.

[We dont] subscribe to Arbitron because our numbers are not strong enough, our 
coverage area is not that broad and its expensive to subscribe to Arbitron.  And if you 
dont pay for a subscription to Arbitron, then they do not focus on your audience in order 
to publish your numbers and youre not able to quote the Arbitron numbers.  So that 
becomes a very difficult challenge.  (RWeaver-Bey171, p. 11)

Who gets sampled and how they are sampled determines the accuracy of the information 
collected by the ratings agencies.  Erskine Faush, a Black television broadcaster, takes exception 
with Arbitrons sampling practices.

Ive always had a thing with the rating people.  I dont think its done fairly.  I dont think 
its truly representative.  I dont think theres enough sampling.  I dont think, you know  
I dont think its ever been.  And Ive still got in my possession, as I said, time when the 
stations  our ratings, you know, exceeded those of the general market stations even.  
And, yet, it was always with the asterisk.  We cant sell on the numbers.  Were not a 
subscriber [to the rating services], okay, because of the enormous cost.  (EFaush238, pp. 
21-22)

Jeffrey Hutton, a White radio broadcaster, made us aware of the fact that small, non-minority-
owned stations have related problems with Arbitron.  

Im in an unrated market, I cant afford to pay Arbitron to tell me how many people 
listen.  It wouldnt be accurate anyway because in a county our size, they only send out 
like 20 or 25 diaries so I have to be able to sell my results.  I have to be able to explain to 
people why working with my station will put butts in their buildings, so to speak.  And, 
business does not come to us, I go to everything.  I go to everybody and thats how we 
survive.  (JHutton383, pp. 9-11)

Mr. Hutton also shared that since he is a hometown radio station in very small city, people 
with national buys never come to his town.  Like his minority counterparts, (t)he [advertisers] 
dont get to me; I go to them.  I have to, I mean, very rarely will somebody ring my telephone or 
send me a fax and say I want to buy advertising.  I go out every day and knock on doors and 
introduce myself to people and try to sell advertising. (JHutton383, pp. 9-11)

In contrast, Robert Fink, a White radio broadcaster, told of experiences selling advertising time 
quite different from those we heard about from minority broadcasters.  He characterized 
whatever difficulty he might have with capturing local advertising dollars as purely a function of 
small advertisers budgets, not discrimination.  With national advertisers, he shared Mr. Huttons 
experience being in a small market.

Basically [our experience of going out and getting advertisers has been] really good.  
And Ive been a sales manager in Los Angeles, so Ive had the experience of, you know, 
the big time and the small time.  In a small community, they tend to realize that they do 
need you, and its a difficult sale simply because, again, their budgets are so small, and 
its more a budgetary problem with our clients than whether or not they want to do 
something with us.  Some people dont even want to give you the time of day.  But 
anybody thats somewhat trying to make their business successful, they will talk to you 

 Id say in the small market the biggest problem tends to be the budget problem of the 
local merchants.  (L)ocally were accepted fine because were just one of the people.  
Where we dont get our share is, we do not get our share of what we term regional or 
national dollars.  [With] the local mom-and-pop, we dont have a problem except for 
budget; the bigger type of people, their hands are controlled by their corporate offices 
that basically give them no dollars to spend on a small market. (RFink235, pp. 18-20)

 


5.  	Effect of Deregulation and Consolidation

On par with discrimination as a long-standing barrier to broadcast and wireless entry, study 
participants cited industry consolidation pursuant to the 1996 Act, as a fundamental and 
significant barrier to entry in recent years. 

Johnny Shaw, an African-American radio station owner, characterizes the raising of the caps on 
the number of radio stations one can own in a market as the lowest blow for independent 
owners.  I think that probably has hurt more than anything else.  (JShaw185, p. 21)


? The Shift from Local, Independent Owners to Large National Group 
Owners  Opening the Floodgates That Virtually Wiped Out Small 
Radio Stations

With the consolidation resulting from the 1996 Act, there has been a shift away from 
independent local owners to large, Wall Street-financed group owners.  Manuel Davila, a 
Hispanic radio broadcaster, recognizes the shift from community focus to earnings per share.

[I]ts basically all corporate, you know, because they have to answer to . . . investors 
now.  The investors dont give a damn if its an Hispanic radio station or its a Black disk 
jockey or its a Chinese salesperson.  They care about if they get 10 cents on the damn 
investment . All the government did is help the big guys.  And thats whats happened.  
The big guys, corporate America, have taken over communications, and it seems to be 
okay with everybody, or it seems to be okay with everybody thats of importance, I guess. 
Now I may not like it.  You may not like it.  My dealerships[who advertise with me] may 
not like it but, hell, theres nothing he can do about it. (MDavila128, pp. 50-51)

Many believe that the deregulation of broadcasting was motivated and driven by politics, i.e. 
donations made to legislators by large broadcasting enterprises.  John Tupper, a White television 
licensee suggests that [C]ongress and the FCC shouldnt be fooled by the contributions being 
made by the networks to their campaigns for the purpose of gobbling up more of the voices out 
there that are going to be more homogenized over time. (JTupper216, p. 36)

Mary Helen Barro, a Hispanic former broadcaster, talked about the impact of raising the caps as 
open[ing] the floodgates.  While caps had been lifted gradually from 1985 to 1996, the big 
jump allowed by the 1996 Act ended up wiping us all out.  She went on to say:

The big corporations got what they wanted, and the little people are out of business. 
Bottom line.  They kept bumping them up because you know the big corporations 
wanted it. (W)e were pleading with them, we were saying, No! Youre going to put us 
out of business! We cant grow fast enough, we cant . . . . . .(W)e went to the FCC, we 
went to hearings, we wrote letters . . . to the Congress. It did not matter.  (MHBarro190, 
p. 13)

Manuel Davila, a Hispanic broadcaster, blames the government for the predicament in which 
small broadcasters find themselves today.  He feels that the only thing the 1996 Act is going to 
do for the little guy is help him or her get a better price for his station once he or she sells 
because he or she can not compete anymore. 

Whos going to lend us $30 million [to buy a station]?  Because the government, the 
government had dictated that big business is going to own communications.  And thats 
the governments fault, man.  Because somewhere along the line the government said it 
was all right to own 400 radio stations.  (L)et me tell you the scenario that I see.  

Originally you could own seven stations. . . . Okay, thats kind of back in the old days.  
And then that changed to 14 because there was AM and FM.  And then as the people 
acquired what they needed to acquire  and Im not knocking it but, you know, the big 
guys, they acquired what they needed, but they said, you know, its time to change the 
rule again.  So lets go to 20 stations.  Okay, the government says yeah.  They ram this 
thing through.  Now they can own 20 AMs and 20 FMs, something like that.  And then all 
the big guys buy what they can buy.  And then they said, you know, we think its better if 
we own 25.  Well, the government changes the rule again   And now they can own all 
these things.  

And theyre saying this is all to help the little guys.  I havent seen a little guy get big yet, 
you know.  Im not saying they havent, okay.  Then the government says, you know what, 
the big guys have bought all the markets that they can possibly own, New York, LA, 
Chicago, San Antonio, Dallas, Houston, El Paso, et cetera, et cetera, et cetera, down the 
row.  You know what, we think those rules should be changed so we can own two FMs in 
those markets because weve bought everything we can buy and we want to get bigger.  
So the government says, you know, thats a great idea.  The next thing you know, the 
rules have changed, again, under the pretense to help the little guy.  All this did for the 
little guy is allow him to sell his station.  Thats about all this did for the little guy.  
Because he couldnt afford to buy the big guy out, so he had to almost out of default sell.  
(MDavila128, pp. 45-46.)

Mary Helen Barro also acknowledges that deregulation did not help the independent 
broadcasters, but rather put them out of business.  She further sees market consolidation as a 
threat to freedom of speech as smaller and often minority-owned and minorityformatted stations 
are forced out of business.

They put us out of business bottom line. Yeah, no doubt about it. Id be in business 
today if it werent for the FCC. the American Hispanic-Owned Radio Associations 
broadcasters [fought] individually for years as the FCC and the Congress kept pushing 
for higher ownership caps, trying to gratify the large corporations who wanted to expand 
and they wanted to buy up stations and expand. Now there were some small broadcasters 
who did want to sell. There was no doubt about that. But for every one that wanted to 
sell, there were 10 of us that were struggling to stay in business. 

And when the FCC raised the ownership cap, they literally shoved us out of the business. 
And if you look at broadcasting today, you will see that the vast majority are large 
corporations, fewer minorities  And what I dont think has been discussed up til now 
but what I consider a very grave threat is loss of freedom of speech. With fewer and fewer 
companies owning more and more licenses, there is a real threat to freedom of speech.  
(MHBarro190, pp. 1-2)


? Economies of Size and Scale

The findings of this study point to an unprecedented level of market dominance and influence 
enjoyed by public companies utilizing scale economies, inexpensive capital, stock-funded 
acquisitions of licenses, and similar financial and operational advantages.  These attributes of 
size and scale represent insurmountable obstacles to competitiveness for small, women- and 
minority-owned companies lacking such advantages. 

In broadcasting, participation by small and local businesses had been historically supported due 
to a regulatory structure that set licensee ownership levels and encouraged local ownership.   
Through the 1980s and early 1990s, the industry saw significant increases in minority and 
female ownership, stemming from regulatory initiatives that included comparative hearing 
minority ownership policies, distress sales, and tax certificates.  Since 1996, however, small, 
women- and minority- owned companies, and the communities they serve, have, and continue to 
be, dramatically impacted by a broadcast industry rapidly responding to the deregulatory nature 
of The Act by consolidating license ownership. 


(a) Impact Upon Licensees  

? Deregulation as a Barrier to Entry 

Deregulation and the resulting industry consolidation have formed multi-faceted barriers to new 
entry for small, women- and minority-owned companies. The dramatic increase in the price of 
stations, and the predominance of Wall Street-funded companies with stock and stations to use as 
currency for station acquisition, have severely disadvantaged the small, independent broadcaster.  
Given the history of limited access to capital traditionally experienced by small companies, and 
especially those owned by woman and minorities, it appears that this disadvantage is virtually 
insurmountable.

Brian McNeill, a media investment banker, explains how the economic landscape for 
broadcasters has changed in recent years.

 (T)he bulk of our business used to be financing entrepreneurs in the radio and 
television business, but as consolidation has played itself out, most of the assets have 
gone into the hands of public companies, there are just quite frankly less opportunities 
for private companies and entrepreneurs, and even less opportunities still for start ups. 
Theres just less opportunities.  (A) much greater proportion of the stations are owned 
by large public companies so theres just less turnover, theres less activity, and in fact, 
prices have been driven up by public companies and that makes it harder for 
entrepreneurs to make the numbers work. So for both of those reasons there is just a lot 
less activity for private companies and entrepreneurs and individuals to buy assets in the 
media businesses.  (BMcneill513, pp. 5-6)

Mr. McNeill goes on to talk about how this change of station ownership from private to public 
companies has negatively affected small businesses.

(M)aybe Im nave and maybe theres a lot of prejudice and hardship that goes on at a level 
that Im not aware of, but I think the world is getting pretty focused on quality and pretty 
color- and gender-blind.  I think the difficult thing is that the structure of the industry has 
changed, and I think its just really difficult now because ten years ago, there was a very 
small percentage of the assets in the hands of public companies. A very large [number] of 
the assets are [now] in the hands of public companies and thats just made doing deals a lot 
harder for everybody... It shifted into high gear in 1996, when they had the 1996 
Deregulation Act.  So since 1996, its more the private and small companies [that] are 
disadvantaged, vis--vis, big and public companies. Thats been a more dominant theme 
than minorities and women being disadvantaged.  (BMcneill513, p. 25)

Art Gilliam, an African-American radio broadcaster, explains how this shift affects access to 
both acquisition opportunities and capital.

The [large companies] can go to the market place, get funded and buy properties, they can 
also bid up the price because they can wait for a number of years to turn a profit.  So you 
have a situation where theyre able to obtain financing  so that creates upward pressure in 
terms of pricing.  So its very difficult to find stations and to compete for financing with 
companies that are in that position.  (AGilliam117, p. 19)

Frank Montero, former Director of the FCCs Office of Communications Business 
Opportunities, talked about the change from a different perspective.  Historically, he has seen 
that small, minority- and women-owned companies have   frequently focused on the smaller 
markets or the medium-sized markets as opposed to the big markets because the economies are 
easier to maintain  He remarks that initially consolidation took place in the larger, more 
lucrative market.  He sees that changing now and notes that new entrants will have more 
difficulty than before.   I can tell you that consolidation is definitely moving downstream as 
you are seeing these large companies definitely starting to inquire into the middle and I think 
eventually into the smaller markets.  I think that doesnt bode well for new entrants, for new 
people coming into the marketplace.  (FMontero509, pp. 10-11)



? Deregulation as a Barrier to Expansion

For small, women- and minority-owned companies already operating as licensees, deregulation 
and consolidation have meant severe difficulties in growing their stations, adding to their 
holdings and remaining competitive.  Growth of existing operations is generally a function of 
advertising revenue and access to working capital.  Growth in holdings is a function of access to 
large sums of capital.  With discrimination in advertising and the capital markets coupled with 
the effect of deregulation on national advertising practices and station prices, smaller 
broadcasters have virtually lost their ability to compete.

Alfredo Alonzo, a Hispanic male radio licensee, explains how deregulation has restricted the 
growth opportunities for small businesses.

You know when the FCC deregulated ownership, in 96 was it? I really feel that that hurt 
the small business owner because of the fact that these larger entities were able to buy 
literally almost all the radio stations in the big markets. And it really didnt leave a whole 
lot of pickings for anybody else. A case in point, in Tampa, we happen to have 2 AMs and 
an FM in Tampa, and if you look at Cox, Clear Channel, and CBS, between the three 
companies, they own like 80% of all the radio stations in the market. So it only leaves 
20%. Before 1996, the most you could own was 2 AMs or 2 FMs [in each market]. And 
prior to that, a number of years before, the most you could own were 8 AMs and 8 FMs 
throughout the whole country.  So I just feel that deregulation has hurt the ability of a 
small business entrepreneur to really grow. Because you just dont have assets available 
to you. These companies have grown; they set up these portfolios where they have, you 
know, 8 radio stations in their given market, and since theyre not forced to sell because 
they could legally own them, they drove up the price because they were able to pay more 
money than the small business owner, so I really think deregulation has hurt the small 
businessman more than anything else. (AAlonzo377, pp. 7-8)

Erskine Faush, a Black television station owner, told us of his recent attempt to buy a station in 
Birmingham, Alabama.  He made an offer on the station and thought he had a deal.   but over 
the weekend something happened to that deal and one of the major companies came in with more 
bucks and bought it.   (EFaush238, pp. 12-13)

Even though Mr. Faush was trying to buy another station, many small broadcasters are being 
marginalized and often forced to sell.  Mateo Camarillo, a Hispanic broadcaster, says:

 (A)s I mentioned to you, my preference is to look at the world with more rosy-colored 
glasses than looking at it half empty and being pessimistic about things. But you know, as I 
see things, its a real challenge, its difficult to see positive things with the trends, the impact 
of consolidation, with the market being controlled by the big guys and the impact with most 
minorities not being big guys, being marginalized and squeezed to the point that  if it 
wasnt for their dedication and commitment to community, it [would] make life real difficult.  
But still their life is difficult.  I see few rays of hope.  (MCamarillo375, pp. 27-28)

Tyrone Brown, an African-American communications attorney and former FCC Commissioner, 
understands that the need to grow or die is what is driving many small broadcasters, and largely 
minorities, to sell their stations. Well, I cant get big enough to stay in this game so I better get 
out now.  (TBrown510, p. 11) 

Patrick Prout, an African-American radio licensee, told us why he was selling his station.

If one does not have a huge number of stations  at least thats my perception and its my 
belief and others  one cannot survive as a small broadcaster.  when you have to 
compete now that the cap is off in terms of how many stations one can own in a 
particular marketplace.  We were actually in an LMA [Local Marketing Agreement] 
situation.  We ended up in an LMA situation. (T)he owners of the stations that we were 
LMA-ing to were selling their stations, and we decided to go in as part of the package.  
For one, we would get out from under this thing.  Secondly, Im still on a full-time basis 
trying to drive cash flow to feed my family.  So I couldnt afford to  just to - put the time 
into this endeavor, and decided I might as well just sell it.  (PProut284, p. 9)
	

? Economies of Size and Scale as a Barrier to Expansion

Small, women- and minority-owned companies report their viability is being made more 
vulnerable due to increasingly larger consolidated competitors who enjoy natural operational 
advantages that smaller companies cannot match.  With more stations, one has more clout with 
advertisers.  For single-station or very small group owners, the remaining piece of the advertising 
pie is very small.  

Additionally, larger, more well-financed broadcasters have the capital to finance station 
improvements, attract and retain top management and on-air talent, and purchase syndicated 
programming.  For some, the struggle to stay competitive in todays market reality is no longer 
worth it.

Diane Sutter, a White former television licensee, also explains that size and scale have impacted 
the small licensees ability to compete.

Well, the trouble with doing anything in radio is  the monopoly game has already been 
played for a long time, and if you cant get 4 or 5 or 6 or 8 stations in a market I think 
its very difficult to survive. I think thats already happened for me, I dont think 
theres a place for me in radio right now.  I mean lets face it; when Lowry Mays 
[Chairman of Clear Channel] is selling off a bulk of stations that if someone had bought 
those would have been the 3rd largest group in the country and Mel Karmizans [CEO of 
CBS radio] got 180.  Thats not an arena in which someone like myself can compete very 
successful(ly) (DSutter205, pp. 23-24)


Dorothy Brunson paints a bleak picture for African-American-owned television stations, such as 
hers, over the next few years.  Ms. Brunson predicts that being small, non-network-affiliated 
stations, struggling to get carried by cable and satellite systems and still being required to 
conform to the new digital television requirements, will cause all of them to be out of business in 
the next two years.

When I look at the number of African-Americans that own television stations in this 
country, I think theres twelve of us, if I recall correctly. And Im sure that in the next 
two years, we wont exist.  There will probably be none, because certainly, its going to 
be more difficult for me.  As high definition comes about, Ive got to find funding to do 
that. (L)ike right now, because Im not [affiliated with] one of the big four [networks], 
the cable and the satellite companies dont have to carry me for two years.  How am I 
going to survive for two years?  And thats happening to all of the smaller market 
stations, where we [African-Americans] are.  Two of us are in large markets and the 
others are in small- to medium-sized markets. 

 Whats going to happen when the satellite (television) companies dont have to carry 
you, and that becomes as important as cableAnd what happens to most carriers in the 
interval?  For us, its life and death.  But for others, they can market because theyve got 
the better programs.  Well, you sell out.  Youve got to get out. Theres no way you can 
survive, youve got to get out.  So then [the station under the new owner] becomes an 
ABC affiliate or somebody else who can go in and lower the boom on those [satellite and 
cable] guys.  

And the Commission says, well go in and  negotiate with those guys. I have not been 
able to get in the door.  I havent been able to get in the door of those satellite 
companies. Those cable guys, Im still fighting against the opposition from most carriers 
of seven to eight years ago Theres just no way that we can survive.  In radio, you 
probably can do a little better, because you dont have the technical, you know, those 
hindrances.  And youre not on the cutting edge, but I just dont see, I dont see many of 
us staying in television.  I just dont see it.  I talked to five to six of these people all the 
time.  And theyre scared.  I mean, we can do the basics, but we cant compete with the 
big guys, you know, we just dont have the wherewithal.  Someone said, well, why dont 
you all band together?  But if you take a lot of little nothings and put them together, you 
still got a big nothing.  (DBrunson105, pp. 23-24)


? Small Businesses Unprepared for Speed and Impact of 
Consolidation

Mary Helen Barro, a Hispanic former radio broadcaster, shared the impact that consolidation has 
had on her life.  She lost her stations as did some of her Hispanic colleagues.  Consolidation 
happened too quickly for her to put into place a meaningful competitive strategy.  At 61, she is 
on food stamps and back in college to get herself  a teaching credential so I can earn a 
living.  She feels lucky that she did not lose everything.  She knows many who did.

Patrick Prout, a Black radio licensee, asks the FCC to find some way to help the small owners, a 
lot of whom are minorities, compete with the larger players.

With the consolidation and the mega broadcasting companies today, that certainly has 
driven a lot of small players out of the marketplace and a lot of your African-Americans 
who are coming in  or minorities, period, coming in  -- were the smaller players.  Some 
sold to make money and get out.  Others sold because they felt they had to.  They couldnt 
compete.  I think the FCC needs to somehow figure out how they can put an umbrella 
around the small players or do something to help the small players compete with the 
larger players. (PProut284, p. 19-20)


? The Impact on Access to Capital

Beyond their relative disadvantage with respect to simple access to capital, small, women- and 
minority-owned companies perceive a diminished supply of capital available to them, resulting 
from structural changes and responses in the industry with consolidation, and with harmful 
impact on their ability to enter the industry and sustain their businesses.

Where personal resources and perhaps a bank loan used to be the cash requirements for license 
acquisition, ballooning station prices have necessitated access to huge sums of both debt and 
equity financing.  Stations are now selling for millions rather than hundreds of thousands of 
dollars.  Whereas before, banks might finance three-quarters of the cash needed to buy a stations, 
they are currently lending only up to approximately one-third of the purchase price for stations.  
The balance has to be financed with either venture capital funds or personal assets.  Few people 
have personal assets large enough to forego the venture capital route.


Having been traditionally hampered in their efforts to acquire capital during the pre-1996 Act 
years, small businesses and especially minorities, are virtually precluded from gaining access to 
the financial wherewithal needed to be able to participate in todays consolidating broadcast 
marketplace.

Charles Cherry, a Black radio broadcaster, tells us that Consolidation sucks.  (T)wo-thirds of 
the people that were in this business five years ago are now gone and [for] the people who want 
to stay in and grow the business theres no incentive because you cant get any help from 
anybody to do it.  I mean, they just look at you like, youre just too small. (CCherry262, pp. 24, 
28)

Michael Carter, a White radio licensee, who benefited from high station prices when he sold his 
station, acknowledges that consolidation has hurt the little guy.

Well, [raising the caps] helped me.  It helped me get more money for WHB [upon the sale 
of the station], but its not good for radio. Whats good for Mike doesnt mean its good 
for the industry . . . because a little guy like me doesnt have a chance to get in today.  We 
really dont with these mega corporations.   I dont have a chance. You cant compete 
with their money.  Three radio stations in Kansas City sold the other day for $113 
million.   I cant raise that. (MCarter230, pp. 14, 15)

Manny Davila, a Hispanic radio broadcaster, shares the irrationality of the prices as they relate to 
the amount of capital a small radio operator can possibly raise for station acquisition.

What [does the FCC] do?  Well, were going to make it better.  Were going to do a 
bidding process [among the buyers].  Were going to do a bidding process and make it 
fair for everybody.  So you and I go bid for  you know, what are we going to bid?  How 
would you like [to be] doing the cable network in New York, how about that?  I want the 
cable network in New York.  You and I go bid.  What are you going to bid, girl?  What am 
I going to bid? 

 Well, Ive got  damn, Ive got 50 pencils here, man.  And with your 25 bucks, weve got 
25 bucks here.  Oh, by the way, this guy just bid $10 million and he dont even know 
[squat]  but hes got it.  You know  come on, has it opened up for all of America?  No, 
its opened up for corporate America.  Are we saying that maybe we should be on the 
corporate ladder?  Yes, we should be on the corporate ladder.  Have we had a chance, a 
real fighting chance to get on the corporate ladder?  Hell, no, we havent.  Because, 
unless youre lucky, and actually got a station in a big market a long time ago  we dont 
have a chance. I talked to a guy in San Antonio.  And the guy says, well, you know, 
theyre going to sell these stations for $40 million, two FMs that Id like to buy, $40 
million.  Where is this guy going to get $40 million? (MDavila128, p. 51)

Mary Helen Barro shared her story about how the timing of the FCCs announcement regarding 
the lifting of the ownership caps killed her deal to buy additional radio stations and ultimately 
forced her into bankruptcy.  She was (t)wo weeks away from signing a refinancing deal that 
would have kept me alive and I would have ended up with 2 AM s and 2 FM s. Two weeks 
away from signing my papers, the FCC announces that theyre going to raise the ownership caps 
and this time theyre going to raise them so high,  (i)t scared my financing to death and they 
backed out.  They said, Thats the end of small business in broadcasting.  So my whole 
house of cards fell apart. And, well, I went through bankruptcy.  I lost everything.  Yeah, I 
wasnt able to go through on the deal, I lost my FM, OK?  My FM that I had on the air, I lost it.  
(MHBarro190, pp. 11-12)


? Impact on Cost of Capital

Along with access to capital, cost of capital constitutes a competitive disadvantage and barrier to 
entry for small, women- and minority-owned companies.  Large, publicly-traded companies have 
an advantage due to their ability to acquire debt financing at lower interest rates than can their 
small business counterparts; and they can use their stock as payment for station and company 
acquisitions.

As Diane Sutter, a White former television licensee, explains, a lower cost of capital enables the 
purchaser to bid a higher price than a could a competitor who had access only to more expensive 
money. 

Well, if a deal is going to a broker, its virtually an auction.  And, its very unlikely that 
an entrepreneur, especially in a larger market, that an entrepreneur can compete [in an 
auction for a station] because of his cost of money. So once you get to an auction I 
couldnt compete with the public marketplace, because the cost of my money versus the 
cost of a Sinclair, of a River City at the time, of any of these other groups, when they have 
public financing, when they have public money, and their multiples, you know, they were 
trading [their stock on the stock market] at 15, 16, 17, 18 times multiples. 

So they could afford to pay a 14 or a 15 times multiple [that is the purchase price was a 
multiple of cash flow] to buy a station. And they had other stations that they had acquired 
earlier in a less inflationary market, so they could amortize their cost throughout and 
spread them throughout their stations, so an entrepreneur like myself, who had expensive 
money, if you will, I would bid $20 million on a station, and Sinclair would bid $23, $24 
[million] because their cost of money was so much less than mine, they could afford to do 
that.  (DSutter205, pp. 13-14)


? Competition for Revenue  the Struggle for a Proportionate Share

Small, women- and minority-owned broadcasting businesses experience particularly acute 
problems in the advertising marketplace since deregulation according to existing licensees 
competing against much larger firms.  Access to national advertisers dollars is especially 
difficult and very necessary for independent station survival.  This lack of access raises a huge 
market entry barrier for them. 

Consolidation has affected not only the rates that one can get for advertising slots but also the 
absolute amount of dollars.  Large group owners in a market can offer national advertisers 
packaged deals within and across markets, essentially eliminating the need for ad dollars to be 
spent with small, independent broadcasters.  Large group owners are gaining a disproportionate 
percent of total market advertising dollars relative to their market share of listeners.

Benny Turner, an African-American radio broadcaster who first got into radio in 1985, explains 
it this way.

 [The 1996 Act] has basically allowed for consolidation of ownership which in this 
market has allowed a concentration of ownership that affects the rates that we are able to 
get for our product, and its basically decreased competition and has almost given 
ownership in this market the power to basically give their urban formats away, which is 
what we basically pursue. [It is very difficult to grow our station, to have it be 
economically viable] because we basically have been competing against [companies 
who] had several formats and basically what they tell the advertisers is, If you buy our 
country station or rock station, well basically give you the urban station, and so it 
made it difficult for us to command a decent rate, when they were basically giving the 
[urban] format away.  (BTurner108, pp. 10-11, 12)

Francine Rienstra, a White radio licensee, says that Nowadays, because of the deregulation and 
the [companies] owning so many stations, weve got really four groups in this market that wield 
the entire ratings and wield the entire dollar.  And everything else is struggling.  (FRienstra360, 
p. 29)

Richard Weaver-Bey, a Black radio station owner, addresses the effectiveness of having more 
stations to sell to advertisers.

And since consolidation weve seen an extraordinary dip in our ability to sell because 
you have Infinity and SFX and Clear Channel buying up five and six stations in the 
market, consolidating, moving all of their stations into one location, and when their 
salespeople go out they can sell five stations in one swoop.  And so why does an 
advertiser need to think about a small station thats in a little corner of the market?  
(RWeaver-Bey171, p. 12)


(b) Impact Upon the Public

Licensees and key market players interviewed expressed significant concern as to the impact of 
consolidation on the public; freedom of speech; diversity of views; and on quality of service to 
small, rural and minority communities, and the resulting increases in barriers to entry for small, 
women- and minority-owned companies.  Henry Rivera, communications attorney and former 
FCC Commissioner, made this observation.

Well I think that [the lifting of the ownership caps] has hurt  because you are seeing a 
consolidation of the radio industry that I dont think anybody envisioned.  And you have a 
lot of people who were in the business who are selling out. Or people who are going up 
against these big conglomerates, trying to buy a station; and they cant afford the same 
prices because [the consolidation is] driving the prices up.  So it is not a climate that 
induces a diversity of voices and viewpoints. Rather its a climate that encourages 
consolidation and voices. So any time youve got that kind of a situation, youre going to 
have fewer minorities involved in the broadcast industry. Its just a, its just the way 
things are. (HRivera516, p. 13)


? Loss to the Public Interest

Erskine Faush, an African-American television licensee, spoke passionately about the obligations 
broadcasters assume as public trustees and the impact industry consolidation is having on 
diversity of opinion and voices.

Let me put it this way.  I never thought Id see in my lifetime prior to the 
Telecommunications Act, you know, the mega-mergers and so forth, that that much 
control of this industry would be in the hands of a few people.   I think it has had its 
impact in terms of diversity of opinion, [and the] access of the community.  I think its 
had a profound effect. 

 (W)e always understood that, as a public trustee, the communitys interests, not only 
just your being able to have a viable entity in order to make money  and, of course, 
thats not a bad word at all, you know, in business.  In our economy, you are either going 
to make money and stay in business or you dont make any and youre out.  Its very 
simple.  But by the same token you have an obligation as a licensee and public trustee to 
act in the public interest with those things that are going to make, hopefully, the quality 
of life better for people.  

And we have sought to do that in every way we can, to be involved in the voice of the 
voiceless and to give access and be involved in those things that are going to serve the 
public interest.  And seemingly much of that is on the back burner.  In fact, we have, you 
know, at least in my opinion, persons who obviously have no broadcast experience, 
persons who are in the business with only a profit motive.  Again, Im not saying that 
thats a bad idea, but its always been our understanding from everything that weve 
understood coming out, that this industry had an obligation, that the airwaves belonged 
not to you.  You are a trustee.  And when you are entrusted with anything that belongs to 
someone else  you have an obligation to act in their interest and not just your own.

 I think serious injury has been done, and frankly I dont know how it will ever be 
corrected.  I think that we would have been out of business at this time, along with many 
others , except that we have a survival mentality and its been forced upon us by 
generally the whole ethos of society.  And given our experience, again, in coming up 
through the, prior to the, civil rights movement, the struggles that all of that engendered, 
coming from that time to where we are today  and Im not unmindful of the tremendous 
strides that have been made, but Im also keenly aware of how far it remains to go.  
(EFaush238, pp. 13-15)


? Loss of Freedom of Speech

With fewer and fewer companies owning more and more licenses, there is a real threat to 
freedom of speech (Mary Helen Barro, former Hispanic radio broadcaster) 
(MHBarro190, p. 2)

Many licensees saw a loss of freedom of speech as a serious consequence of market 
consolidation.  They attributed this impact to the diminishing number of small and minority-
owned stations and the consolidation of broadcast properties into the hands of the few. They 
expressed concern that formats, news and public service programming were becoming 
homogenized and less targeted to the needs of individual communities.  Overwhelmingly, they 
worried that no one would serve the segment of the market to which they had committed 
themselves if they were forced to either close or sell their station.

Mary Helen Barro offered her view.

We little broadcasters dedicated a great deal of time and effort to community service, to 
public service, to informing, especially those of us in Spanish radio. We had a lot of 
activities to inform people about what was going on to educate them, to encourage them 
to become citizens, to register and vote, and become active in the process. The big 
corporations, they do a minimum token job of that.

 Your small broadcasters were much more dedicated to community involvement and 
getting people involved in the process.  Your big corporations dont do that. And I think 
its been a great loss to the community.  And, as I say again, freedom of speech.  You 
dont understand the real threat to freedom of expression that has occurred due to the 
FCCs policies. Not only did you shut out the little guy, you shut out the opportunity for 
expression. So its not like other industries. When youre talking about broadcasting, 
when youre talking about media, youre talking about freedom of speech.  
(MHBarro190, p. 15)


? Loss of Diversity of Viewpoint

The Commission has long since recognized that a [d]iversity of ownership fosters [a] diversity 
of viewpoints,  and aptly observed in its Statement on Policy on Minority Ownership of 
Broadcasting Facilities that [a]dequate representation of minority viewpoints in programming 
serves not only the needs and interests of the minority community but also enriches and educates 
the non-minority audience.and  enhances the diversified programming which is a key 
objective not only of the Communications Act of 1934 but also of the First Amendment.   The 
Commissions cornerstone responsibility of protecting and acting in the best interest of the 
public interest requires the agency to promote a diversity of viewpoints.  Many of the 
interviewees expressed concern over the loss of diversity of viewpoints.

John Tupper, a White television licensee and network affiliate, remembered a time when there 
was more diversity among owners of affiliate stations and the innovation that came from that 
diversity.

[You had] ideas that came from affiliates who were innovative because there was more 
diversity spread about in the license holding which resulted in basically better 
programming, new ideas being tried, et cetera.  (W)hen you get away from that and 
you deal with all ideas emanating from programmers in Burbank, you get a different mix 
of service to the public than if you had more diversity in the ownership.  (JTupper216, p. 
36)

Erskine Faush, an African-American television broadcaster who has devoted himself to 
responsible, informative broadcasting to his community, is proud of the contribution he has been 
able to make.

[Members of the community]  know  we are the friend that they can call, whatever they 
need.  We have a talk program on in the mornings and so forth where we attack the 
issues, and have been doing it for years, of giving a voice to the community.  And this is 
what we exist on because, as I said, we grew up in that time when we felt that that was an 
obligation to the community to be involved and to be the voice of those who had no voice. 
And Im glad somebody is paying attention [with this study] to some of the things thats 
going on, you know. Im glad to have this opportunity, not for my sake but for the 
generations and things that will come along.  Theres a long way yet to go.  And 
somebody needs to be picking up the mantle and running forward with it.   (EFaush238 
pp. 24-25)


? Loss of Community Service 

The theme of centralized broadcasting versus a local community focus emerged repeatedly 
throughout the interviews.  Benny Turner shared that he was concerned about the local voice 
being lost with consolidation. Yes it does pose a threat and creates a greater opportunity for 
syndicated or centralized broadcasting away from the local community.  (BTurner108, p. 14)

Trent Boaldin, a White wireless licensee whose family owns wireless and cable systems, 
expressed that (s)erving the community is very much a driver for what we do.  I mean this is a 
family business.  Im a third generation member of the family.  (TBoaldin307, pp. 21)

Mateo Camarillo, a Hispanic radio licensee, expressed concern that large corporations are more 
interested in serving their shareholders than they are in  serving the communities from which 
their audience come.

And I really believe that ownership has a lot to do with the end product, whether youre 
talking about voice, service to the community, truly fulfilling the public trusteeship that 
you have in that license, to serve all of the public thats in your community, because you 
know a corporation in New York City doesnt have the same [interests], the shareholders 
are interested in a profit, and they may not be as interested in serving the neighborhood 
in Barrio Logan.  (MCamarillo375, p. 28)

Manny Davila, another Hispanic radio broadcaster, got into radio to serve his community.

Were the last independent(ly) owned station in San Antonio, and were the last radio 
station that somebody can come into off the street with a tape that he recorded in his 
garage and we will play the damn song And so youre talking about guys that got into 
radio when the FCC basically said that this is a community thing, and youre supposed to 
help the community.  And we said, you know, thats the kind of jobs that we want, and in 
the meanwhile we might even make some money,  because it was never the money that 
motivated us. (MDavila128, pp. 21-22.)

Others, such as Richard Weaver-Bey, an African-American, discussed their discomfort with 
selling their stations believing that there will no longer be a voice of the community it serves 
when the station is gone.

Diversity of voices and views is a pillar of our democracy. So right now were looking 
at selling the station, and I really am not comfortable having to do that because I 
understand how strongly the station is needed in the community and that it is the voice of 
our community.   (RWeaver-Bey171, p. 8, 14)

Johnny Shaw, who with his wife, Opal, owns a radio station, feels an obligation to serve his 
African-American community.  His commitment was expressed this way.

 (I)t goes back to the service that we provide for the community.  And I feel that Im 
obligated, because this window of opportunity [to acquire a station] was open for us, to 
do this.  To me, when we acquired that license from the FCC, its kind of like we married 
the community, and we agreed that we would serve the community. I think when you sell, 
again, to the larger companies, I think you are selling your community out, because the 
larger companies are only going to focus on advertising dollars.  They are not going to 
care about announcing the PTA meeting of the night.  Do you know what Im saying? . . . 
and Im sure in talking to me you can tell Im big on this idea of serving the community, 
being in the community, being a part of the community. (JShaw185, p. 22, 31)


? Loss to Minority Communities

Minority licensees especially felt their commitment to their respective communities - to keep 
them informed, to empower them, to report on current events from the perspective of those 
whom the events would most impact.


Mateo Camarillo, a Hispanic radio licensee, was one such broadcaster.

Im an immigrant and  Ive always identified with the Hispanic community; and my 
first discipline is social [work]. I have a Masters in social work. I started a school of 
social work to train Hispanics to work with the Hispanic community. So Im very 
committed to the community that I grew up in that I feel obligated to pay back and 
develop that community. And one of the things that is very obvious is that it doesnt have 
the required resources or tools to be able to develop. 

One of the commitments I have made to myself is to help empower the Hispanic 
community to be at least on equal footing and one of the issues is information. And 
information is not readily available. The closest thing to information are papers that 
come out once a month or every 2 weeks, or whatever; its not real-time information. So 
by the time you learn about an opportunity, whether its a job application, or a request 
for a proposal, the deadline has passed. The opportunity [has passed]. So that is 
knowledge, such as that the City Council is meeting to decide the fate of something 
important to you or the school board is going to decide about the quality of education for 
your kid. You know you dont get the information when you need it. So I had always 
wanted to help get real time information so that people can be more efficient and 
effective in trying to do things that impact their life.  (MCamarillo375, p. 8)

William Saunders, and African-American, entered broadcasting because he wanted to make sure 
that the news about his community was reported accurately and completely.  And every time 
that we did something, when it would end up on the radio and TV and the newspaper, it was 
different from what we did.  And I felt that there had to be a way that we could tell people what 
we were about, the truth about the whole situation, and that basically is how I got involved.

Many participants discussed how the perspective of the speaker affects the nature of what is 
spoken.  Mr. Saunders highlighted that point.

The information that people need, they normally get it from a certain source; and then 
they get it better if its presented by the source that also [is] impacted by that kind of 
information. So I think that thats the driving force and I think thats what the original 
Telecommunications Act was about in 1934, was to really be able to serve the 
community. (WSaunders163, pp. 15-16)

Mr. Saunders adds,  (W)e really like to do the kind of programs that work for our community. 
I would like to see a program that  could deal with having a teacher of the 3rd grade coming in 
on the afternoon just for kids to do homework. And to be able to have that kind of program 
sponsored by somebody. I think that is important.  (WSaunders163, pp. 10-11)



6.	FCC  Actions/ Inaction and Discriminatory Effects

Since the enactment of the Communications Act of 1934, the FCC has regulated the allocation 
methods and use of the radio spectrum.  The FCC has used three primary methods to allocate a 
license when two or more mutually exclusive applicants have applied:

1) Comparative Hearings: An FCC proceeding, presided over by an Administrative Law 
Judge (ALJ), to determine, which  broadcast applicant was best qualified to hold the 
license. The 1965 Policy Statement on Broadcast Comparative Hearings defined the 
two primary objectives of comparative hearings to be: first, the best practicable 
service to the public and second, maximum diffusion of control of the media for 
mass communications. See Policy Statement on Broadcast Comparative Hearings, 1 
F.C.C. 2d 393 (1965). The FCC provided seven criteria to the Administrative Law 
Judges (ALJs) upon which they should decide the comparative merit of the competing 
applicants:

(i) Diversification of control of the media of mass communications; 
(ii) Full-time participation in station operation by owners; 
(iii) Proposed program service; 
(iv) Past broadcast record; 
(v) Efficient use of frequency; 
(vi) Character; and 
(vii) Other factors.

 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 
issued the Statement of Policy on Minority Ownership of Broadcasting Facilities, 
which formalized the use of minority and gender credits in comparative hearings.  68 
F.C.C. 2d 979, 982 (1978). The FCC extended the credit to women owners in Mid-
Florida Television Corp., 70 F.C.C.2d 281 (Rev. Bd. 1978), set aside on other 
grounds, 87 F.C.C. 2d 203 (1981). In 1992, the D.C. Circuit held that the FCCs use 
of gender integration as a plus factor in comparative hearings was unconstitutional. 
In 1993, the DC Circuit held that the integration credit of the FCCs comparative 
hearing criteria was arbitrary and capricious. Bechtel v. FCC, 10 F.3d 875 (D.C. Cir. 
1993). In 1994, as a consequence of the Bechtel decision, the FCC suspended all 
active comparative hearings.  In 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.  Adarand v. Pena, 515 U.S. 200 (1995);

2) Lotteries: In 1982, Congress enacted Section 309(i) of the Communications Act of 
1934 to allow the FCC to select licensees by random selection. 47 U.S.C. 309(i). 
Section 309(i) also required the FCC to establish incentives, rules and procedures 
ensuring a "significant preference" for minority-controlled applicants in awarding 
licenses by lottery. 47 U.S.C. 309(i)(3)(A); 47 C.F.R. 1.1622  The FCC used this 
section to award wireless licenses for cellular, specialized mobile radio, and low power 
TV. As Part of the Omnibus Budget Reconciliation Act of 1993, Congress limited the use 
of random selections to "applications accepted for filing" by the FCC before July 26, 
1993, and Section 309(i) required an FCC determination that the use of the 
communications spectrum is not to be distributed by auction. 47 U.S.C. 309(i)(1)(B). In 
1997, Congress enacted legislation that caused 309(i) to expire effective July 1, 1997 
except for the award of licenses and permits for public, noncommercial television 
stations. Pub.L. No. 105-33, 111 Stat. 251 (1997) 3002(1)(2) and;

3) Auctions: Section 309(j) allows the FCC to select licensees by auction. Section 
309(j)(3)(B) instructed the FCC to establish competitive bidding procedures that would 
"promot[e] economic opportunity and competition and ensur[e] that new and innovative 
technologies are readily accessible to the American people...disseminating licenses 
among...businesses owned by members of minority groups and women...." 47 U.S.C. 
309(j)(3)(B). Again in section 309(j)(4)(C)(ii), Congress requires the FCC, in 
prescribing area designations and bandwidth assignments, to promote "economic 
opportunity for a wide variety of applicants, including small businesses...and businesses 
owned by members of minority groups and women." 47 U.S.C. 399(j)(4)(C)(ii). In 
creating these opportunities, Section  309(j)(4)(C)(ii) suggests that the FCC consider 
using "tax certificates, bidding preferences, and other procedures. 47 U.S.C. 
309(j)(4)(C)(ii).

Each method of license allocation had advantages and disadvantages. Both comparative hearings 
and auctions are expensive. The comparative-hearing process often cost hundreds of thousands 
of dollars in legal and engineering fees. Like many legal proceedings, the comparative hearing 
process often was prolonged. Members of the communications industry sometimes either 
engaged in predatory practices towards minority and women broadcast applicants or abused the 
minority and women ownership program by adding minority or women fronts to their 
applications. 

Acquiring a wireless license through the auction process is a costly venture, as well, especially 
when one adds in the cost of building out the wireless system.  Wireless licenses obtained 
through auction can therefore cost considerably more than those licenses acquired through 
comparative hearings.  

The nature and excitement of the auction process, especially in the entrepreneurs C-block 
auction with its small business bidding credits and numerous delays, tempted and encouraged 
those with less experience in the industry to overbid for their licenses, thus rendering many 
business plans unworkable and unattractive as a financing opportunity. In contrast, the lottery 
process was the most cost effective allocation process from the standpoint of the licensee, but 
given its randomness, it did not necessarily allocate the license to the most qualified, or to 
those interested in providing services that would best serve the public interest.  However, the 
lottery process was effective in allocating a representative proportion of low power television 
licenses to minority-owned businesses.
For each method of license allocation, the FCC has instituted policies, programs and rules which 
attempted to increase opportunities for small, minority and women applicants in the acquisition 
of broadcast and wireless licenses.  For instance, in the comparative hearing process, the FCC 
provided extra credit to those applications with participation by women and minorities. In the 
lottery process, the FCC provided minority applicants with a mechanism for additional 
participation in those licenses that they attempted to acquire. In the auction process, the FCC 
established bidding credits, installment payments and discounted interest rates that had some 
benefit for small, minority- and women-owned businesses. 

Two other FCC programs attempted to increase opportunities for minority-owned businesses in 
the secondary market transactions, i.e., the minority tax certificate program and the distress sale 
program. In 1978, the FCC implemented the minority tax certificate  policy, which provided 
incentives to owners of existing broadcast properties to sell the properties to minorities.  The tax 
certificate program allowed the seller of a broadcast property to defer any gain realized on the 
sale if the property was sold to a minority purchaser, and the gain was rolled over into a qualified 
replacement broadcast property.

Congress repealed the tax certificate program for minorities in an appropriations rider to the Self 
Employed Persons Health Care Extension Act of 1995.  The legislative history of this rider 
demonstrates that Congress believed the certificate program constituted bad tax policy.   
However, the tax certificate program was a very effective means of disseminating broadcast 
licenses to minority-owned businesses.  Prior to 1978, minorities owned approximately 40 
broadcast licenses, one half of one percent of approximately 8,500 total broadcast license by the 
Commission.  From 1978 to 1995, the FCC granted approximately 356 tax certificates to 
promote minority broadcast and cable ownership (287 radio, 40 TV and 30 cable licenses).  This 
helped give a much needed boost for minority ownership.  In 1982, the tax certificate program 
was expanded to cable systems.  As noted above, Congress subsequently eliminated the tax 
certificate program. 

In 1978, the FCC implemented the distress sale policy, which allowed a broadcast licensee 
whose license has been designated for a revocation hearing to sell its station to a minority-
controlled entity at 75% or less of the station's fair-market value. Underlying the distress sale 
policy was the dearth of minority ownership. Although highly effective, the FCC rarely used the 
distress sale program. In fact, in seventeen years, approximately 48 licenses were transferred to 
minority-owned business through the distress sale program. The distress sale policy still 
technically exists but its constitutionality is in question since Adarand.  There were instances in 
which these programs worked well and others in which they were abused. 

In 1969, the FCC issued the Nondiscriminatory Employment Policy, which forbade 
discrimination on the basis of race, gender, color, religion, or national origin in employment 
practice by licensees of commercial or noncommercial broadcast stations. To ensure compliance, 
the FCC required each broadcast station to establish a proactive equal employment opportunity 
program. In 1998, the DC Circuit Court held that the FCCs equal opportunity rules were 
unconstitutional on equal protection grounds. See Lutheran Church-Missouri Synod v. FCC,  F. 
3d   (D.C. Cir. 1998). The FCC promulgated new rules that focus on outreach, which are now 
also subject to constitutional challenge. Despite the fact that the FCC Nondiscriminatory Policy 
is the most longstanding of the FCCs rules in the area of equal opportunity, many of the 
interviewees believe that the FCC has unevenly enforced these rules. They see this lack of 
enforcement as a missed opportunity that could have positioned more women and members of 
minority groups to have the kind of track record and corporate broadcast experience needed to 
leverage themselves into ownership opportunities. The right kind of experience can open doors 
to ownership opportunities, and debt and equity financing

Many people we interviewed believed that the FCCs actions, inaction, policies, and rules were 
not intentionally discriminatory, but the impact - the unintended consequences  allowed for 
discrimination by third parties against FCC licensees and applicants and clearly disadvantaged 
many small, minority and women licensees making them ill-positioned to compete successfully 
in either a deregulated broadcasting or capital-intensive wireless market.

Jerry Byrne, a White male who with his Asian partner owns wireless licenses, shared his 
perspective on the FCC and discrimination.

When [the FCC] lay[s] out rules, the rules are not discriminatory, the way theyre laid 
out.  [But] if they dont enforce the rules that they set out from the start, then theres a 
discriminatory process taking place.  My point is this, if they want to be inclusive, they 
can.  They can to a point. . . .  But, if the rules are allowed to be broken during the 
process, then on its own, discrimination is taking place.  (JByrne141, p.40)

Art Gilliam, an African-American radio station owner, talks about the political influence at the 
FCC Commissioner level and how that might translate into discrimination on the part of the 
FCC.

No I didnt think there was discriminationwell, lets see, I dont have a perception of 
the FCC at its . . . staff level engaging in discrimination.  I have not experienced that 
personally.  At the same time, I think at the Commissioner level, which is an appointed 
level, that there is political influence that can be brought to bear down through the 
organization . . .  (w)hich is different than discrimination, but its discrimination in the 
institutionalized sense in that most [of those who] have political influence are less likely 
to be African American.  (AGilliam117, p. 17)

Henry Rivera, a communications attorney and former FCC Commissioner, gave us a historical 
perspective on a series of changes that affected minorities opportunities to participate 
successfully in the acquisition of wireless and broadcast licenses.

 . . . I think in terms of things that have happened to the minority community, clearly one 
of the most devastating has to have been the repeal of the Tax Certificate.  I mean when 
we lost that, we really did lose a terrific vehicle toward increasing minority ownership. 
That was devastating. Secondly, we lost the Comparative Hearing Process, which 
awarded minorities with preferences in the Comparative Hearing Process. That was also 
a real blow. The Commission really doesnt designate licenses for hearing anymore. 
There was a policy that was called the Distress Sale Policy which benefited a 
broadcaster to sell his station to a minority if he had been designated for hearing. And I 
think that policy is still alive, but in fact there are so few licenses that are designated it 
really doesnt make much of a difference. Then weve had the whole series of anti-
affirmative action decisions by the courts, which have hurt the FCCs EEO policy [which 
the] Commissioners trying to . . . re-institute now .  But . . . this series of things that has 
happened [has] been extremely hard on the policy of fostering minority ownership and I 
think that the figures show that. Theyre have really not been any increases in minority 
ownership over these many years. (HRivera516, pp. 12-13)

George Dobbins, an African-American wireless licensee, provided his understanding of the 
regulatory and market realities.

Many of the employees at the FCC, you know, they wanted to see some small and 
minority companies succeed.  But it wasnt a lot at that point [after the Adarand 
decision] that the FCC could do, because if you dont have any advantages, I mean, the 
FCC couldnt do anything about it.  So the thing that enabled the few, the handful of 
major companies that you see out there now that are successful [e.g., Radio One, Granite 
Broadcasting, Z Spanish] really become successful was when they had the advantages to 
give the opportunity to small and minority companies to get involved.  If you put it out on 
an open playing field, its just about impossible for some of the small Black companies 
out there, undercapitalized, not enough managers [adequate resources] to compete 
against these major players.  I mean, thats the history of it and thats going to be the 
future of it.  The history is not going to change.  Theres a clear-cut pattern of that, and it 
doesnt take a genius to figure it out.  (GDobbins362, p. 6)


(a)	The FCC Does a Tough Job Well

In speaking with the study participants, many shared their frustrations, travails and 
disappointments in dealing with the FCC.  However, several participants had kudos for the 
Commission, acknowledging that even in the face of the FCCs tough and complicated job, they 
felt well served.  While the primary objective of the study was to examine market entry barriers, 
it is important to note the FCCs successes.

Tazbah McCullah, a Navajo woman who oversees the operation of a tribal-owned commercial 
radio station shares her experience with the FCC.

The [FCC] ha[s] never hindered our efforts in becoming a licensee. Or during the 
construction permit process, either.  They've been very helpful.  They've provided us 
extensions pretty readily.  (TMcCullah133, p. 7)

Mia Lovink, a female wireless license holder told us that The bidding process [in the auctions] 
was easy.  I mean it was  the FCC made it easy.  Their tech support was always  you didn't 
have to wait at all.  They were very helpful.  (MLovink323, p. 6)  Her experiences with the 
process itself were shared by all wireless license applicants who we interviewed.

Several small licensees were of the opinion that they were under an unfair financial burden and 
unrealistic time constraints because they were subject to the same reporting requirements as large 
group owners.  In contrast, other licensees, like Jose Molina, a Hispanic radio and television 
licensee, believed that if one does what the FCC requires, hell have no problem.

 Oh, the FCC, [Ive] got no problems with them. You do things right the FCC is cool.  
You screw up, the FCC will give you a chance to unscrew it; but I[ve] never been in that 
situation because it is easier to do a good job and to follow the rules and the law, then to 
do a sloppy job and have to patch it up.  (JMolina121, p. 9)

Jose Molina, adds to his prior praise of the FCC.

I really like the FCC and I tell you, the FCC is not composed of a body of non-
visionaries. The FCC has visionary people. . . . I am sure that they are already working 
very hard at fixing this situation [of the negative impact on small station owners in a 
consolidating market].  How theyre going to do it, I havent the slightest idea.  But they 
know that those Americans like me who are hard working people, that dont stiff banks, 
no bankruptcies, nothing, you know what I mean?  (JMolina121, p. 20)

John Thomas, an African-American radio broadcaster found the FCC staff helpful even though 
he wouldnt say that is was necessarily easy [dealing with them].  He did offer that it was 
understandable.  He acknowledged that the people that I dealt with . . . were very clear about 
what I needed to do and how things were supposed to be done.  He concludes that he has not 
had any problems with the FCC at all.  My relationship has been good.  (JThomas277, p.. 8)

Others, like Eduardo Caballero, another Hispanic radio and low power television station owner, 
were laudatory and deeply thankful for the assistance they received from the Commissions staff.

Well, they seem to have a great deal of understanding of the problems that a minority 
individual with limited resources had to meet the deadlines.  Because they give you a 
[construction permit] for a limited period of time and you are supposed to build within 
that time.  But then if you dont, you have to go back and say I need an extension.  And if 
you dont [again,] you have to go back and ask for another extension.  And then at one 
point they are going to tell you show me that youre doing something to build the station 
in order to give you an additional extension, and they would understand that I was 
building one station and that my resources did not allow me to build another station at 
the same time.  

So I would go there and say, (T)his is what Im doing.  Im building the station in 
Bakersfield, but these other 11 construction permits are about to expire and I dont have 
a way to build at the present time.  I dont want to lose them.  This is something I always 
wanted to do; I always wanted to have.  And they will get back to me and say, well, 
show me that you are serious about your efforts.  And I will go there and I will show them 
that I signed a contract to lease equipment or to buy a piece of equipment, and they were 
extremely helpful in understanding. 

And actually, I have to praise particularly a gentleman.  He is in the Mass Media Bureau. 
. . . And most people in there have been, as I say, very, very understanding of our 
difficulties and our problems.  [This gentleman] is a supervisory engineer of the low 
power television branch of the Mass Media Bureau.   That man will have my eternal 
gratitude for being so understanding.   And I feel very good telling you that the FCC must 
be proud of having somebody like him there. (ECaballero124, pp. 15-16)


(b)	FCC Inaction When Confronting Private Discrimination 

According to many interview subjects, historically, some individuals at the FCC have tried to 
reduce market entry barriers for small, women- and minority-owned businesses, but have 
encountered Commission-created obstacles and difficulties.  Had these obstacles been non-
existent, women- and minority-owned businesses might very well have been able to gain 
financial and managerial strength, thus better preparing them to compete successfully within the 
framework of todays marketplace.

The FCC instituted several successful programs, like the tax certificate program, to increase the 
opportunities for small, women-and minority-owned businesses.  However, it appears that in 
some instances the FCC chose to ignore discriminatory practices in the primary and secondary 
market for licenses.

Rev. Everett Parker provided his insights into the historical challenges facing those who tried to 
overcome discrimination and provide a fair opportunity for small, minority- and women-owned 
businesses before the FCC.  He told us, Oh, sure Ive seen discrimination [at the FCC].  Ive 
never won a vote at the FCC.  The only time Ive ever won anything at the FCC was when we 
sued them.  He has been extensively involved in civil rights issues as they impact broadcasting  
both licensing and employment.  He shared two of his experiences with the FCC.

(W)hen the Civil Rights Act and the effort to protect minorities in particular came along, 
I looked at the stations throughout the South and we decided that we should do something 
about the mistreatment of Blacks by stations in  the South.  And the first thing we did was 
to ask the NAB  Governor Collins was then the head of the NAB  to ask their [member] 
stations to treat Blacks the same way they treated Whites, to use courtesy titles [e.g., Mr. 
Or Mrs.] and to give them the opportunity to present their views, especially [on] Brown 
v. The Board of Education. . . . Collins wanted to do that.  But the board of the FCC flatly 
turned us down. (EParker504, p. 3)

Rev. Parker went on to tell us about a license renewal battle he fought with the FCC and 
ultimately won.

We went down to the South and looked at stations and picked WLBT in Jackson and the 
Channel 13 also, the two stations in Jackson, because they were the stations which were 
owned by Newhouse in Birmingham and which we later went after and got Newhouse out 
of the broadcasting business. . . . 

And we went to Jackson because its the college there, Tougaloo College, which was 
being attacked every day on WLBT.  And we monitored for a week and then we petitioned 
the FCC  everybody thinks that we were after the license or something.  But we 
petitioned the FCC to have a hearing knowing full well that they would not accept public 
information, that they would send it to the station and the station would say, I didnt do 
it, or Ill stop doing it, and then they would send you the mimeograph sheet and 
would put it in the file that we looked at.  

And we filed a bill of particulars with the FCC instead of filing the information.  We told 
them the things that we thought they should look at in a review of license renewal.  
Already the station had been in trouble with the White House. And so we filed a bill of 
particulars the way you would in a federal court, which the FCC had never done before.  
And of course, the station came back and said throw them out, they didnt put in 21 
copies, which you had to put in in those days, and all the other things.   

The FCC wrote us back the usual stuff.  And at that point we presented our proof, and 
they didnt know what to do with it and they sat on it for a year.  And then they renewed 
the license at Channel 13 and they gave WLBT a one-year renewal, knowing full well that 
theyd come back at the end of the year and theyd get their license and that the public 
would say look what we did.  

And they had no thought that we would go to court.  But, of course, thats what we did, 
and we got this landmark decision by the circuit, written by Burger.   You know, it was 
the most conservative panel that you could get on the circuit.  And we then had to have 
the hearing, and it was held in Jackson.  And we presented our evidence there and, of 
course, the hearing examiner, which he was called in those days, absolutely paid no 
attention to our stuff and he made so many errors that the court  when the commission 
renewed the license and we again appealed to the court, which had kept jurisdiction, the 
court dispersed it and the court, for the very first time, lifted the license.  It didnt send it 
back to the FCC for further action.

So thats the story of how and why we did these things.  But as soon as we had the court 
decision giving the rights to the public to intervene in the affairs of federal regulatory 
agencies, thats when we petitioned the commission in 1968 to issue EEO rules and to 
make the reports of the stations public, which they did after much pressure. (EParker504, 
pp. 2-5)

Former Commissioner Henry Rivera shared with us the difficulties around enforcing the 
Commissions EEO policies.

There were many moves to curtail the Equal Employment Opportunity Policy in the early 
80s, to do a lot of things that were not terribly favorable to minorities; and, instead to 
look to marketplace solutions to help them, rather than to government initiatives.  I think 
thats the most charitable way to put it.  (HRivera516, p. 4)

He goes on to recount how the Commission handled the Multi-Point Multiple Distribution 
Service in such a way as to avoid overtly assisting minority ownership.

There was . . . a new service, called Multi-Point Multiple Distribution Service [MMDS]. . 
. .  And initially that was supposed to be a broadcast service and the Commission was 
supposed to grant preferences to minorities in issuing those licenses; but they didnt want 
to, so what they did was they classified it as a common carrier service where the minority 
preferences did not apply.  So that was an interesting thing. I think they did the same 
thing with Direct Broadcast Satellite.  So there were a number of instances like that, 
where the Commission was doing things to avoid overtly assisting minority ownership. 
(HRivera516, pp. 9-10)
	  
Mateo Camarillo, a Hispanic owner of both radio and PCS licenses, talked of his frustration with 
the FCCs response to the Adarand decision as it affected the delay of the C-block auction of 
PCS licenses.

. . . (T)he Supreme Court ruling [in Adarand] did not say that you could not have those 
[race- and gender-based] programs; it said you had to have a justification, it be on a 
narrow basis, but the FCC just threw out everything.  (MCamarillo375, p. 21)

Further, David Honig, Executive Director of the Minority Media Telecommunications Council, a 
non-profit advocacy group for minorities in media and representing multiple civil rights 
organizations, shares his knowledge of the FCCs activities around the distribution of licenses for 
educational broadcasting, the precursor to public broadcasting as we know it today.  This is an 
example of the FCCs enabling a state (Alabama) agency to discriminate.

And you look . . . at the way that they handed out the public television and public radio 
licenses in the country.  This is before the Carnegie Commission report in 1967 which 
sort of created what we now know as public broadcasting.  Then it was called 
educational broadcasting. 

One of the main purposes [of the educational broadcasting licenses] was to train people 
who would then go out and work in commercial broadcasting, and the schools were much 
more prominent among licensees than they are now.  

Well, state agencies also were granted some of these licenses.  All of the television 
licenses for public TV in the state of Alabama were given to something called the 
Alabama Educational Television Commission, between 1958 and 1962. And the agency 
was a branch of the Alabama State Government.  And its members were appointed by 
the governor of Alabama, George Wallace.  So you have to assume that the FCC had 
heard of George Wallace, seen him standing in the schoolhouse door and had actual 
notice of what he was going to do with the television stations and who he would allow to 
work there, and thus who was going to get the training in Alabama to be able to qualify 
someday to get a bank loan as an experienced broadcaster to apply for and obtain a 
commercial broadcast license.  This must have occurred to [the FCC].  
. . . (W)e took a look at . . . state and public colleges and when the colleges got their 
licenses, because often the state college systems in Texas and Maryland and Mississippi 
and Alabama and Florida and so on would apply for public broadcast licenses for the 
White schools, not the Black schools.  So [the Black schools] got them like ten years later 
and [the stations] were much lower power [than the ones for the White schools]. 

I mean the University of Maryland got one way before [Historically Black Colleges] 
Bowie State or Morgan State did. Cochran still doesnt have one.  Coppin State in 
Baltimore was running a broadcast program with no school, I mean can you imagine 
trying to run an airline program to train pilots and they dont have an airplane? Theyve 
got to train [solely] on  simulators?  Or medical school that doesnt have cadavers, they 
have to train on models? How would you like to be operated on by a doctor like that? 
Actually, managing to keep the school going there with no broadcast license. I mean 
theres nothing [that] substitute(s) for the immediacy and unpredictability of . . . what 
happens when youre on the air live and you cant turn it off and say sorry, we have to 
pause and figure out what to do. Theres no substitute for that. 

And thats why when the Commission rubber stamped these applications, the question 
shouldnt be what were they thinking? The question should be, they were thinking and 
they didnt care. It was an entirely predictable consequence. They were basically 
ratifying and validating the decisions of segregationists public and private.  (DHonig521 
#2, pp. 6-7)

Mr. Rivera explains that the Congress and the courts have often impeded the FCCs efforts to 
increase opportunities for small, minority, women-owned businesses.

 . . . (A) lot of the things that I suggest[ed] earlier that have happened to minorities and 
small businesses and women have happened as a result of things external to the 
Commission.  You add in [a few FCC Chairmen]  who have been very concerned about 
fostering minority ownership, but have had the pins knocked out from under them, 
basically. And its very difficult for a, I mean, theres not much that could have been done 
that has not been done at the FCC up to this point in the last two [White House] 
administrations.  (HRivera516, p. 15)

Mr. Riveras perspective is shared by Benny Turner, an African-American owner of radio and 
television licenses, recognizing that the FCC operates in a world influenced by political realities 
and the courts.  He believes that the FCC hasnt . . . been very effective [in helping minorities].  
I think [thats in] large part a result of the decisions rendered by the courts and actions taken by 
Congress that seem to have the effect of limiting the authority of the FCC to be more aggressive 
in leveling the playing field.  (BTurner108, p. 10)
(c)	Policies and Processes

Some interviewees discussed the time-consuming nature of FCC practices and procedures. The 
longer it takes to get a decision from the FCC, the more money it costs for attorneys, engineers, 
trips to Washington, D.C., etc.  money that generally cash-strapped small businesses can ill 
afford.  Henry Rivera describes the situation this way:

No, I never did [think anyone at the FCC was intentionally slowing things down so 
people who couldnt afford the fight would drop out], although I think that if one were 
interested in being anti-minority, the Commission processes by themselves would often 
have [that] result. I mean it just takes a long time to get anything done at the 
Commission, and if youre a minority or a small business, you generally dont have the 
capital to finance the particular matter through to its conclusion at the Commission. It 
just takes a long time.  There are a lot of pleadings involved and so forth, and you have to 
have the staying power to see your way through those proceedings. So, as I said, you 
didnt need to be discriminatory, you just didnt need to do anything extraordinary and 
the Commission processes by themselves would take their toll.  (HRivera516, p. 7)

Many people who we interviewed discussed the repeated appeals or petitions process that the 
FCC allowed to take place. Dennis Miller, a White male owner of wireless licenses, shared his 
perception that two competitors of his abused the petition process to gain competitive advantage 
over him.

There have been two instances where peoplethis is a personal opinion now . . . where 
people have abused the process.  Filing petitions to deny the transfers to our company, 
only in one case, the settlement papers say one thing, the other issue, the real reason was 
they wanted a lower roaming rate, and they knew by filing that petition to deny [our 
license] itd gum the gears up for six months at the minimum. . . . I think the motive in 
both cases was financial on their side to change the dynamics of a business relationship 
or a separate contract, roaming; being specific it was roaming. . . . (T)hey knew that we 
would be steadfast in closing the transaction; but what happens to you from a business 
perspective is once the transactions have been announced and you go on public notice at 
the Commission, it becomes public knowledge that company A is selling to company B.  
And if you can slow that process down in never-never land or in the middle of it, you 
gain a competitive advantage.  (DMiller147, p. 14)

The pace of change, especially in  telecommunications and wireless technology, has also created 
delays in FCC decisions.  As the Commission seeks to transform from rigidly service-specific 
Bureaus towards a New FCC , responsive to technological and market convergence, some new 
entrants contend they are bucking up against an old bureau mindset  costing scarce resources.  
Toni Cook Bush, co-owner of a newly-formed, multi-ethnic, all-female-owned company using 
integrated technology to create a new television network distribution concept, discusses her 
frustration in trying to get the necessary approvals and licenses from the FCC.

So I think . . . we have two strikes against us [at the FCC]. One, that were, you know, a 
small company that nobody knows, and that two, were proposing something different 
than what the FCC has seen before and they have not figured out a way to treat 
applicants who are seeking the same resource but are in two different bureaus; how to 
treat them the same way. (TBush378, pp. 17-18)


(d)	Staff Responsiveness and Impact of Bureaucracy

Many of the licensees who we interviewed had direct dealings with the FCC other than the 
licensees usual reporting requirements and license transfer transactions.  While some shared their 
deep appreciation for the assistance they received from various staff members and the FCC, 
others spoke of the difficulty they have had with the FCC including the following: non-
responsive staff members, access to Commission information, access to the Commission web 
site, or staff members out-of-touch with the small broadcasters condition. 

Rev. Everett Parker, who has a long history of dealing with the FCC, has a different perspective 
on staff assistance and FCC structure.

. . .(W)e could get a lot more help from the staff at the FCC than we get.  You know, you 
make decisions at the top and nothing happens at the bottom.  Remember what 
Eisenhower said, I push all these buttons and nothing happens.  So, no, the FCC is not 
set up to go out and see what the public needs and try to do something about it.  
(EParker504, p. 28)

James E. Wolf, Jr., who has had multiple problems maintaining his radio interests, shared one of 
his many challenges with the FCC.

Im going to tell you.  I had so many challenges with the FCC, even when somebody 
required that I move off of my signal.  But I used to be at 95.9.  They forced me down to 
95.7 to accommodate their power increase.  When they did that, you know, it brought a 
short spacing to the west of my signal, which meant that we were relegated to a 6,000 
watt station.  

And I was trying to get my power raised.  So just like the [other] adversities [I spoke 
about]  the FCC was always, we dont care as long as we serve more people, . . .  in 
this case it was [metropolitan] Illinois, to be able to serve more people. . . . And so when 
they did that it brought frustration on my behalf, you know, because I got boxed in and I 
could never raise my power up.  And I thought we are always going to be a small signal, 
small station. . . .  

I got reimbursed just the other day.  And this has been going on since 1993.  I just got  
not total reimbursement, but I just got some money, . . . (f)or the move that I had to make 
to accommodate the station.  I made the move back in 1996, you know.  I mean, I havent 
even cashed the check.  Ive still got it.  I just got it the other day.  

[I had to go through] (l)itigation  and what really, really bothered me is the FCC said 
you guys settle this out of court here.  This is not an FCC matter.  They sent documents, 
papers, and everything, down to me.  I said this is crazy.  I said, you put me in this 
matter.  But, you know, theres so much insensitivity here.  

And then finally I asked them to go back and review it again.  They went back and 
reviewed and said, well, yeah, it is an FCC matter.  It was just callousness on their 
behalf, you know.  And so they went back in and they made the [other] corporation 
reimburse me the money, but I didnt get nearly the money I should have gotten.  They 
kept me strung out for half of a decade, and I only got $6,000 out of it.  And I think it was 
just ludicrous, you know, that they operate like that.  (JWolf281, pp. 28-29)

Jeffrey Hutton, a White male operating a small-town radio station, shares his concern over his 
perception that the FCC doesnt have a grasp [of small market radio], his unhappiness with the 
FCCs low power FM decision and his own story about signal strength impeding his ability to 
compete adequately.

. . . (T)o me the FCC is a regulatory agency and they dont have a grasp, they preach 
small market radio and then they go and do this thing with all these little micro-stations 
[low power FM].  They dont have a clue how it works in real life.  Theyre bureaucratic 
businessmen and women sitting in Washington that dont get out in the field and they 
dont know how it works.  

So let me just give you a good example.  Im in a town that has a population of 600.  
(I)t was probably my fault because I didnt know how to do proper due diligence, but this 
station cannot be upgraded.  Okay, logically, for me to be able to have a better station I 
have to be able to broadcast with more power from a higher antenna, so I can reach 
more of an area, so I can go out to try to sell more advertising to more people.  Well, 
because of the spectrum spacing rule of the Commission, I cant do that.  Im locked out.  

Now theyll turn right around you know and allow a station in a big market to increase 
its power which is somewhat ridiculous because you know everybody lives within just a 
small radius there.  They can hear the station fine.  But that kind of activity blocks out the 
smaller stations like me so, you know, I have to, literally, its a day-to-day struggle to 
survive with this radio station because I dont have any power.  I get walked all over by 
these bigger stations in towns far, far away from here that interfere with my signal so I 
cant even serve the county Im in.  There are portions of the county that cant hear me 
because were only a 6,000 watt station.  And I find that very frustrating. 

People all the time saying you are a good station, why dont you increase your power so 
we can hear you better and things like that, and I cant do that.  So thats my biggest 
point of contention with the FCC from a realistic perspective, they dont have any idea 
whats going on out here.  (JHutton385, pp. 7-8)

Toni Cook Bush raises the issue that even though more recent FCC Chairmen have worked hard 
to make it better . . . for minorities and women . . the fact of the matter [is] in the bowels of all 
those Bureaus, its the same old guys whove been doing this for 20 years.  That has not 
changed.  But you dont get to the top [of the FCC] unless you can get through some of these 
guys at the bottom.  . . . I think that is very problematic.   (TBush378, p. 20)

Mary Helen Barro, former president of the American Hispanic-Owned Radio Association and 
owner of multiple radio stations, shares her views on the differences between broadcasters and 
FCC staff, both in terms of priorities and time frames.

I think the FCC truly does not listen to the small broadcasters. . . . I think they think like 
bureaucrats. They dont think like business people and it has hurt the small broadcaster. 
Whenever broadcasters have been in need, and its very common, the wheels of 
government are on a different timetable than private industry is on. Government thinks in 
terms of months and years.  Private industry thinks in terms of days and weeks.  And the 
response time often times by the FCC when small broadcasters were in need was just not 
timely.  And it hurt small business a great deal. You dont have that problem nearly today 
because frankly there is little or no small business [left] in broadcasting [since the 
deregulation in broadcasting]. (MHBarro190, p. 8)


(e)	Equal Employment Opportunity

In 1969, the FCC issued a Policy Statement which forbade discrimination on the basis of race, 
color, religion, or national origin in employment practices by licensees of commercial and non-
commercial broadcast stations.   Accordingly, each station had to establish a proactive equal 
employment opportunity (EEO) program.  This was the first time the FCC had directly addressed 
the issue of race in a formal policy ruling.  This Policy Statement established the Commissions 
right to revoke licenses and to hear allegations of EEO violations in comparative hearings.

In 1998, the D.C. Circuit Court of Appeals held in Lutheran Church  Missouri Synod v. FCC, 
141 F.3d 344 (D.C. Cir. 1998) that certain provisions of the FCCs radio broadcast EEO rules 
were unconstitutional.  The Commission suspended the requirement for broadcast licensees to 
file annual employment reports on September 30, 1998.   It wasnt until Spring of 2000 that a 
new EEO Policy Statement was issued.  These new rules are once again before the courts. 

Rev. Everett Parker was instrumental in pushing for the first set of EEO rules.  He understood 
early on that meaningful employment opportunity within existing, broadcast companies was 
critical if women and minorities were to have a fair chance of becoming licensees.  Today, more 
so than ever, prior experience and a significant track record of success in broadcasting is a 
primary determining factor for participation in the secondary market for radio and television 
licenses. Rev. Parker shared his recollection of the FCCs handling of the EEO reporting 
requirements.

[With] the first EEO rules, when EEO reports were turned in, the FCC didnt even open 
them.  They threw them into boxes and took them into the library and stored them. . . . 
They never have examined [radio and television] stations in detail for their [EEO] 
performance even though they are supposed to.  And you know, license renewal has 
always been a farce.  And the staff at the FCC certainly did not want to be bothered with 
these hundreds and hundreds of reports and analysis.  

In the end, since we were issuing these analyses every year we made a deal with the then 
chairman.(H)e and I made an agreement that [we] would do the analysis and would 
have the figures.  And as long as he was Chair everything was just wonderful.  

But then, of course, the [President] Reagan FCC came along and after that, you know, 
they just said they werent going to enforce the EEO rules and the hiring and promotion 
of minorities and women went down again.  By the time the Reagan administration came 
in, television, at least, was as high as any industry in having minorities and women in 
upper level jobs, not at the corporate level, but in the stations.  (EParker504, pp. 8-10)

Former Commissioner Rivera, who was at the FCC from approximately 1981 to 1985, 
experienced during his tenure that there were very few things that were positive at all [for 
women and minorities during the years that I was at the FCC].  He especially highlighted the 
lack of enforcement of the Commissions EEO policy and the negative impact that had on the 
creation of a farm team, those individuals who should have gotten the experience needed to 
one day become licensees.

I think most of the things that happened were negative. I think that one of the things that 
happened that hurt a lot was the Commissions decision basically to stop enforcing its 
EEO policies.  And there was no, I mean, clearly, I think [the then Chairman] thought 
that this was a bad thing to do, that it was not appropriate for the government to be 
sticking its nose in enforcing broadcasters to hire minorities. And, as I said, I think that 
hurt a lot, because, thats your farm team, basically.  Those are the folks that you look to 
in the future to get into ownership. And the Commission basicallyyou can look through 
the records during that period of time and you will find very few enforcement actions that 
had anything to do with EEO.  So it was a pretty bad time at the Commission in that 
regard. .  (HRivera516, p. 9)


(f)	Distress Sales

The 1978 Broadcast Policy Statement: Statement of Policy on Minority Ownership of Broadcast 
Facilities, 68 FCC 2d 979, 983 (1978) also created the Distress Sale policy which allowed a 
broadcast licensees designated for a revocation hearing to sell their broadcast station to a 
minority-controlled entity at no more than 75% of the stations fair market value. 

The FCC developed the distress sale policy.  It was created at the same time as the tax certificate.  
Virtually none of the study participants had acquired their station(s) in this fashion as the license 
renewal process rarely resulted in the threat of revocation.  

Richard Weaver-Bey, one of the few broadcasters who did acquire his station under the distress 
sale program, spoke of delays in the process which cost him scarce financial resources and 
advertising revenues, forced him into default on his SBA loan. After Mr. Weaver-Bey traveled to 
Washington, DC to meet with the Commission staff, the FCC approved his license transfer.

We were being told that the FCC was not processing [our] paperwork or whatever.  And 
we would call down and not get answers.  So we decided that we would take a trip to 
Washington [D.C.] and see if we [could] make some headway. . . (W)e were able to have 
a couple of meetings during the course of that day, one in the mid-morning and one in the 
late afternoon, to provide information to two of those individuals. [O]ur[license transfer] 
process, when we got back after that, moved along at warp speed and we were finally 
able to come to a closing.  

So, I think what the Commission could have done at that point in time was to make sure 
that if there was a distress sale and that if there were buyers who were ready to close, 
that the Commission forced the expeditious closing of the station.  And that didnt 
happen.  So that set us back and cost us a lot of money, as well as when we did get into 
the station, by the time we got into the station, there were a number of advertisers that 
had been brought on in trade and things of that nature that were just very difficult to 
overcome [contracts had been negotiated, etc.]  So our station was sort of behind the 
eight ball . . . from the start, and it was very difficult in attempting to catch up, so we fell 
into default with the SBA loan.  (RWeaver-Bey171, pp. 5-6)


(g)	Comparative Hearings

The FCC  used the comparative hearing process from 1945 through 1994 to award licenses when 
there were two or more mutually exclusive applicants for the same frequency. In 1978, the 
Commission formalized the use of minority and gender credits in the comparative hearing 
process, with the goal being to increase participation by minorities and women. This meant that 
if a minority or woman was a controlling member of an applicants management team, that 
application was given more points during the hearing process. The Bechtel decision in 1993, 
which invalidated the FCCs integration criteria, led to the FCCs suspension of the comparative 
hearing process in 1994.  Thereafter, the 1996 Act officially eliminated comparative hearings.

Amador Bustos, a successful Hispanic multi-station owner, speaks to the effectiveness of the 
comparative hearings as a means to encourage minority broadcast license ownership.  I think 
that [the FCC was] well intentioned but not effective.  I think that the comparative hearing was 
really not an effective process to try to get minorities into the hopper and into the system.  
(ABustos122, p. 12)

The study participants who went through comparative hearings spoke of multiple obstacles, 
challenges, frustrations, and commitment during the process.  The length of time and money 
expended to acquire a license was a real burden for these applicants. Ben Perez, a 
communications attorney and low power television licensee, represented many minority groups 
in comparative hearings before the FCC.  He shared his view on the effectiveness and impact of 
the process on minority applicants.

This hearing process is horrible.  It destroy[ed] the hopes and fortunes of virtually every 
minority applicant, doing tremendous damage, and the outcome is not more minority 
grants.  In fact, if anything, it's probably less than it used to be.  And the FCC was very 
good about refusing to count either the composition of applicants, minority versus [non-
minority] or the composition of winners.  They never, they refused to gather statistics, 
because they, I feel, because they knew if they quantified, then people would hold them 
accountable for what was happening. Claiming to be helping minorities, but the licenses 
are not going that way.  If they quantified the Comparative Hearing, what percentage of 
applicants were minority?  What percentage won and got licenses? The numbers would 
have been horrible.  They did not, and they never have, and they still haven't. 
(BPerez540, p. 36)

Mr. Perez saw the hearing process as a war of attrition.  He detailed it this way.

Hearings by their nature were a war of attrition.  The big broadcaster who had the most 
players to expend and had the most appreciation of the value of the license would spend 
the most and wear down and defeat all the other applicants.  That's another permutation 
of the same thing, but if they couldn't buy them out they would wear them down, and they 
[would] get financially exhausted.  They literally financially exhausted them.  And, you 
know, more depositions, longer trials, more appeals.  And if they fought long and hard 
enough and this was the creed of the broadcast Comparative Hearing attorney  I could 
tell my client, if you're willing to fight hard and long enough, I'll win this for you. 
(BPerez540, p. 28)

Ruby Unger, a White female radio licensee, primarily felt that the FCC wanted to push onto the 
applicants themselves the responsibility for making the decision about who would end up with 
the license.

 [What] the FCC basically wants the applicants to do is knock each other out.  The 
FCC did not want to make a decision.  They did not want to rule in anyones favor.  They 
really wanted to have somebody buy out the competition, you know, give them money to 
go away.  And when the depositions were taken here in Novato preliminary to the 
hearings in Washington, it was very clear that our application would be the top or the 
second in line. that was the general consensus.  I think it was clear once the process 
started that  and I dont really remember who said that specifically, but it could have 
been my FCC attorney. (T)he upshot is I did settle on the night before I was going to 
testify.  And I did that because I was advised to do that by my attorney.  And in hindsight 
it really was the best thing to do.  It was really difficult.  Its like being pregnant and then 
the night before youre going to give birth you decide, okay, I wont have this baby.  It 
was really sad.  (RUnger367, pp. 2-5)

Mateo Camarillo, a Hispanic radio and wireless licensee, who holds a masters degree in social 
work, previously started a school of social work to aid his Hispanic community, has been an 
extremely successful multi-unit McDonalds franchisee, and was a university professor for 10 
years, talked of his experience with the comparative hearings as being a horrible process.

 (T)here were multiple parties seeking that frequency, seeking that spectrum and so 
obviously I had an attorney, and I thought it was, a good firm; it was highly 
recommended to me. And we proceeded to go through the process, the comparative 
hearing process which, you know, meant going to Washington for hearings before the 
administrative law judge. 

I was not very pleased with the competency of the administrative judge, [who] shall 
remain nameless. . . . he would be falling asleep while people were making presentations 
in front of him, things that even a lay person would say, gee, whats going on?  You know 
he would ask questions [of]  presenters that already had answered the question in their 
presentation. Things that led you to believe, is this person awake?  And so I didnt have 
much faith in a rational recommendation coming out of that process. 

So what eventually I did is I was able to show that of all the applicants, I was the most 
qualified in reference to the criteria. There was another firm out of San Francisco, who 
was also very tenacious and it came down in my opinion to that entity and our entity. I 
formed [my] company with two other associates and we had an S Corporation . . . three 
stockholders. 

. . .  And what I did then is I was very motivated to win and very aggressive in the 
proceedings and then I even hired a private investigator too because I knew [the other 
applicant] was lying. The applicant had lied. The top competitor had lied and I knew it. 
And my attorney said its a big difference between you knowing somebody lied and 
proving to the FCC that they lied.  And it was, and he was right. There was a big 
difference. 

 So it was very frustrating. So I knew that the odds were, it wasnt a level playing field. 
And so what I eventually did, I made him an offer to buy him out, his application, which 
went against my grain and my principles because you know I knew I had beat him 
outright, but I offered to pay him what he had expended, which was the rule at that time, . 
. . they couldnt make a profit. They could recover what they had spent. So thats in fact 
what happened. Because I didnt believe that I could win, based on what had transpired, 
even though I was the best applicant, even though the other person, the other party had 
lied. So that left a bad taste. 

 It was a long process. It was from 81 to 85. It was four years. . . . (B)ecause we bought 
out the other applicant, we were kind of what you might say the only ones left standing at 
the OK Coral.  But again, I didnt think it was a fair process. I dont think we won on 
merits. We shouldnt have to win, people shouldnt have to win by having the fattest 
wallet. We should have won based on the merits.  (MCamarillo375, pp. 3-5)

Francine Rienstra, a White woman who holds an FM license in Tucson, Arizona, had a different 
yet no less difficult experience with her 10-year-long comparative hearing process.  She 
encountered from one individual three appeals of the decision to award her a license. Ultimately 
she prevailed, but by then her resources had so dwindled that she had to engage in a Local 
Marketing Agreement (LMA) in order to generate the funds to build out her station.  Eighteen 
months after the station went on the air in 1994, Ms. Rienstra sold her station to her LMA partner 
per their original agreement.  She tells her story this way.

Initially, in 1984 I formed a company to acquire a brand new FM radio license in 
Tucson.  It was part of the Docket 80/90 batch of licenses; approximately 700 licenses 
across the country were being auctioned off [distributed under comparative hearings].  I 
had estimated that it might take a couple of years to try to acquire that license and was 
prepared to go ahead and apply for a license, even if it took 2 to 2 years, or 3 years at 
the outside.  I figured that was worth it, and I was working another job in the meantime. 
[It actually took] ten years.  

I sent in a letter [to the FCC] initially  stating that I would apply for a station should 
they allocate a license here.  The FCC said they would allocate a license.  Then they said 
that the . . . signal wouldnt work for a class A station.  Tucson is in a valley, but it is 
surrounded by mountains.  But we have plenty of stations here that give good signals.  
And I was in competition with, initially, 40 other groups.  And then by the time it got to 
that point where the FCC said, no, were not going to allocate a station here, Im 
thinking there are 40 other groups here that want this license and there was only one 
license to be allocated to this market.  And if somebody doesnt say something or do 
something, then theyre not going to allocate a license here.  

I couldnt wait for everybody else to make a move, so I spent my money and had my 
engineer do an engineering study stating that we could get city-grade coverage for a 
class A station. . . . [The FCC] said that they were not going to allocate a license because 
you couldnt get good city-grade coverage.  Based on their figures that they did from 
their computers, I guess, Im not really sure, I guess from their computers.  And I believe 
what happened is that they took the 10,000-foot mountain and said that youd be 
broadcasting from below ground and couldnt get a tower high enough to get a good 
signal.  And I said that thats not true and talked to my engineer who said thats not true, 
and I asked him to put together an engineering study.  

And we did, and we essentially appealed to the FCC.  No other group did that; I was the 
only one that did.  And the FCC made some changes, changed the channel number and 
the frequency, and then they allocated us a channel number here. 

 So, continuing in the process, then you have to send in your application when they 
request that you do that, and I did, and so did 20 some odd other groups  or no, it was 
more than 20, probably around 30.  And then the FCC weeds them down; they weed 
down six months, and then you have to re-apply.  They weed it down and weed it down, 
and every time they weed down, it takes six months to weed down. . . . (W)e all applied, 
and then there was some more weeding-down process based on how good of an 
application you put together.  And in order to get the 80/90 Docket, there were certain 
rules that you had to follow, and the closer you stuck to those rules, the more points you 
got. 

. . . [We were an all-woman group] and we were all local.  We had not  this was part of 
their parameters  we had not owned any other broadcast entity.  I had a minority in my 
group.  I had a radio background. . . . All this time, while this whole process was going 
on, Id been working for radio and television stations as a sales person and then as a 
sales manager.  And then, we got to the point of weeding it down to [a point where] we 
did depositions and it weeded down, and then there were four groups, and really I was 
the strongest out of the four groups.  

And we went to a comparative hearing in Washington, D.C. [in 1990], and thats when I 
was declared the winner.  And then one gentleman, who had applied for many, many 
different stations around the country, as well as owning a couple of stations in 
California, had applied for this one, too, and he was part of the four remaining groups at 
the comparative hearings.  After I had won, he appealed it.  I think he said something 
about my engineering wasnt right, and that wasnt true.  Because the FCC denied him 
and said that I was still the winner.  That was six months long.  He appealed it again... 
and I won it again.  He appealed it a third time.  

See, the FCC had formed some kind of a group at that time, and this was supposed to 
make the process easier because then it wouldnt have to go back to the FCC.  Well, it 
did.  It went through that group, and I was the winner.  He appealed it back again to the 
FCC, and I was the winner.  He did appeal it one more time, and then they said I was the 
winner.  And in order for me to get that license on the air and to even try to get more 
funding, because now we had used almost all . . . of our funding . . . for attorneys, for 
engineers, for trips, all the research and everything else that we did.  So we had used 
quite a bit of funding, and we were still pouring money out of our pockets.  This was all 
out of pocket. (FRienstra360, pp. 1,6-13)


(h)	Repeal of the Tax Certificate

The 1978 Broadcast Policy Statement created the tax certificate program which provided tax 
benefits to the seller of a media property if it was sold to a minority business.  The tax certificate 
policy encouraged and promoted minority ownership by giving a two-year like-kind transfer tax 
break (a deferral) for the sale of licenses to minorities if the proceeds were reinvested in a similar 
communication industry.  In 1995, as part of the Self-Employed Persons Health Care Deduction 
Extension Act, Congress repealed the tax certificate program because of alleged abuse .

This tax certificate program was the single most effective program in lowering market entry 
barriers and providing opportunities for minorities to acquire broadcast licenses in the secondary 
market.  Virtually every minority broadcaster with whom we spoke commented on the programs 
effectiveness and recommended its reinstatement as a means to increase opportunities for 
minority ownership.  While it did not guarantee that transactions would be consummated, the tax 
certificate program did motivate sellers to seek out and offer an increased number of broadcast 
properties for sale to minorities. 

Bernadine Nash, a minority daytime-only AM radio station owner in Boston, summed up the 
benefits of the program and the negative impact of its repeal.

The biggest blow for us, really, has been the dissolution of the minority tax certificate.  
Because when the minority tax certificate was in existence, I actually had people 
approach me when they wanted to sell their radio stations because there were significant 
tax breaks to be derived from it.  When that went away, not only did I not get phone calls, 
I couldnt get phone calls returned when I was inquiring about properties.  Ive been 
trying like crazy and have hit, I cant tell you how many, brick walls, and have come to 
the realization that in this market it is not going to happen within the framework that I 
imagined that it would.  (BNash118, pp. 7-8)


Dorothy Brunson, an African-American UHF licensee explained the economic benefit of the 
program to the buyer.

It lowered the [purchase price]. . . . Because what happened, if you needed that crucial 
20% down payment, and you only had 5%, if you got a tax certificate, and that person 
was able to defer those capital gains of 17 or 18 percent of tax on that money, they would 
then be willing to give you maybe a 10% swing [ on the price of the station].  Or even 
12%, if it was big enough.  And that 12%, with your 5%, well, theyd give you a 20% 
push to be able to pull that deal out, so if you can now get 15 times cash flow [in 
financing], youre going to be able to manage that, because youve already got a 20% 
equity stake. (DBrunson105, p. 25)

Amador Bustos, who was quoted earlier on the ineffectiveness of the comparative hearing 
process, said that (t)he only thing that was effective was the tax certificate  [because it] allowed 
minorities, as in our case, access to get some property that we would not otherwise get, because 
the seller was motivated by the fact that they could defer the tax for a period of time.  
(ABustos122, p. 12)

Dorothy Brunson, who commented that it was a travesty when the Congress overruled the 
Commission on the tax certificates, provided some statistics on the programs success.

(I)f you go back and look at the number of cases where I went back and I believe it was 
1997, 96, you probably had about oh, I would say close to 250 properties that were 
owned by African-Americans, maybe with Hispanics with the radio stations and one or 
two TV stations in the West, we were looking at probably about 315 properties.  Out of 
that 300, probably better than about 100, 150, were based on tax certificates.

You have to look at some of the historical research.  It was tremendous.  Yeah, there were 
some who came in and got out, bought with tax certificates, turned around and sold [the 
stations]; but youre always going to have somebody whos going to abuse the system, 
but you dont throw the baby out with the bath.  But it could have been better done if the 
tax certificates were regulated, and all they had to do was put a clause in that the persons 
who had the tax certificates, would a) have to hold [the station] for a minimum of two 
years, or three years and/or b) [the FCC] could have limited them - they (could) say no 
tax certificates over $300,000 or $400,000 or whatever, you know.   But, not to just kill 
the whole program. (DBrunson105 p. 24)

Henry Riveras perspective that the repeal of the tax certificate was devastating to minorities 
was shared by many. 

I think in terms of things that have happened to the minority community, clearly one of 
the most devastating has to have been the repeal of the Tax Certificate.  I mean when we 
lost that, we really did lose a terrific vehicle toward increasing minority ownership. That 
was devastating.  (HRivera516, p. 12)

(i)	Auctions

The Omnibus Budget Reconciliation Act of 1993 (which added Section 309(j) to the 
Communications Act of 1934) gave the FCC authority to distribute licenses through a 
competitive bidding process, or auctions.  Initially the auctions were used only for wireless 
licenses.  The first broadcast auction, the Bechtel auction, took place in 1999.

The most significant difference between the auctions and the previous means of distributing 
licenses (comparative hearings and lotteries) is that now successful applicants, as a result of the 
auction bidding process, are required to pay tens and often hundreds of thousands of dollars to 
the FCC for each license awarded to them.  The FCC at one time allocated the spectrum to 
qualified applicants without receiving any compensation from the applicants, now the 
prospective licensee with the deepest pockets wins.

For already capital-deficient small, minority- and women-owned businesses, the huge sums of 
money needed to both acquire the licenses and build out the systems has created an enormous 
barrier to entry. 

To help counter the financial impact of the auctions, the FCC originally created bidding credits 
and later favorable financing for small businesses, with additional credits being given to 
minority- and women-owned businesses. The FCC set the C and F blocks of PCS spectrum aside 
as entrepreneur blocks with the expectation, at least with the C-block auction, that small 
businesses would get a head start in the market with PCS service over the larger telephone 
service providers who were scheduled to bid for their licenses in the subsequent A- and B-block 
auctions.

Unfortunately, the decision in the Adarand case prompted the FCC not only to delay the C-block 
auction beyond the date of the A- and B-block auctions but also to remove any special credits 
that had been available for minorities and woman and to extend those credits to all small 
businesses participating in the auction.

The delay in timing of the C-block auction, coupled with the loss of minority and women 
bidding credits, impaired bidding strategies, pricing estimates, and ultimately limited the 
opportunities for small, minority-, and women-owned businesses to get financing, meet their 
installment payments, and build out their systems.

But more than anything, most interviewees who offered an opinion about the auction process 
indicated that, because of the capital requirements of the process, small business owners would 
be shut out of the process and relegated, if given a chance at all, to the least desirable and 
therefore most affordable spectrum.  Carl Davis, a wireless licensee characterized the FCC as a 
money-grubbing organization which isnt fair any longer.(CDavis322, p. 27)  


Brian Cobb, a media broker had this perspective on the auction process:

. . . (T)he bulk of [the wireless spectrum] is being provided to whoever pays the most 
money.  But . . . the system got perverted when [the FCC] got greedy and started selling 
to the highest bidder, so all they are doing is turning over all the frequency to the largest 
corporations in the country.  Thats whats happening.  I call it corporate socialism, 
because Im a big fan of small business.  (BCobb512, p. 32)

Toni Cook Bush sees the auction authority as one which now drives and defines choices made by 
people at the FCC.  The bottom line that I figured out from at least some of the conversations 
that Ive had at the Commission is that they really do just want to raise money, and they view 
their job just to try to figure out ways to get [companies] into an auction.  (TBush378, p. 27)

Henry Rivera sees it this way:

The Administration . . . and the Congress like the fact that theres money being generated 
out of something that the Commission is doing and the Commission likes that. So, they 
like to be patted on the back and given attaboys and attagirls and you guys are doing a 
great job and youre raising all this money for the Treasury and we think youre great.  
[But] thats the ball they tend to keep their eye on rather than, you know, what can we do 
about helping minorities? What can we do about fostering new technology  . . . but I think 
that their mind is not necessarily on advancing the public interest as much as it should be 
but rather [on] how much money can we generate from this particular auction.  
(HRivera516, p. 21)  

Brian Cobb asks a more fundamental question about the rationale behind the auction process.

They havent had a very viable solution yet [for issuing licenses]. . . . They tried to set 
rules that said, okay, if a minority is involved then they get favoritism or if there is more 
localism. . . . So then in the [comparative hearing] process everybody was trying to eat 
each other, and they got tied up for years and years and years.  That wasnt very good.  
And so the ultimate solution was to make it as simple as possible, whoever has got the 
most money gets the frequency; and I dont understand the rationale in that.  I mean, I 
understand the economic rationale, but if you say its the public frequency, why did you 
do that. (BCobb512, pp. 33-34)

Frank Blount also believes that the FCC is focused now on money with little consideration of the 
small business guy.
 
And the FCC, I think that this whole thing has been geared to boy, lets get the billions of 
dollars.  But, what have they done to the small business guy?  They have shut him 
completely out of the market.  (FBlount153, pp. 23-24.)


Carl Davis shared more of his feelings about the impact of auctions on the rank and file.

Really, in my opinion, auctions are illegalbecause the airwaves belong to the general 
pops, the general population in the United States. And why should you have to pay the 
Federal Government?  It all belongs to the people.  And . . . I dont [think] we should 
have to pay for those licenses. We never paid.  People never paid prior to this.  So 
essentially what happened, the bulk of the licenses were given away to people. And then 
all of a sudden when you bring in the rank and file, more or less, then they start charging 
. . . . (CDavis322, pp. 17-18)

When the C-block auction finally took place, the result was super-inflated prices driven by a few 
supposedly well-financed bidders; and the belief that this was the last real chance for 
entrepreneurs to get a meaningful part of the wireless spectrum.  The A- and B-block auctions, 
which had already put spectrum in the hands of the large companies, had taken place.  Whatever 
advantage that was expected to accrue to the entrepreneur block by being first to market had 
been erased when the C-block auction was delayed.

Brian Fontes, a Senior Vice President at the Cellular Telecommunications Industry Association 
(CTIA), offered his perspective on the viability of C block licensees given the timing of their 
market entry.

I dont think the Commission did small businesses any great favor with the C-Block; [the 
C-block license holders are] the last to market - the small business, women-, minority-
owned, Telco-type businesses, which were originally stated under the auction authority, 
and Adarand kind of wiped that out.  And now it's just a small business exemption or a 
small business category.  I mean, they auctioned off first the A-Block, then the B-Block, 
then the C-Block.  So in terms of when these blocks of spectrum become available means 
that the other blocks  it's kind of last to market.  And I think anybody that's last to 
market will have a more difficult time  one, raising capital and two, competing.  
(BFontes524, p.11)

C Block licenses sold for considerably more money per population covered by the license than 
the A and B blocks. Many applicants either dropped out of the process early, were able to afford 
only much less attractive secondary or tertiary market licenses, or considerably overbid for their 
licenses thus rendering their business plan uneconomic. Therefore these C-Block business plans 
became unattractive as a financial investment either for conventional lenders, equity partners or 
vendors.  

Many C-block licensees have been unable to meet their installment payments; many have filed 
for bankruptcy.  In either case, they have had to return their licenses to the Commission, per the 
auction rules.  Some C block licenses have already been reauctioned.  Another block of licenses 
is scheduled for reauction on December 12, 2000. 

Mateo Camarillo, a Hispanic wireless licensee, whose experience with comparative hearings was 
presented above, also shared his disappointing auction experience with us.  His story is 
illustrative of the stories shared by many other C block participants.

When I became aware of [the C Block] and I found that there was receptivity to those 
suggestions [about preferences for minorities such as bidding credits and installment 
payments], and they became policy, then I decided to shift focus and I left the 
administration of running the radio stations to get involved in PCS and formed a 
company, . . . Integrated Communications Group. And we then were successful in getting 
investors and other parties to commit to work with us [prior to the beginning of the 
auction].

Anyway, what happened is the Supreme Court ruled on a case called Adarand vs. Pena, 
and after that ruling came down we lost millions.  All our investors went away. All our 
investors went away.  Because [with] the FCCs interpretation of the ruling, the Supreme 
Court Ruling did not say that you could not have those [minority] programs, it said you 
had to have a justification, it be on a narrow basis, but the FCC just threw out everything 
and so thats why our investors went away.  

And when they in fact promulgated new rules later that year, we had committed so much 
time, so much energy, we went ahead and participated on a reduced scale. And despite 
the fact that we lost millions from our investors, we just scaled down. However, we ran 
into the same problem that we ran into in radio broadcasting, being in secondary and 
tertiary markets, we subsequently found we did bid and prevail in the auction both the C 
Block and F Block and obtained 11 licenses. However none were, and our strategy was 
along the [U.S.  Mexico] border because that was our niche, that was our strength is 
marketing and reaching the Hispanic market which is on both sides of the border, and we 
thought that gave us an advantage over you know Joe Doe company that didnt even 
understand that community. 

However, we had the Next Waves of the world who outbid us and drove the bidding 
prices out of sight, so we had to drop out in Corpus Christi, in Brownsville, in markets 
that were important, and so we ended up with tertiary markets. 

The problem that we eventually found out is that it was very difficult to attract investors 
[and to get] the attention of suppliers, the Motorolas of the world, the Qualcomms of the 
world, in secondary and tertiary [wireless] markets. So that was another huge problem 
and so were now currently in escrow to sell our licenses because we cant raise the 
millions needed to [make installment payments on the licenses or build them out], that we 
had before Adarand.  

We had everything lined up. We had manufacturers. We had investors, we had all kinds 
of things. But we had so much invested in time and energy we thought that we could still 
make it work on a smaller scale; but we subsequently learned the hard way that people 
arent interested in Timbuktus of the world.  Which is where minorities tend to end up 
because they dont have the capital, they dont have the wherewithal to go public, to have 
the critical mass to have this staying power.  (MCamarillo375, pp. 21-22)

While few interviewees that were involved in the C-Block auction expressly talked about the 
benefit of being able to pay for their licenses using installment payments, it was apparent from 
their comments that this program encouraged them to participate in the auction process.  The 
difficulties for most arose, however, with the delay in the timing of the C-Block auction due to 
Adarand.  

As was the case with Mr. Camarillo above, lenders and investors lost confidence in the C-Block 
applicants and generally decided to withdraw their support.  Furthermore, when the auction 
finally did take place, the bidding was very active, with prices escalating beyond the point of 
economic prudence.  Many bidders, given their lack of sophistication with the industry and 
financing in general, used all of their available money to make the license down payment, 
perhaps naively expecting that since they had time until their first installment payment they 
would be able to raise the needed capital from outside sources.  With prices for the licenses 
generally being higher in most markets than their business plans could accommodate, it became 
virtually impossible for licensees to raise the capital needed to build out their systems and make 
their installment payments on a timely basis.  Several licensees have defaulted on their payments 
requiring them to forfeit their licenses.


(j)	Interactive Video and Data Services (IVDS)

The FCC auctioned Interactive Video and Data Service (IVDS) and targeted this spectrum to 
small, minority, and women-owned businesses. Many interviewees stated that, during the IVDS 
auction, they came to believe that certain necessary technology was available and carried the 
imprimatur of the FCC. In fact the technology did not exist and many have been unable to make 
use of their licenses.  Realizing the problem, the FCC suspended the requirement that license 
installment payments be made.  In some cases the FCC has refunded the installment payments 
made to date by the licensees in exchange for the return of the license.  However, the down 
payments made by the winning bidders remain in the hands of the FCC.

Nancy Douglas, an IVDS licensee, talked about the basic problem with this spectrum.

Interactive Video and Data is what it was called, but that name now has gone by the 
wayside.  Now they just call it 218-219, because it certainly is not interactive video, it 
never did do that, could not do that, [even though the FCC] said that it could.  It turns 
out that the equipment, the amount of spectrum which is 1000 mhz of spectrum, will not 
even do what they said that it will do.  You need a lot more spectrum to be able to do that.  
You need really broadband, you know.  So, even that was incorrect, which is basic 
engineering.  You know, which again shows that the FCC did something that was totally 
wrong.  And the FCC has refused to take any responsibility for that.  (NDouglas155, p. 9)


Carl Davis, who holds five wireless IVDS licenses, among others, explains the financial impact 
on him of the IVDS auction process.

I was a winning bidder on five licenses in the IVDS . . . and subsequently put 10% down. 
And at that point in time, I think virtually everyone who had bid for those licenses 
realized that the company who had stated that they had the equipment to operate at those 
frequencies did not have the equipment.  And at that point in time, virtually everyone who 
had outside financing, the financial community backed off and left us high and dry.

. . . I had deposited for the initial down payment something like $272,000.  So then the 
financial backing that I had at that point in time decided to back out and left me dry and I 
couldnt come up with the other $272,000 for the [other half of the], I believe, 20% down. 
. . .  A lot of people got collared. I dont know the numbers totally, but a number of 
people did. . . . I had used my own funds for the initial down payment, but I had backing 
for the additional ten percent and the subsequent payments - I think it was an additional 
$3 million. [I had] $272,000 [of my own money in the deal].     

The Federal Communications Commission kept [my down payment]. . . . Since I didnt 
make the additional 10 percent down . . . they claimed that I did not uphold the 
agreement, and, therefore, they confiscated the license.  The FCCs position has been, 
and still continues to be, we should have done due diligence [on the equipment and the 
spectrum]. And I think thats a cop out because the Federal Communications 
Commission is the one who incessantly tapped onto, Answer TV is what it was called, 
stating that they had the equipment, and the FCC was touting this around in the 
newspapers and through their correspondence with us. That theyre equipment 
essentially did exist.  

However, in further research, we found that the Federal Communications Commission 
did not even check to see if Answer TV had the equipment. They issued the licenses based 
[on technology that] . . . was hypothetical.  

Altogether, with respect to IVDS, I spent a total of a half million dollars - in developing 
my system [with QVC] that I thought was there, hiring people to write things for me with 
respect to how we were going to market this thing; paying attorneys; and doing research 
of all sorts.  (CDavis322, pp. 1-3, 11-12)

Mr. Davis continued on to conjecture why, with the failure of IVDS, the Commission will not 
return licensees down payments.

So Im in contact with a lot of licensees.  And theyre complaining.  You know even 
though they made a second down payment and a few installment payments, theyre saying 
well, how come I cant get all my money back?  You know, whats precluding the Federal 
Communications Commission from giving all my money back?  Theres no reason for it.  
And come to find out there is a reason.  And the reason is this - a company called Next 
Wave.  

[They] (p)ut down half a billion dollars [for licenses in the C-block auction], on the 
licenses  they bid for on PCS, I think it was called. And they didnt come up with the 
additional half, which was another half a billion. . . . So they are in default. Now because 
they are in default, and were in default, the FCC doesnt want to necessarily give our 
money back, our down payments back because if they do, it would set a precedent and 
then they would get their money back, or in this case, Next Wave is attempting to, they 
want their down payment, but the FCC wants to really confiscate that fine and put it back 
on the market because now the licenses are worth about ten billion.  So they can make a 
lot more money.  And its become a money hungry business. (CDavis322, pp. 26-27)

Mr. Davis also reports that he has finally found a use for IVDS and the accompanying 
technology to make it operational.  However, since he failed to pay the second half of his down 
payment, as reported above, the FCC has confiscated his license and is leaving him without any 
way to recoup his personal investment.

This is the public notice, [the Order], to IVDS people (and we are called 218-219 mhz 
service): . . . they tell you how to get your money back, that is your installment payments. 
If that is the case, or they give you another option, you can go ahead and continue to[pay 
on the] installments, and they will commence 3 months henceforth, or you can request a 
return of your installment payments, or you can pay off the entire loan.  Now I have 
proposed to pay off the entire loan But they say I dont own the license because I didnt 
put the additional 10% down. I have found and a number of other people have found that 
we can utilize the license for digital information data transfer.  So now the license would 
at least be able to get some of our money back.  And I think the price I paid was close to 
$4 million, for the license totally, three point seven, three point eight, something like that. 
I could [earn] that money back in a period of five years.  

I have gone out and Ive turned over rocks and Ive come up with a financing source. And 
they are willing to pay the FCC off.  I have letters to that effect and Ive sent the letters to 
the Federal Communications Commission and given them an opportunity to check these 
peoples credentials and background and make sure they do have this cash; and they still 
deny me the opportunity to come back, give them the 10% down and pay full price for the 
license.  (CDavis322, pp. 28-29)

Mr. Davis concludes by sharing his perception of how the FCC specifically marketed the IVDS 
licenses to the small, women- and minority-owned business communities.  He feels that these 
communities were set up by the FCC.

Well, this is hypothetical of course on my part. This is what I see happened with IVDS. I 
think that, it looks like to me, now this is strictly speculative, because I have no 
evident[iary] proof, the Federal Communications Commission set up the minority 
community.  That is, they touted these IVDS frequencies and spectrum to be the greatest 
thing that happened in the world since White bread.  

And what they did was they made great efforts to reach into the community, into the so-
called minority community to get them to apply for these licenses. . . . Thirty-four percent 
of those [who] won the licenses were of that nature [small, minority- and women-owned 
businesses].  Hey, really, [the FCC] just touted it like it was a great thing.  You know, 
this is something that it gonna be a breakthrough for the so-called small business person, 
minority individual, and females.  That this is going to be the opportunity for them to get 
a break in the communication industry, which will render them wealthy, essentially.  

And were gonna give them this chance to do this with this new technology and new ideas 
and blah, blah, blah, and they went on and they put it in the Wall Street Journal.  It was 
in the Washington Post.  It was in every newspaper I ever had, they sent out little 
brochures, they did everything they could to reach into the communities to get people to 
bid on these things.  And they did it.  They turned around and left a sour taste in virtually 
everybodys mouth.  (CDavis322, pp. 33-35)


(k)	Abuse of the System

Ownership programs that were designed to benefit minority- and women-owned businesses were 
sometimes abused by White men using women and minorities as fronts for their applications.  
They would specifically recruit women and minorities to pursue licenses using FCC minority 
and female programs and credits, but lacked the good faith intentions to include their partners 
in meaningful ownership or decision-making positions.

Alternately,  believing that women and minorities did not have the staying power to put up a 
protracted fight for a license, other groups of White men would file applications when they 
believed a woman or a minority had an excellent chance of winning a license, fully expecting 
that sooner rather than later the woman or minority applicant would pay them off to withdraw 
from the selection process.  This scheme was referred to as greenmail.

Some minority and women interviewees recounted instances when they had to respond to 
multiple appeals of the FCCs award of their license. Carl Davis, the study participant who 
encountered the IVDS difficulties above, shared his story of being greenmailed in his bid for 
cellular licenses.

[The people who contested the awarding of the cellular license] . . . were two people out 
of Kentucky.  [Their] last names were Peter and Moon. And then there was a so-called 
committee out there called Committee for a Fair  Auction, or something [like that], I 
forget exactly what their names were. (T) hose were the people that were involved. And 
we were what they referred to as greenmailed  at the time. Meaning they were using a 
technique that the FCC allowed to take place, which was nothing but Blackmailthat is 
anybody could file a petition to deny a license against you for whatever reason they may 
have thought they could have done it for.  

And its referred to as greenmail, in the sense that where it was a money-making, illegal 
in my opinion, concoction of somebody out there in the hyperspace or whatever you want 
to call it.  Because if you didnt [pay them to go away], you would have to go through a 
hearing process at the FCC and you [would] have to secure lawyers and you [would] 
have to do all the things involved.  

So it costs you a great deal of money just to get to that point in time, get your license 
awarded to youThey chose a lot of people.  I wasnt just the only one.  (T)hey [filed a 
number of complaints]. They went through an entire listing against those they felt 
probably would pay rather than fight.  One guy was, I forgot the first names, but I can 
remember the last names because they were substantial to me at the time. Peter and 
Moon, and they were from out of Kentucky. 

I ended up paying them a million dollars  Because the FCC was going to carry this 
thing, and carry it out for a long period of time, so I just paid them a million bucks I 
spent a million dollars to pay Peter and Moon, they got $500,000 a piece. The Committee 
. . . for a Fair Auction, something to that effect, they got $168,000 I think it was. And the 
legal cost of all of this came to, because I had a contingency contract with the attorneys, 
they ended up getting $700,000. So all told between Peter and Moon, this Committee for 
Fair Auction, my lawyer and his marketing firm,  who ended up getting $750,000, so all 
told it was close to $2 million dollars.  (CDavis322, pp. 12-15)


(l)	Inferior Licenses

Whether it was late market entry (in both broadcast and wireless), insufficient funds for the 
purchase of larger market licenses, or the perception of brokers and sellers that small businesses, 
especially minority businesses, couldnt afford the more powerful signal stations, small, 
minority- and women-owned businesses frequently ended up with inferior properties. In the 
interview process , we found this with minority-owned businesses more than any other 
demographic group.

Broadcast licensees deemed the quality of their licenses as inferior if they were in small, less 
populated markets; if their signal strength was weak or spotty because of geographic terrain; if 
they suffered interference from other stations in the area; if they had their AM station at the 1600 
kHz and above, or if they were daytime-only AM stations.  Inferior wireless licenses included 
secondary and tertiary markets or spectrum for which no viable technology exists, such as with 
IVDS.

As one might imagine, it is more difficult to achieve and maintain profitability with inferior 
licenses.  Further, anything that the FCC does to limit these licensees ability to offset the 
economic deficiency such as denying requests for additional power or grandfathering in older 
more powerful stations when rules regarding frequency interference are changed creates a further 
burden.

Dale Gehman, a Native American radio station owner, offered his opinion that there are two 
sets of rules  one for new stations and one for the older stations whose signals create 
interference but who are grandfathered in under newer, more stringent FCC regulations.  

It's those that were the power to be years ago, and their level of what they're operating 
at has extreme interference, but that's okay, they're grandfathered.  But if you do a 
new facility, a new group, try to do something for their community, oops, you got to 
meet these extreme stringent rules.  As far as minorities getting in the market, there 
should be one rule for everybody.  If this certain contour is interference, then by God it 
should be for everybody.  And if that means lowering power on the old stations, so be it.  

Or at least go to what the worse condition is in the country, and that's the standard, 
because the spectrum's used up.  If they were to say, okay, here's the rule, because here's 
what the grandfathered stations are operating at and everyone can now operate at this, 
then it opens up the spectrum for many more stations.  

Of course the existing broadcasters are not going to like that.  They're going to say, hey, 
that's terrible, there's new stations coming on.  But you're holding people to two 
standards.  You're saying, okay, minority groups, we'd like to have you in broadcasting, 
and we'll help train you and we'll do our EEO programs, but you really don't want to be 
in ownership because we're going to limit you because you have to meet these new rules 
while we operate under these old rules, that really there's no parity at all.  It just does not 
make sense to me, and I don't really understand. . . . It's not right.  (DGehman132, pp. 
25-26)

We already shared Mateo Camarillos story about the C-block auction where, because his 
funding dried up when the ownership programs were eliminated due to Adarand, he had to 
significantly scale back his bidding and as a result, acquired licenses in inferior secondary and 
tertiary markets.

. . . but we subsequently learned the hard way that people arent interested in Timbuktus 
of the world.  Which is where minorities tend to end up because they dont have the 
capital, they dont have the wherewithal to go public, to have the critical mass to have 
this staying power.  (MCamarillo375, pp. 21-22)

Were also reminded of comments made by Cellular Telecommunications Industry Associations 
Brian Fontes about C block small businesses being last to market and therefore having a more 
difficult time  one, raising capital, and two, competing.  (BFontes524, p.11)

Nancy Douglas, owner of IVDS licenses, shares that . . . there are no small minority, small 
business opportunities anymore.  Theyre gone.  There will not be any.  [E]verything from now 
on that theyre selling is really expensive.  You know, its like the only thing that they have left is 
stuff way, way up there on the (wireless) spectrum.  And thats stuffs really expensive to 
construct.  (NDouglas155, p. 19)

(m)	Decision-Making and the Role of Key Market Participants

Almost all licensees acknowledged that they needed legal and often engineering representation 
before the FCC.  Although fees for these professionals is often very expensive, most 
interviewees acknowledged the value.  It was a challenge for many, however, to pay 
Washington, D.C. prices for their professional advisors.  Additionally, several study participants 
spoke of the relationship of key market players, primarily attorneys, to the FCC and its decision-
making function.  They shared experiences where it was their perception that some licensees, or 
prospective licensees, were receiving more favorable treatment than one would expect given 
their applications merits.

Others spoke of those intermediaries who were all too familiar with the rules, regulations and 
inner workings of the FCC gaming the system and causing delays in the process for competing 
licensees.

Dennis Miller, a wireless license holder, acknowledges the importance of good legal 
representation before the Commission when he said [Our law firm is] experienced and 
understands the [FCC] well. [It] has relationships with the Commission staff, which is vital.  
(DMiller147, p. 8)  

Dale Gehman sees it from another perspective.  He shares an experience where he perceived that 
others were gaining advantage in ways that were expressly against Commission rules.

One thing that really bugs me about the rulemaking branch is that there is a great deal of 
contact by certain [non-FCC] people that I am convinced helped determine how some of 
the rulemakings [came] out of there.  I'll tell you, there's some more stuff going on behind 
the scenes. 


[A broadcaster I know] was on the phone to the rulemaking branch every other day.  
And, it's like, those are closed proceedings.  You're not even supposed to talk to those 
people up there. [the FCC] allow[ed] contact in there that should really be prohibited, 
and I saw this work several places in Alabama [where] I know that there's no way he'd 
have got[ten] that pulled off, except that he just really befriended the people in the 
rulemaking branch and just stayed after them and after them, on the phone calling up 
there every couple days . . .

I dont understand how some people can get things like that done, and then we try to 
follow everything exactly the way it's supposed to be and we would get [our application] 
kicked out with the least little thing. I mean, it was just like these little tiny areas in 
dispute.  Our [applications] got kicked out.  There'd be other broadcasters around us.  
They would have major problems with their applications.  Their attorneys would go over 
and sit with the Commission, and they would just set them aside. And we would get kicked 
out.  We would have to go back in the whole proceeding.  (DGehman132, pp. 19-23)

Robert Fink talks about trying to use the Commissions web site to help defray legal fees.

I have to spend money on lawyers and research engineers to find if there is something 
coming up.  I mean, go to [the FCCs] web site, and everybody now says, well, 
everything is available on their web site.  Trying to find something on there is nearly 
impossible anyway.  And 90% of the time, when you go to it, it tells you unavailable at 
this time  it just never seems to give us what we want, and, half the time it is under 
construction and that type of thing.  Their maintenance on it is horrendous.  And if that 
could be maintained, that would save us a lot of time but also a lot of [money)  we have 
to call our attorney at $150 an hour to find out stuff.  (RFink235, pp. 26-27)

Art Gilliam talked about his experience in the comparative hearing process where he perceived 
that the outcome of the hearing was politically influenced.

I have participated in a comparative hearing process . . . This was related to a television 
matter that took place involving the RKO license . . . there was here in Memphis and . . . 
some people here put together various groups that competed for the license; and I was a 
part of one of those groups, but not the leading part of that group in terms of economics.  
No [we were not successful in getting the license], and I think that the party that was 
successful probably had political connections because I dont believe that based on the 
criteria that the FCC set forth that that party would have been able to otherwise win the 
license, but they did. 

They were not local, and it had some considerable differences, based on ethnic criteria.  
So my conclusion from all of that was that politics does indeed play a considerable role 
in the outcome, although probably certainly not at the staff level of the FCC.  . . . I am 
personally and totally convinced that the outcome was politically influenced. when you 
look at the criteria, you could readily [see] that their integration of management into 
ownership was not at the level of several of the other groups, they were not local, so 
several things. 

In fact, the lawyers we were using, who are themselves well-connected lawyers, initially 
told us that they were assessing the groups and said this group basically didnt have that 
good of a chance that there were about three other groups that really were the main 
competitors and we were one.  Later on, these [same] lawyers, . . . later one came back 
and kind of hedged a bit and talked about how this [other] group had excellent 
opportunities.  I just believe that they had gotten inside information about this group; and 
its not something I can demonstrate by proof, but its just a matter that I dont believe 
that, and I guess, subsequent political developments in the country that Ive come to be 
aware of, have convinced me even more so that money can buy licenses. 

. . . I dont have a perception of the FCC at its . . . staff level engaging in discrimination.  
I have not experienced that personally.  At the same time, I think at the Commissioner 
level, which is an appointed level, there is political influence that can be brought to bear 
down through the organization and I think thats what happened in this case.  Which is 
different than discrimination, but its discrimination in the institutionalized sense in that 
most that have political influence are less likely to be African American. (AGilliam117, 
pp. 13-17)

Other than the FCC, the media broker appears to wield the most influence over who receives 
notice of station purchase opportunities. David Honig, Executive Director of the Minority Media 
Telecommunications Council (MMTC), explained that through the years civil rights 
organizations have complained that minorities werent hearing about stations for sale until the 
deal was announced.    When stations were offered to minorities, Mr. Honig explains, the 
properties were often troubled or technically inferior.  Dr. Benjamin Hooks, the first African-
American FCC Commissioner tried to correct this situation through a ruling at the FCC.  He was 
not successful.  David Honig, who worked for one of the organizations that filed a complaint, 
explains what happened.

What Dr. Hooks was responding to was complaints by some of the civil rights 
organizations that minorities werent hearing about stations for sale until the deal was 
announced.  that when minorities would get called saying a station is for sale, it was 
often a station where the owner was desperate that they would even consider minorities 
and the station was frankly technically inferior, it was on an environmental site, or 
something was wrong with it.  But the really juicy deals, minorities werent hearing 
about.  

One difficulty that brokers had often pointed out was, Well once you start having some 
of the sales announced publicly and others not, people will move around.  It will be a 
competitive disadvantage if we have to announce it and they dont close.  Then our staff 
will move over there and were sort of selling the continuity of the staff as an asset that 
were selling that affects the price and sometimes when formats change, people want to 
move and they note that it is and so forth, a good point.  

[Dr.] Hooks answer was Fine, lets have a level playing field.  Everyone who sells a 
station has to announce the sale 45 days before they can sign a contract on the sale. That 
way, everyone equally will know whats for sale, and everyone will have a chance to bid 
openly. And let the one with the most money win. And that was a radical idea because it 
didnt get any other votes. And the reason it didnt get any other votes, to be fair, was 
that some of the Commissioners who opposed it felt that then everyone will have their key 
assets moved somewhere else and depress the value of the industry. 

But there was no answer to it in terms of, well, what else are we [going to] look at that 
might work to open up this brokerage business. Are you going to have any hearings? 
Because, [Dr.] Hooks was calling for some remedy for discrimination by brokers. This 
particular idea was one, but then the Commission just dropped the ball and well, well 
deny this idea and not look at anything else either. There was some boilerplate in it that, 
well, we think this is an important problem.  Well continue to look at it. They didnt.  
(DHonig521 #2, pp. 19-20)

(n)	Ineffective or Unaffordable Advocacy

Many study participants expressed frustrations over their inability to afford a cadre of 
communication attorneys, as the large group owners and telecommunication companies do, to 
represent their interests before the FCC and Congress, to respond to rulemakings and to move 
licensee requests for action quickly through the various processes and Bureaus within the 
Commission.  Advocacy by members of the communications bar provides more opportunities for 
access to key FCC decision makers. 

Several licensees indicated that they had neither the time nor the financial resources to be able to 
spend time in Washington, D.C. representing their own interests, lobbying members of Congress 
and meeting with FCC staff. 

Ronda McKenzie, an owner of multiple wireless licenses, shared her perspective on the issue of 
small business advocacy before the FCC.

Well, Ill tell you the biggest problem is these big carriers have tons of money to have 20 
lobbyists up on the floor up there with the FCC people and, you know, [the Commission] 
grease[s] the squeaky wheel.  And small businesses and minorities dont have that kind of 
money, you know.  We cant  I mean, were worker bees.  Were out here trying to make 
it happen and we certainly dont have the funds to pay professional lobbyists to be sitting 
on the floor to protect our best interests.  And theres nobody there to protect us.  And no 
one really is there to represent our interests.  And we dont have the money to do  and 
we cant fight AT&T and Sprint, you know.  (RMckenzie158, p. 13)

To assist the small, minority- and women-owned businesses, the Office of Communications 
Business Opportunities (OCBO) was established.  According to Frank Montero, former Director 
of OCBO, the Office is charged with helping small women and minority owned businesses 
enter into the telecommunications and technology marketplace to try to address barriers that 
they may be facing in terms of trying to get into that marketplace, either because they are having 
difficulty obtaining access to capital, or they may have difficulty obtaining information about 
Commission proceedings that they may be interested in participating in or information on how to 
apply for a license. (FMontero509, p. 1)

Mary Helen Barro, a former owner of radio stations and former President of the American 
Hispanic-Owned Radio Association, explained her perspective, which was echoed in part by 
others.

We went to Congresswell Congress, well, forget Congress. They didnt care about the 
little people. What they cared about and what theyve always listened to are their big 
contributors, which [are] the major corporations, and the major corporations had a lot 
of money and they wanted in.  I was pretty much up on what was going on in the 
industry. I also had very good and expensive attorneys that kept me apprised. But if you 
did not have the luxury of having an attorney stay on top of things for you, you basically 
were left out of the loop. You had to spend a lot of money because believe me, the FCC 
never told anybody anything. Their system of notification   is really one that is 
structured for the large companies that have the money to have attorneys that constantly 
stay on top of what is going on at the FCC.  For the small broadcaster, who is on limited 
funds, forget it. Youre never going to find out anything.  (MHBarro190, p. 7-9)

Henry Rivera, having worked with the FCC in multiple capacities for years, noted that its very 
difficult for small, minority- and women-owned business.  They really dont have much of a 
voice [at the FCC] and they  dont have the same stature or muscle power basically that some 
of the bigger operations in town are able to muster. (HRivera516, pp. 14-15)

Toni Cook Bush highlighted another problem which small businesses, especially new entrants, 
can be confronted with when trying to secure representation before the FCC.

It is very hard to find engineers and attorneys that dont already represent one of these 
other guys, so you find that minority companies, and I think female companies and 
smaller companies go in at a disadvantage because theres nobody for them to hire.  So if 
we could hire another engineer who was better known at the FCC, we would do it in a 
heartbeat. But we cant find anybody who doesnt have a conflict.  (TBush378, p. 19)

To help eliminate some of the reliance on communications attorneys, the Commission and 
OCBO have worked hard to make access to information and the license application filing process 
more user-friendly through the use of the Commissions web site.  Frank Montero talked of this 
transition.

I think  there is clearly a movement afoot at the Commission to try to break that 
reliance [on Washington, DC-based FCC attorneys] because obviously people who cant 
afford an FCC lawyer in Washington are left out. . . . [Information technology and the 
Commissions web site] has certainly broken the inside-the-beltway monopoly on the 
communications law practice.  And perhaps this is the first step of the evolution is that 
now,   if you look through the ranks of the Federal Communications Bar Association, 
its amazing how many communications lawyers are outside of Washington.

 Well, there is no way those people could have existed  five, ten years ago.  I mean  
you had to be able to walk over to 1919 M Street to meet with people, to get copies of 
things from the reference room, to go to the commission meetings.  I mean, if you 
couldnt do that, make the filings, you just could not have practiced that type of law.  The 
fact that somebody in Little Rock, Arkansas can watch commission meetings because it is 
being web cast on the computer or make their filings through the electronic filing system, 
or get any  information about the status of an application or anything on the computer, 
it is amazing.  (FMontero509, pp. 30-31)

And yet, a web site does not replace the effectiveness usually associated with well-paid attorneys 
and lobbyists.


7.	Education, Training and Experience

The study found that a number of minorities who were in either the broadcast or wireless 
industries, or both, had significant educational background and work experience, in almost all 
instances, greater than for their White male or female counterparts. 

We interviewed, for example, several people who had undergraduate engineering or broadcasting 
degrees; one minority woman had a Ph.D. in public policy and had attended a small business 
executive education program at Harvard Business School; a number of people had law and either 
undergraduate or graduate business degrees from various well-known universities and colleges; 
one person had been a senior executive at the investment backing firm of Goldman Sachs; 
another had been in charge of international advertising for Proctor and Gamble; a third had been 
publisher of a weekly industry newspaper for the Hispanic radio market; and yet another had a 
masters in social work, had started a school of social work, had been a successful multi-unit 
McDonalds franchisee, and a university professor.

While education did not necessarily translate into market success, the kind and quality of prior 
work experience had an enormous impact on ones ability to raise significant sums of debt and 
equity financing which ultimately translated into opportunities to purchase stations in the 
secondary market.  For those minorities who experienced greater access to capital than was usual 
for minorities taken as a group, the common denominator was significant private sector work 
experience, either in finance, marketing or broadcasting.  With this background they were not 
only able to capitalize on their successful track records but also on their network of contacts to 
assist in the raising of financing and access to deal flow.  Often prior business colleagues became 
private or venture capital equity partners or investment bankers and lenders.

Especially in todays broadcast industry climate of consolidation, extremely high station prices 
and far more scrutiny of management expertise by brokers, lenders and venture capitalists, good 
solid private sector experience is an enormous benefit to both the new entrant and those licensees 
looking to increase their holdings.

Additionally, many station owners we spoke with had, at one point, been station managers and/or 
sales managers for others.  There is no question that this background was helpful to them when it 
came time to deal with the day-to-day operations of their stations.  However, what was generally 
lacking in these individuals was knowledge of finance, deal making and business plan 
development, all qualities that enter into a media brokers evaluation of a prospective buyers 
competency to close.

The findings above point to an increased need for small businesses who are new broadcast 
entrants or those who currently own stations not only to receive sophisticated business training 
but also to have access to career tracks which will enable them to gain the kind of experience that 
opens the doors to opportunity in todays market place.


Many industry-related training programs are available that are not connected with specialized 
college and university departments.  For example, The Minority Telecommunications 
Development Program (MTDP), under the auspices of the Department of Commerces National 
Telecommunications and Information Administration (NTIA), offers training in broadcasting 
through its ComTrain program.  S. Jennell Trigg, a communications attorney, founded and 
developed The Telecom Opportunity Institute, a not-for-profit corporation which promotes 
career opportunities, employment, and ownership in telecommunications for minorities, women 
and at-risk youth.  And starting in September 2000, in conjunction with the National 
Association of Broadcasters Foundation, Diane Sutter, a successful television station owner, will 
be presenting a year-long broadcast-related executive MBA program for thirty students.  
Funding has been raised for a three-year pilot program, with specific  financial assistance 
available for up to 15 women and/or minority broadcasters each year.

Classroom training aside, nothing can replace solid on-the-job training.  In this study we found 
clear evidence that prior significant industry-related work experience was critical for access to 
both capital and opportunities.  The failure of the FCCs EEO policies through court action and 
lack of enforcement severely curtailed the development of a cadre of women and especially 
minorities who could have gained the experience necessary and been ably prepared and ready to 
compete in the post-Telecom Act world. 


8.	Perceived FCC Climate

Several study participants expressed concern over their participation in this study because they 
did not want to become too visible to the FCC.  There were a few study participants who chose 
not to have their comments taped or transcribed or otherwise asked that their comments not be 
attributed to them.  They felt that if they publicly criticized the Commission they would be 
opening themselves up to such things as delays and unfavorable rulings, both of which would be 
costly.  In a few instances, interviewees shared experiences in which they were instructed by 
their legal counsel not to push certain items with the FCC because by doing so they might 
imperil a favorable decision.

When queried, virtually no licensees were aware of any formal complaints that had been filed 
against the FCC.  Dorothy Brunson, an African-American television owner, offered this 
explanation.

No, I dont think anybody has that kind of courage. One of the things that people are 
always aware of is that youve got to live in this environment, and so you cant cut the 
hand off thats feeding you.  You may not be getting a belly full, but youre not starving to 
death.  So, youre caught in a kind of a Catch-22.  You dont want to appear persona 
non-grata, and do something thats going to make you stick out like a sore thumb.  

And so you kind of keep your mouth shut and you try to continue to push and shove 
without making a tremendous amount of noise.  Because, you know, you have to survive 
in this business or you get out.  But you cant do both.  Especially if I were Preston 
Padden (a broadcasting industry lobbyist), or I was any other of the major lobbyists, I 
could say a lot of things that they say all the time, you know, as it relates to ABC, or 
relates to the cable or broadcasters or NBC [or] National Association of Broadcasters.  
But we cant say those things, because were too small, were too vulnerable.  So do we 
file?  No, nobody in their right minds going to file. (DBrunson105, p. 21)

Concerns of this nature conceivably have an impact on small, minority and women licensees 
willingness to lobby the FCC or Congress for programs, regulations and/or rulings that could 
ultimately either lower barriers to entry or increase opportunity for business growth.  Without the 
resources to hire lobbyists on their behalf, their discomfort with approaching the FCC or 
Congress muffles the voices of those least likely to be heard.



V.	IMPLICATIONS OF THE FINDINGS

Our detailed findings of the experiences of small, woman and minority-owned businesses 
provide us with the knowledge and perspective to form broad conclusions in nine major areas 
concerning past, present and prospective market entry barriers, as follows:


A.	Capital and Markets are the Drivers

The present broadcast and wireless industries and their regulatory structure, perhaps more than at 
any time in the history of the FCC and the industry, is, by design, responsive to capital and 
market forces.  Given a well documented, established and accepted fact that (in increasing order 
of severity) small, women- and minority-owned businesses are capital deficient, there is little 
wonder that participation by such businesses in FCC licensed industries is alarmingly low, and, 
by all appearances, on a steep and severe decline. 

In the words of one licensee interviewed, we now experience [what] blind reliance on market 
forces brings you to.


B.	Absence of Critical Mass

As to women- and minority-owned companies in broadcasting, timing has been everything.  
Historically and systematically excluded from industry participation due to overt and passive 
discrimination on the part of local communities, the broadcast and advertising industries, 
secondary market players, and the FCC, modest inroads were made after 1978, with the adoption 
of minority and female ownership programs and credits.  Their modest gains through the mid-
1990s had hardly the opportunity to take root, and grow sufficiently strong,  in order to buffer 
them from and increase their chance of surviving deregulation.  

Powerful industry countermeasures, nurtured by Congress and the Courts, and half-heartedly 
opposed by the FCC, in rapid succession undid a less-than-two-decades effort to redress nearly 
seventy years of barriers to entry for women and minorities.  The sequence of rollbacks of 
minority and women ownership programs and credits, industry-wide deregulation, industry-wide 
consolidation, even, the absence of accurate, up-to-date statistics documenting the full impact on 
women and minority participation, have combined to present significant barriers to women- and 
minority-owned businesses being significantly represented in broadcast and wireless ownership.


C.	The Role of the FCC and Congress

As stated by one interviewee, there is something besides the market in the world  if 
unresolved market forces were to be the criteria under which all would be conducted, why does 
the Constitution give Congress the power to regulate commerce?  

As a large bureaucracy with wide-ranging responsibilities, the FCC presents myriad faces before 
the public.  When it comes to small, women- and minority-owned businesses, the FCC too often 
has been perceived as being detrimental to policies, procedures and enforcement that would 
enhance participation by small, women- and minority-owned businesses.  

This study revealed anger, frustration, disappointment, and resignation on the part of numerous 
small, women- and minority-owned business owners at Congress and FCC actions that have 
erected and heightened barriers to entry and growth.  Their concerns included:

? The FCC looking the other way when confronted with Jim Crow discrimination in 
broadcasting in the American South; 
? The perceived lack of strong, corrective action by the FCC on EEO and other 
discriminatory policies perpetuated by big industry;
? The FCCs acquiescence to the distribution of licenses in the secondary market where 
information and capital are rationed within old boy networks;
? A long-standing give-and-take relationship between organized industries, e.g. 
broadcasters, local and long distance telephone service providers, and the FCC;
? Routine FCC acquiescence to interests in the private sector, Congress and the Courts 
opposed to the concerns of small, women- and minority-owned business;
? A perceived lack of responsiveness historically to advocacy by small, minority and 
female business interests;
? The perception of a willing acquiescence to the abandonment [by Congress] of the 
minority tax certificates and other ownership programs without substantive protest 
upon the earliest sign of judicial opposition;
? The FCCs support for auctions, despite possible disparate implications of distributing 
wireless and broadcast licenses to the highest bidder;
? Self-interest, resistance and inertia within the FCC on small, women- and minority 
business issues;

Leading up to passage of the 1996 Act, advocacy and representation on behalf of small, minority 
and female business interests before the FCC was considered weak and ineffective, in 
comparison with stronger, more influential lobbies representing existing broadcasters and large 
corporations.  Fear of reprisal from those in a bureaucracy perceived as being more concerned 
with future employment with large corporations served to squelch some from louder, more 
public dissent.

Many interviewees perceive the FCC as contributing to the lack of opportunities and 
participation by small, minority- and women-owned businesses in the communications market. It 
is little wonder that many study participants have reluctantly given up hope of prevailing as 
competitors in broadcast and wireless industries in the future.

D.	Discrimination

Discrimination appears to have played an important role as an entry barrier, especially to 
minority participation in broadcasting, from;

? segregation in the Jim Crow South, legally depriving African Americans and their 
communities of information, employment and ownership opportunity,  
? pervasive discrimination and structural barriers to financing and economic 
participation, 
? pre-1996 Act barriers to entry and expansion based on advantages of size and 
scale derived under previously discriminatory advantage, 
? the post-1996 Act rollback of previous advances made, primarily from the tax 
certificate program. 

A clear majority of women and minority licensees interviewed in the study believed they had 
encountered discrimination in their attempts to become licensees: in raising capital, in the 
secondary market, and in operations. As a result, successful licensees persevered, despite 
discrimination at many turns, and, despite the belief that their experiences would have been 
significantly easier, if their circumstances had been exactly the same, and they were White 
males.

This anecdotal study illustrates the complex, intricate and pernicious working of historical bias 
and discrimination throughout our society.  It demonstrates the tenacity of individuals in the face 
of such discrimination to persevere, to strive to break through in spite of bias.  And it 
demonstrates the difficulty and enormous resources required to uncover definitive proof of the 
bias that lies within the hearts and behind the actions of some.   


E.	Bidding Credits in Wireless Licensing

The study participants perceived the bidding credits as a failure even though the FCC used them 
in the wireless auctions in an effort to enhance opportunities for small, minority-, and women-
owned businesses.  Few small businesses, and precious few women and minority businesses, 
found bidding credits of sufficient value to offset the capital resources of large companies in 
auction contests.  The biggest impact of bidding credits, according to interviewees, was to 
artificially elevate the final price of wireless licenses, with little or no impact, on the eventual 
result of licenses being issued to small businesses.     



F.	Relaxation of Ownership Caps 

Small-, women- and minority-owned businesses, with a small number of notable exceptions 
(e.g., Radio One Communications, Z-Spanish Radio, Granite Broadcasting) have been and 
continue to be driven rapidly out of radio and television media ownership.  Nearly all cite the 
relaxation of ownership caps under the 1996 Act as the principal cause. 
  
With passage of the 1996 Act, nearly every small businessperson interviewed expressed new and 
substantial difficulties in competing and surviving, with expansion being virtually out of the 
question.  The result has been an avalanche of station sales to dominant national consolidators.  
This trend appears to have impacted all small and local radio broadcast businesses and has 
appeared to have affected minority broadcasters particularly.


G.	Loss of Community Service and Diversity of Viewpoints 

This studys interviewees uniformly reported that small, minority-owned businesses are more 
integrated, aligned with, and responsive to the local communities that they serve.  Their 
declining participation in broadcast and wireless ownership, it appears, has resulted in a 
diminished concern for local issues and needs, which has led to a loss of diversity of viewpoints. 


H.	Potential Loss of Civic Participation, Democratic Values and Freedom of Speech

Informal networks of licensees, attorneys, brokers and others have worked together to distribute 
and redistribute licenses among those with access to the secondary market for decades.  Only 
recently have a few women and minorities been included in this network.

The interviewees reported that this lack of access to and inclusion in the secondary market 
network, made worse by widespread discrimination in the capital markets, and the lack of strong, 
effective government and regulatory intervention, has contributed to the long-standing under-
representation of women and minorities in broadcasting. 

The present day effect of these conditions, deeply rooted in exclusionary market and regulatory 
structures and behaviors, create current and future market entry barriers for small, women- and 
minority-owned businesses of crisis proportions.  These barriers result in; 

? fewer small, women and minority broadcast licensees,
? fewer broadcast stations and wireless licenses owned and operated by small, 
women and minority licensees, and
? fewer communities served by local and community-based small, women and 
minority licensees.

This impact, especially upon small and minority-owned businesses, as became apparent in this 
study, was overwhelmingly clear.  The result, according to many of those interviewed, has been 
a dramatic loss in the diversity of viewpoints provided by the nations mass media, and a 
concentration of influence and control of the means of mass communication of possibly 
unprecedented proportions.


I.	The FCC is the Public Trustee of the Broadcast and Wireless Spectrum

Passage of the 1996 Act, and the rapid and harmful impact on small, women- and minority-
owned businesses as foreseen and testified to by many, calls into question the proper role of the 
FCC in allocating spectrum consistent with the public interest, convenience and necessity.  
Questions such as:

? What is the role of the FCC in an era of auctions and consolidation?  How does 
the FCC balance its goal of maximizing revenues with maximizing diversity?  
Which is the greater public good?
? What constitutes appropriate trusteeship and management of public assets such as 
radio frequency spectrum?  To whom do the airwaves belong?  Do they belong to 
the highest bidder in auctions that will inevitably be controlled by corporations 
that are nearly 100% controlled by White men?
? Who protects individuals and communities from the excesses and effects of 
capital and markets without appropriate constraints on corporations?
? What governmental body provides protection against anti-competitive behavior in 
local markets, as the FTC and DOJ provide over national markets? 
? In a free-market economy, what is the measure of appropriate regulation? Is the 
current level of FCC regulation insufficient?

This study revealed a strong linkage between small business, local ownership and the professed 
core commitment by the business owner to local interest and community service.  These values 
were offered in contrast to the obligations of publicly owned companies consolidating the 
broadcast industry to maximize profit and shareholder value.  

Radio in particular reveals itself in the words of this studys participants to be a uniquely 
personalized and local voice of the community. This study, therefore, calls into question the 
meaning and value in our society of public service and community interest.

Frequent mention was made by participants interviewed of profit taking at the expense of social 
responsibility referring to the FCCs sponsoring of auctions to distribute licenses.  Has the FCC 
and the government become corrupt from greed as many suggest, exchanging public interest 
for governmental revenue as its purpose, mission and charter?

In the wake of rapid technological changes and market consolidation, finally, what is the FCCs 
role in shepherding and leading the protection of our freedoms of speech and diversity of 
viewpoint on the nations airwaves?  Small, women and minority participants interviewed were 
passionate in their belief that vital freedoms and values have suffered, perhaps irreparably, from 
recent consolidations of media power in the hands of relatively few corporate owners.  

To the extent that important national trusts are threatened, and possibly compromised, as this 
study suggests, critical questions are raised concerning the nature of the relationships, 
responsibilities, accountabilities, and authority between the nations industries, its legislative and 
judicial branches, its citizens, and our society.







VI.	CONCLUSION

Historically, minorities, and less so women and small businesses in general, have confronted 
barriers to entry into the broadcasting industry.  An anecdotal study of this nature is particularly 
valuable because it specifically illustrates the difficulties faced by small, minority- and women-
owned businesses.  This study provides a face and voice to real-life people who have 
encountered barriers that are all too real.  They have faced discrimination in the financial 
markets, limiting access to capital.  They have faced discrimination in their communities, 
limiting access to employment opportunities and land for communication towers.  They have 
faced discrimination in the secondary market, limiting access to information about and the 
opportunity to participate in the buying and selling of stations.  They have faced discrimination 
in the advertising industry, limiting access to advertising revenue, the life blood of a 
broadcasting company.  All of these factors have contributed to a disproportionately low number 
of minority and women owners in broadcasting who have been able to sustain their companys 
viability and position it for growth.

In the wireless industry, where realistic opportunities for small businesses to participate in 
acquiring licenses have only been available since the middle 1990s, lack of access to the large 
sums of capital needed to build out wireless systems has been the greatest barrier to entry.  
Wireless licensees have encountered the same difficulties acquiring debt and equity financing as 
those experienced by their broadcast licensee counterparts, causing many of them to default on 
financial obligations to the FCC, thereby having to forfeit their licenses.

To help mitigate these market forces, both the FCC and Congress have established through the 
years various ownership programs to increase the opportunities for market entry into both 
broadcasting and wireless telecommunications for small, minority- and women-owned 
businesses.  Programs such as minority ownership programs in the comparative hearing process; 
bidding credits in the lotteries; and installment payments, bidding credits and favorable interest 
rates in the auctions, were established to enhance the probability that women, minorities and 
small business owners would participate in the FCCs processes for awarding new licenses.  The 
distress sale and especially the tax certificate policies opened up access to the network of sellers 
and brokers in the secondary market for media properties to the often excluded minority 
prospective licensee.

Countering these positive programs, Congress and the courts halted what progress was being 
made in the increase in broadcast ownership by minorities, women and small businesses when in 
1995 Congress repealed the tax certificate program and the courts ruled in Adarand, and in 1996 
Congress passed the Telecommunications Act of 1996 which deregulated broadcasting and 
brought on a sudden and rapid consolidation of media properties into the hands of the few.  It 
appears that the confluence of these events, with their collective negative impact on small, 
minority- and women-owned businesses in the broadcasting and wireless industries, has virtually 
forestalled any progress that was being made and has, in fact, created a crisis in participation in 
telecommunications by these businesses.  The barriers to entry have been raised so high that, left 
standing, they appear virtually insurmountable.  Minority, women and small business ownership 
in these industries is diminishing at such an alarming rate that many we spoke with felt we had 
passed the point of no return.

While discussing passionately the negative financial and personal impact small, minority- and 
women-owned businesses are sustaining from these converging forces, the greatest concern by 
far of those with whom we spoke was the loss of service to their communities, the loss of 
diversity of viewpoint, and the threat to freedom of speech that the market consolidation in 
telecommunications was creating.  They collectively believed that the mission of protecting the 
public interest must continue to be served and that market forces left to their own devices would 
seriously erode that purpose.

The participants in this study generally agreed that programs, such as the tax certificate policy, 
that provide incentives to sellers and investors to conduct business with specific groups of people 
work well.  Without them, if history is a predictor of the future, the network of participants in the 
secondary market for licenses (sellers, brokers, debt and equity investors) will continue to do 
business with people they know and with whom they have previously had successful dealings.  
Without these incentives, the door to opportunity will remain closed to all new entrants except 
for the lucky few who come to the table with just the right mix of vision, experience, and equity.

Furthermore, we heard repeatedly that small, minority- and women-owned businesses need a 
louder voice before the Commission if their interests are to be served as mandated.  They are 
lacking the resources, either individually or collectively, to be strong enough advocates for 
themselves.  Whether it is more authority for the Office of Communications Business 
Opportunities or an office which helps to expedite applications and licensing for small 
businesses, these entities have special needs for timely responsiveness and an understanding 
from the Commission of the issues they confront running a small business day-to-day.  As a 
substitute for presence before the FCC, it is also imperative that the Regulatory Flexibility Act be 
consistently and seriously implemented, as these actions can serve as the ombudsman for those 
whose voice is but a whisper.

Lastly, what also became clear through our study is that there are three government agencies, the 
FCC, SBA and the National Telecommunications and Information Administration (Department 
of Commerce) that are focused on promoting opportunities in telecommunications for small, 
minority and women-owned businesses.  Yet there was little evidence that much, if any, 
collaborative effort existed to coordinate these agencies activities to the benefit of those they are 
trying to serve.  To have these agencies speak loudly, with one voice where possible, before the 
Commission and Congress would meaningfully strengthen the advocacy these businesses so 
dearly need.


Without serious and swift dialogue around how to overcome the market entry barriers discussed 
in this report, there will be little chance for small, minority- and women-owned businesses to 
enter into and succeed in either broadcasting or wireless telecommunications.  It is important that 
Congress, the courts and the FCC consider the impact that market forces, left unchecked, will 
have on the public good.  It seems that the business of telecommunications has shifted its 
primary focus from serving the people to serving the pocketbook.  It is imperative that a new 
balance be achieved if the public interest is to be served.





















APPENDIX A - HISTORICAL TIMELINE





FEDERAL COMMUNICATIONS COMMISSION
STATUTORY, REGULATORY AND HISTORICAL TIMELINE
1950-Present



CATEGORY
EVENT
DATE
Primary Market:
  Comparative Hearings
? As a result of Ashbacker Radio Corp. v. FCC, 326 U.S. 327 (1945), the 
FCC was required to hold comparative hearings for mutually exclusive 
applications.  The Supreme Court held that [w]here 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 any applications 
upon examination without a hearing. 







1945

? The Policy Statement on Broadcast Comparative Hearings, 1 F.C.C. 2d 393 
(1965) articulated and clarified the criteria used in the comparative hearings 
for assigning licenses.  The seven (7) areas for which applicants received 
credit (or points) were:  diversification of control, integration of 
ownership into management, proposed program service, past broadcast 
record, efficient use of frequency, character, and other significant and 
relevant factors to be considered in the decision-making process.






1965

? Comint Corp. challenged the FCCs refusal to explicitly consider race in the 
comparative hearing process (in which Mid Florida Corp. was awarded the 
license) and appealed the FCC ruling to the D.C. Court of Appeals.  Comint 
argued that minority ownership should be given comparative credit on the 
basis of the 1965 Policy Statement on Broadcast Comparative Hearings.  
The FCC noted that the Communications Act . . . is color blind and 
therefore, in a comparative broadcast proceeding . . . Black ownership 
cannot and should not be an independent comparative factor . . .







1965



CATEGORY
EVENT
DATE
Primary Market:
  Comparative Hearings
  (continued)
? In the 1974 TV 9 Inc. v. FCC decision, the DC Court of Appeals reversed the 
result of the Mid Florida comparative hearing.  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.  We hold only that when minority ownership is likely to increase 
diversity of content, especially on opinion and viewpoint, merit should be 
awarded.  This decision set a new precedent for the incorporation of minority 
participation as a factor in the comparative hearing process.







1974

? In Rosemore Broadcasting, Co. (1975), the FCC held 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.




1975

? Garrett v. FCC (1975) finds that minority ownership/participation is connected 
to providing programming responsive to the needs of the minority community.

1975

? In the 1977 Flint Family Radio decision, the FCC clarified the primacy of 
importance of both minority ownership and the participation of these owners 
in station affairs.   the Supplemental Opinion of the Court makes it quite 
clear that the two essential elements necessary to receive merit are Black 
ownership and participation by these owners in station affairs.




1977

? 1978 Statement of Policy on Minority Ownership of Broadcasting Facilities 
formalized the use of minority and gender credits in the comparative hearing 
process. In 1990 the FCC declined to extend enhancement credits for minority 
ownership under diversification of ownership criterion.



1978

? A Review Board hearing the Gainesville Media, Inc. case concluded the . . . 
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.  This decision demonstrated that credit 
should be applied for female participation in a broadcast license application, 
but that credit would not be as significant as that credit applied for minority 
participation.






1978



CATEGORY
EVENT
DATE
Primary Market:
  Comparative Hearings
  (continued)
? The FCC articulated and explained its renewal expectancy for incumbent 
broadcasters in license renewal comparative hearings in Cowles 
Broadcasting, Inc. (WESH-TV) [affirmed Central Florida Enterprises, Inc. 
v. FCC (1982)].



1981

? Financial qualifications changed from having to prove financial viability to 
having only to sign a certificate that the applicant was able to meet the 
financial requirements.


1982

? Until 1986,  the term character (as a criterion for license assignment) was 
often interpreted as moral character.  On January 14, 1986 the Commission 
issued its Policy Regarding Character Qualifications in Broadcast 
Licensing, outlining which character issues should be considered and how 
they were to be investigated.  The issues to be considered involved various 
acts of fraud, misconduct, misrepresentation, and abuse in commercial and 
government dealings as well as criminal conviction.  Eventually, character 
issues were eliminated as a comparative criterion but were kept as a basic 
criterion.








1986

? The Policy Regarding Character Qualifications in Broadcast Licensing, 5 
F.C.C.R. 3252 (1990) made certain modifications to FCC policies regarding 
character qualifications because the previous policy statement took an 
overly narrow view of the range of misconduct that should be relevant in 
licensing decisions covered by it.




1990

? The decision in the Bechtel v. FCC case (1993) had the effect of freezing 
comparative hearings .

1993

? The Telecommunications Act of 1996 eliminated the role of comparative 
hearings in the renewal of broadcast licenses.

1996




CATEGORY
EVENT
DATE
Primary Market:
  Lotteries
? Section 309(i) of the Act granted FCC authority to use lotteries to choose 
among mutually exclusive applications. Used to award wireless licenses for 
cellular, Specialized Mobile Radio, Multi-channel Multi-point Distribution 
Services, and Low Power TV.  Congress enacted legislation that caused this 
section to expire on July 1, 1997.




1982

? Section 390(i) of the Act required the FCC to establish incentives, rules and 
procedures providing credit for minority-controlled applicants in awarding 
licenses.  Congress enacted legislation that caused this section to expire 
July 1, 1997.



1982

? In the Lottery Second Report and Order the FCC authorized minority 
ownership policies for Low Power TV lotteries.

1983

? The 1993 Omnibus Budget Reconciliation Act limited the use of lotteries to 
the allocation of non-commercial licenses and authorized a competitive 
bidding system (auctions) to distribute commercial licenses.


1993
Primary Market:
  Auctions






? The Omnibus Budget Reconciliation Act of 1993 (which added Section 
309(j) to the Communications Act of 1934) authorized the FCC to allocate  
licenses through a competitive bidding process (auctions).  Initially the 
auctions were used only for wireless.  



1993

? Section 309(j)(3)(B) instructed the FCC to establish competitive bidding 
procedures that would disseminat[e] licenses among   small businesses 
 and businesses owned by members of minority groups and women. 


1993

? 1993 Auction Notice of Proposed Rulemaking determined that race- or 
gender-conscious remedies must meet the intermediate standards of judicial 
scrutiny; i.e., the remedy must be substantially related to serve a significant 
governmental interest.



1993



CATEGORY
EVENT
DATE
Primary Market:
  Auctions (continued)
? A 25% bidding credit was made available to women and minority 
businesses for selected nationwide and regional PCS and Interactive Video 
and Data Services narrowband auctions.  (The Adarand Constructors v. 
Pena case (1995) held that any federal program or policy which uses race as 
a basis for its decision-making must withstand strict judicial scrutiny.  Post 
Adarand, the bidding credits were made available to small businesses 
without distinction for race or gender.)






1994

? The bidding credits for women and minority businesses increased to 40% in 
two of six auction spectrum blocks in the regional narrowband auctions.  
Post Adarand, the credits were made available to small businesses without 
distinction for race or gender.



1994

? The Commission established an installment payment program (for down 
payments on licenses) and interest rates for small, minority- and women-
owned businesses bidding for the basic trading area, major trading area, and 
regional narrowband licenses.  Post Adarand, the small business credits 
were made available without distinction for race or gender.  The FCC has 
not extended the installment payment program to auction participants since 
the C and F Block auctions.






1994

? The Competitive Bidding Fifth Report and Order set aside PCS broadband 
Auction Blocks C and F for designated entities on the basis of their status as 
minorities, women, small businesses, or rural telephone companies 
(Entrepreneurs Blocks).



1994

? The Competitive Bidding Fifth Report and Order established rules 
concerning passive non-voting investors, affiliation, additional bidding 
credits, tax certificates (for initial investors in minority- and women-owned 
businesses  later dropped after Congress eliminated the tax certificate 
program in 1995), and installments plans were adopted to enhance 
opportunities for businesses owned by women and minorities.  There was a 
four-tier range of bidding credits, with the most favorable bidding credits 
being given to businesses that were small, women-owned and minority-
owned.








1994



CATEGORY
EVENT
DATE
Primary Market:
  Auctions (continued)
? The FCC eliminated all race- and gender-based provisions in competitive 
bidding for the C and F Block auctions.  Credits that were available only to 
members of minority groups and women were now made available to all 
small businesses.



1995

? The Balanced Budget Act of 1997 expanded the FCCs competitive bidding 
authority under Section 309(j) to include mutually exclusive initial license 
applications for certain types of broadcast licenses.  On November 26, 
1997, the Commission released a Notice of Proposed Rulemaking 
proposing general competitive bidding procedures for all auctionable 
broadcast services within the scope of the amended 309(j), with certain 
exceptions.   This Act also required the FCC to promote economic 
opportunity for a wide variety of applicants, including businesses owned by 
members of minority groups and women.








1997

? On August 18, 1998, the Commission released its First Report and Order 
setting forth procedures governing auctions of broadcast service licenses.

1998

? The first broadcast auction (the Bechtel auction) was completed in October 
1999.

1999
Secondary Market:
  Tax Certificates
? The 1978 Statement of Policy on Minority Ownership Broadcast Facilities 
created the Tax Certificate program which provided tax deferral benefits to 
the seller of a media property if it was sold to a minority business.  The tax 
certificate policy encouraged and promoted minority ownership by giving 
sellers a two-year like-kind-transfer tax deferral for the sale of licenses to 
minorities if the proceeds were reinvested in a similar communication 
property.  






1978

? Congress repealed the tax certificate program (due to allegations of abuse) 
with the passing of the Self-Employed Persons Health Care Deduction 
Extension Act of 1995.


1995
Secondary Market:
  Distress Sales
? The 1978 Broadcast Policy Statement created the Distress Sale policy 
which allowed for license owners that were under scrutiny by the FCC (and 
under threat of license revocation) to sell their station to a minority for 75% 
of the appraised value.  In return, the FCC would cease its inquiry into the 
suspect license owner.  Post Adarand, the FCC has not utilized the distress 
sale policy.





1978



CATEGORY
EVENT
DATE
Secondary Market:
  Anti-Trafficking Rules
? The three-year trafficking rule applied to an FCC grant of a construction 
permit or an assignment or transfer by the FCC.  If in requesting a grant of 
FCC approval for a transfer or assignment, it appeared that the licensee held 
the license for less than three years, the FCC would designate the transfer or 
assignment for hearing to determine whether the proposed transfer or 
assignment was in the public interest.  The three-year rule did not prohibit 
someone from transferring or assigning within the three-year period, but it 
did make it more difficult to do so.









? The one-year trafficking rule replaced the prior three-year anti-trafficking 
rule.  The one-year rule required the retention of a license acquired through 
the comparative hearing process or the minority ownership process (i.e., 
distress sales, tax certificates and comparative hearings) for at least one 
year, unless it was sold to another minority.  Persons who acquired the 
license from non-minorities in the secondary market were not regulated by 
the one-year anti-trafficking rule.







Statutory and Regulatory 
Developments (not 
highlighted elsewhere)


? The 1969 Non-Discrimination Employment Policy Statement forbade 
discrimination on the basis of race, color, religion or national origin in 
employment practices by licensees of commercial or noncommercial 
broadcast stations.  Result:  each station had to establish an equal 
employment opportunity program.  This was the first time the FCC directly 
addressed the issue of race in a formal policy ruling.  This Policy Statement 
established the Commissions right to revoke licenses and to hear 
allegations of EEO violations in comparative hearings.







1969

? In 1970, the FCC adopted its one to a customer rule whereby licensees 
could have only one AM, FM, and TV license in a given market.  (See 
charts below for more detailed information on ownership rules.)


1970

? In 1971, the FCC modified the ownership rules to allow AM/FM 
combinations and radio-UHF combinations in the same market;  only 
VHF/radio combinations were banned by the rules.


1971



CATEGORY
EVENT
DATE
Statutory and Regulatory 
Developments (not 
highlighted elsewhere  
continued)
? In 1979 the World Administrative Radio Conference expanded the AM 
band in the Western Hemisphere.  The FCC used the expanded band to 
reduce congestion in the existing band by allowing existing AM licensees to 
operate new stations in the expanded band, and then after a transition 
period, shut down the old stations.  The FCC limited the entire expanded 
band to these existing migrating stations. (1991)  Several civil rights groups 
proposed that the existing broadcasters be offered tax certificates to sell 
existing (to-be-shut-down) stations to minorities.  The FCC rejected this 
proposal and held that improving congestion was its primary goal. (1993)






1979
1991
1993

? In its 1984 Memorandum Opinion and Order, the FCC declined to extend 
minority ownership policies to common carrier services.

1984

? In 1986 the FCC initiated a Notice of Inquiry on the topic of race and 
gender ownership and employment policies in the awarding of broadcast 
licenses (Reexamination of the Commissions Comparative Licensing, 
Distress Sales, and Tax Certificate Policies Premised on Racial, Ethnic, or 
Gender Classifications).  To ensure that those policies were not eliminated, 
Congress included provisions in the Commissions appropriations bills from 
1988 to 1994 to prohibit the Commission from expending funds on any 
initiative designed to eliminate the broadcast minority ownership policies.







1986

? In 1988, the FCC announced that it would be inclined to grant waivers to 
the one-to-a-market ownership rule in those top 25 markets that had at least 
30 broadcast voices.


1988

? City of Richmond v. J.A. Croson requires a strong basis in evidence of 
discrimination for any state or local government conclusion that race-
conscious remedial action is necessary.  The Court ruled that the 
government cannot rely on general societal discrimination to make its case.  
Instead, the government must establish that it is remedying either its own 
discrimination or discrimination in the private sector in which the 
government has become a passive participant.






1989



CATEGORY
EVENT
DATE
Statutory and Regulatory 
Developments (not 
highlighted elsewhere  
continued)
? In Metro Broadcasting, Inc. v. FCC (1990) the Court, applying intermediate 
scrutiny, upheld the constitutionality of the FCCs distress sale and 
comparative hearing minority ownership policies.  The Court stated that the 
policies served the important governmental interest of promoting diversity 
in broadcast programming.  The Court found that the benefits of 
programming diversity are shared by two groups  minorities who gain 
access to the broadcasting industry through ownership and the American 
public [who] will benefit by having access to a wider diversity of 
informational sources.  Second, the Court found that a causal link exists 
between minority ownership and broadcast diversity and therefore that the 
minority ownership policies were substantially related to the achievement of 
the desired end.











1990

? In 1992, the FCC relaxed the duopoly rules so that in markets with fewer 
than 15 radio stations, licensees were permitted to own up to three stations 
as long as the number owned was less than 50 percent of the total number of 
stations in the market.  In markets with 15 or more stations, the licensees 
were permitted to own up to four stations; no more than two could be of the 
same service, and there was an audience share cap of twenty-five percent.





1992


? The 1993 Omnibus Budget Reconciliation Act contained specific language 
delegating to the Commission the authority to devise rules to ensure 
diversity in license ownership.  More specifically, the FCC was instructed 
to ensure that women and minorities have the opportunity to participate in 
the provision of spectrum-based services.




1993

? In the Bechtel v. FCC decision, the D.C. Circuit Court found that the 
continued application of the integration [of ownership, management and 
programming] credit is arbitrary and capricious, and therefore unlawful.  
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.





1993
1994



CATEGORY
EVENT
DATE
Statutory and Regulatory 
Developments (not 
highlighted elsewhere  
continued)


? In Adarand Constructors, Inc. v. Pena the Court ruled that any federal 
program or policy which uses race as a basis for its decision-making must 
withstand strict judicial scrutiny.  It is not clear whether the diversity 
rationale that survived the intermediate scrutiny standard of Metro would 
survive the strict scrutiny standard of Adarand.




1995

? Section 257 (added to the Communications Act of 1934 by the 
Telecommunications Act of 1996) requires the FCC to eliminate market 
entry barriers for entrepreneurs and other small businesses.


1996

? In the Telecommunications Act of 1996, Congress directed the FCC to 
further relax the duopoly rules so that licensees in markets with 45 or more 
commercial radio stations can own, operate or control up to 8 stations, not 
more than 5 of which are in the same service.  In markets with between 30 
and 44 stations, the limit is seven stations, not more than 4 of which are in 
the same service.  In markets with between 15 and 29 stations, the limit is 
six stations, of which not more than 4 are in the same service.  In markets 
with 14 or fewer stations, the limit is five stations with not more than three 
in the same service, except that a party may not own, operate or control 
more than 50 percent of the stations in such market.  Furthermore, the Act 
eliminated all limits on the number of radio stations that one licensee can 
own nationally, eliminated the numerical cap on television stations and 
increased the national audience reach cap to 35% for TV.












1996

? The Telecommunications Development Fund (TDF)  was authorized by 
the 1996 Telecommunications Act to provide a source of loans and 
investment capital to small communications businesses.


1996

? Lutheran Church  Missouri Synod v. FCC (U.S. Court of Appeals, the 
District of Columbia Circuit, April 1998) held that certain provisions of the 
FCC's broadcast EEO rules were subject to strict scrutiny and 
unconstitutional.  The FCC adopted a Notice of Proposed Rulemaking 
outlining new rules to further equal employment opportunity in 
broadcasting in a manner that is consistent with the courts decision 
(November 1998).  New rules were adopted in January 2000.






1998



CATEGORY
EVENT
DATE
Statutory and Regulatory 
Developments (not 
highlighted elsewhere  
continued
? On January 20, 2000, the FCC adopted rules creating a new, low power FM 
(LPFM) radio service. The new LPFM service is to be exclusively 
noncommercial; there will be no commercial LPFM stations. In addition, 
current broadcast licensees or parties with interests in other media  cable or 
newspapers - are not be eligible for LPFM stations.




2000
Historical Events
? Mrs. Marie Zimmerman became the first woman to own a radio license.
1922

? Station WDIA-AM in Memphis, Tennessee, became the first radio station 
to devote all its air time to Black programs.

1947

? Mr. Jesse B. Blayton purchased WERD in Atlanta, Georgia, and became the 
countrys first Black radio station owner.

1949

? First Hispanic radio station went on the air.
mid-1950s

? Mr. Andrew Langston becomes the first African American to participate in 
a comparative hearing.  His license was ultimately awarded in 1974.

1960

? The National Association of Black-Owned Broadcasters (NABOB) was 
created as an outgrowth of a National Association of Broadcasters (NAB) 
seminar on minority ownership.


1972

? First Black-owned TV license awarded by FCC  to WGPR-TV (owned by 
the International Free and Accepted Modern Masons, Inc., in Detroit, 
Michigan.


1973

? Dorothy Brunson became the first African-American woman to own a 
television station.

1989

? MTDP (Department of Commerce) created ComTrain to provide a 
management training program for minority owners of commercial radio and 
television stations.


1993



Local, National and Cross-Ownership Rules
(adapted from KPMG, LLP report:  History of the Broadcast License Application Process)




Year
Local Market
National Market

Notes

AM
FM
TV
AM
FM
TV

1950
1
1
1
7
7
7
National TV: Only 5 can be VHF
1970
1
1
1
7
7
7
Prohibit ownership of radio and TV 
stations in the same market.  
Grandfathered existing cross ownership.
1975
1
1
1
7
7
7
Additional prohibition of ownership of 
TV and newspapers in same market.  
Grandfathered existing cross ownership.
1985
1
1
1
12
12
12
Local TV:  Could add a 2nd station if it 
was a satellite of the first.
National Radio:  Could add 2 additional 
AM and FM stations if they were 
controlled by minorities or small 
businesses.
National TV:  Could add 2 TV stations if 
they were controlled by minorities or 
small businesses.  TV stations may 
reach no more than 25% of the 
population.  UHF received 50% credit in 
population determination.







Year
Local Market
National Market

Notes

AM
FM
TV
AM
FM
TV

1992

15+: 2 (<25% 
mkt share w/ 
FM)


<15: 2 (3)
<50% of 
stations


15+: 2 (<25% 
mkt share w/ 
AM)


<15: 2 (3) +
<50% of 
stations
1
18
18
12
Local Radio:  
? In markets with 15 or more stations, 
2 AM/FM ,as long as the combined 
share of audience is less than 25%.
? In markets with less than 15 stations, 
3 stations with no more than 2 of 
either AM or FM as long as it was 
no more than 50% of markets 
stations.
National Radio: Could add 3 AM and 3 
FM stations is they were controlled by 
minorities or small business.
1994
Same as
1992
Same as
1992
Same as 
1985
20
20
Same as 
1985
National Radio:  Could add 3 AM and 3 
FM stations if they were controlled by 
minorities or small businesses.
1996

45+:      5 (8)


30-44:   4 (7)


15-29:   4 (6)


<15:      3 (5)

45+:      5 (8)


30-44:   4 (7)


15-29:   4 (6)


<15:      3 (5)
Same as
1985
No limit
No limit
No limit, 
with 
exception
(see Note 
National 
TV)
Local Radio:  
? In markets with 45+ stations, 8 
stations with no more than 5 in 
either AM or FM.
? In markets with 30-44 stations, 7 
stations with no more than 4 in 
either service.
? In markets with 15-29 stations, 6 
stations with no more than 4 in 
either service.
? In markets with fewer than 15 
stations, 5 stations with no more 
than 3 in either service.
National TV:  No limit as long as the 
stations did not serve more than 35% of 
the nations population.  UHF received 
50% credit in population determination.



Year
Local Market
National Market

Notes

AM
FM
TV
AM
FM
TV

1999
Same as
1996
Same as
1996
See Note
Local TV
Same as 
1996
Same as 
1996
Same as 
1996, with 
exception 
(see Note
National 
TV)
Local TV:  2 TV stations in market if the 
second stations is financially troubled, 
not yet built, or is not among the 
markets 4 top-rated stations at time of 
purchase and 8 independently-owned 
TV stations remain.  An owner may also 
control overlapping stations if they are 
based in different designated market 
areas.
National TV:  Same as 1996 but in 
markets where firms own 2 TV stations, 
dont double count towards 35% of 
nationwide population limit.
Cross-Ownership  Local Market::  
? If the market has at least 20 
separately owned broadcast, 
newspaper, and cable voices, can 
own 2 TV and 6 radio stations or 1 
TV and 7 radio stations. 
? If the market has at least 10 
separately owned broadcast, 
newspaper, and cable voices, can 
own 2 TV and 4 radio stations.
? 1 TV and 1 radio allowed 
everywhere.
? TV/newspaper cross-ownership is 
prohibited.


Minority Ownership of Broadcasting Licenses

A search of the literature provides limited information about minority ownership of broadcasting licenses.  Until the commencement 
in 1994 of the Department of Commerces National Telecommunications and Information Administration (NTIA) annual studies on 
minority commercial broadcast ownership in the United States , information about minority ownership was primarily reported in 
various trade publications.  Data for the 1980s proved elusive.  The table below presents the information we were able to obtain.


YEAR
INDUSTRY
MINORITIES
%

TV
Radio
Total
TV
Radio
Total

1970 
N/A
N/A
N/A
N/A
13
N/A
N/A
1972 
700
>7,000
>7,700
0
<20
<20
<0.3%
1973 
N/A
7,350
N/A
N/A
33
N/A
N/A
1974 
N/A
N/A
N/A
N/A
<30
N/A
N/A
1978 
N/A
8,500
N/A
N/A
40
N/A
N/A
1994 
1,151
9,870
11,021
29
293
322
2.9%
1995
1,155
9,973
11,128
32
311
343
3.1%
1996
1,221
10,191
11,412
38
312
350
3.1%
1997
1,193
10,282
11,475
38
284
322
2.8%
1998
1,209
10,315
11,524
32
305
337
2.9%

In contacting prospective interviewees, it became apparent that a number of minorities were no longer station owners.  With 
consolidation in the marketplace, a few former minority group owners have sold their entire holdings of broadcast properties.  The 
1999-2000 NTIA report on minority ownership is expected to reveal that there are now far fewer minority broadcast owners than 
existed in 1998.






















APPENDIX B - INTERVIEW GUIDE


	

FCC HISTORICAL STUDY INTERVIEW GUIDE
	

Subject Name:	_________________________________ Interviewee Control #: ____________

Entity: ______________________________________________________________________

INTRODUCTION

Hello, my name is __________________, and Im calling from Ivy Planning Group at our 
scheduled time to conduct the telephone interview you agreed to have with us about FCC 
licensing practices.  Is this still a convenient time for you?  Great.  (Note to interviewer:  If this 
is not a good time, please reschedule for another time as close to this one as possible.)  

As a reminder, Ivy Planning Group, a management consulting company, has been hired by the 
Federal Communications Commission to conduct a historical study of what market barriers, if 
any, small, minority- and women-owned businesses face or have faced in the acquisition, sale or 
transfer of FCC broadcast and wireless licenses during the years 1950 to the present.

I will be asking you about your experiences with the process of acquiring, selling, or transferring 
FCC licenses, even if you were not successful in or chose to withdraw from these endeavors.  It 
is my intention not to ask for any information that is proprietary to you or your company.  

Our interview has been scheduled to last an hour.  It would be helpful not to have any 
interruptions during our time on the phone so that I can take as little of your time as possible.  I 
will be asking a series of open-ended questions for you to consider.  Please answer them to the 
best of your ability and recollection.  The more you can tell me, the more valuable this report is 
likely to be for businesses like yours.

As mentioned at the time we scheduled this appointment, I will be recording our conversation to 
ensure the accuracy and quality of my final report. The tape will be transcribed verbatim and will 
be archived at the FCC.  (NOTE TO INTERVIEWER: If interviewee insists on not being 
recorded, turn off the machine and take notes by hand.  Let the interviewee know that instead of 
the recording you will be making written notes of the conversation.)

Our study, along with several others, will be used by the FCC to determine whether there are or 
have been market barriers for small, minority- and/or women-owned businesses and, if so, to 
suggest changes in the FCC rules or practices to eliminate these barriers.  At the end of our 
interview, you will have a chance to make suggestions of your own in this regard.

Well, Im ready to begin the interview now.  Do you have any questions before we start?

To help you understand where Ill be going with the interview, here are the topics to be covered:
TOPICS TO BE COVERED

1. Characteristics of the entity(ies) and key person(s) involved in the entity(ies)  (NOTE TO 
INTERVIEWER: entities are small minority- or women-owned businesses; key persons 
are the entities principals, partners, investors and affiliates, and for publicly traded 
companies, the controlling shareholders and any controlling officers.)

2. Entitys capital structure and key person(s) experience in raising capital

3. Effect of FCC policies, provisions and rules on cost or availability of raising capital for 
auctions, lotteries and/or comparative hearings

4. Key person(s) experiences in finding about license acquisition opportunities

5. Key person(s) experiences with barriers to entry or expansion

6. Key person(s) experiences with advertising secondary market license sales transactions 

7. Key person(s) reasons for participating in, withdrawing from or succeeding in the 
license process

8. Suggestions and recommendations of remedies and/or improvements


First, I would like to quickly review the information you previously faxed to me so I can ask the 
right questions later on.

a. For the licenses that you currently have, which preferences/incentives/credits, if any, 
were in place at the time you acquired the licenses?  Did you take advantage of all of 
those to which you were entitled?  If not, why not?

b. Have you ever sold or transferred any licenses? What kind?  How many?  When? By 
what means? To whom?  Did you take advantage of any preferences/incentives/credits at 
the time of sale/transfer?  If not, why not?


TOPIC 1.  Entity and key person characteristics

Opening question.  How was your company organized when you obtained (tried to obtain) your 
first license? What can you tell me about the people involved, and their preparation for being an 
FCC licensee?   


Follow-up topics.  Organizational structure and key players (by name, if possible)? Key 
person(s) demographics, education, employment, business, management, and industry 
backgrounds (especially with communications and information products and services?  Previous 
unsuccessful attempts? 


TOPIC 2.	Entitys capital structure and key person(s) experience in raising capital

Opening question.  How would you describe your experience in raising capital to become an 
FCC licensee?  How prepared were you, financially, when you first attempted to become a 
licensee, and when you first succeeded?  From where did you eventually, or do you traditionally, 
receive your capital support?  Did you experience any discrimination on the basis or race, 
ethnicity or gender?  Did you experience any difficulties in raising capital because of the size of 
your company?

Follow-up topics.  Capital structure?  Access to debt versus equity? Cost of capital? Access to 
and cost of security, collateral, and funds for deposits?  Venture capital? Installment payments?  
Use of credit cards?  Impact of up-front payments, down payments and FCC procedures?  

TOPIC 3.	Effect of FCC policies, provisions, rules and requirements on cost or 
availability of raising capital for auctions and/or non-auction activities (lotteries and/or 
comparative hearings)

Opening Question.  How effective has the FCC and/or its policies been in helping or hindering 
your efforts to become a licensee?  How have their policies, licensing provisions, service rules, 
or requirements affected you and your endeavors?

Follow-up topics.  Auction and/or non-auction (lottery, comparative hearings)?  Cost or 
availability of capital?  Geographic areas to be licensed?  Partitioning and/or disaggregation?  
Holding periods? Small business, race, or gender based provisions or preferences?  Integration 
and/or bidding credits?  Deposit and/or capital requirements? Installment or up-front payments?  
Distress sales?  Tax certificate policy?  Other policies, provisions, rules or requirements (e.g., 
spectrum caps, rules limiting participation to small businesses, etc.)?


TOPIC 4.	Key person(s) experiences in finding out about license acquisition 
opportunities (primary/secondary markets)

Opening Question.  How have you learned of opportunities to acquire licenses via auction, 
lottery and/or comparative hearings?  How have you learned about opportunities to acquire 
licenses on the secondary market?  How did you hear of your first opportunity?  How did that 
first experience change over time?  How would you or someone like you tend to learn of license 
acquisition opportunities now? 

Follow-up topics.  Role and importance of FCC public notices and outreach; other government 
agencies; informal personal networks; trade associations; business brokers; attorneys; bankers; 
venture capitalists; other financing sources; Small Business Investment Companies (SBIC); 
Specialized SBICs; incumbent licensees; advertisements in general market, minority- or gender-
specific media?


TOPIC 5.	Key person(s) experiences with barriers to entry or expansion

Opening Question.  What can you tell us about specific barriers, impediments or roadblocks that 
you have faced as you have tried to become an FCC licensee (as a small, minority- or woman-
owned business)?  As you have tried to grow your business? What, if any, market obstacles, such 
as advertisers pricing practices, have you encountered?  What, if any, discrimination have you 
faced in your efforts (as a woman, minority or small business owner)?  (NOTE TO 
INTERVIEWER:  If interviewee has participated or thought of participating in the auction 
process, ask the following question:  What has been your experience with the new electronic 
auction bidding process?)

Follow-up topics.  Role and importance of FCC public notices and outreach; other government 
agencies; informal networks; trade associations; business brokers; attorneys; bankers; venture 
capitalists; other financing sources; SBICs; SSBICs; incumbent licensees.


TOPIC 6.	Secondary market prospective license seller(s) experiences with advertising 
license sales/transfers 

Opening Question.  What means did you use to let people know that you wanted to sell or 
transfer a license? 

Follow-up topics.   Minority- or gender-specific media, associations, organizations, or networks; 
informal personal networks; business brokers; attorneys; bankers; venture capitalists; other 
financing sources; SBICs; Specialized SBICs; incumbent licensees. Are you aware of any 
alleged discriminatory practices (related to race, gender or size of business) on the secondary 
market that the FCC has been made aware of by complaint or other means?  How were these 
complaints handled?


TOPIC 7.	Key person(s) reasons for participating, withdrawing or succeeding

Opening Question.  Why have you decided to participate in purchasing, selling and/or 
transferring FCC license(s)?   What have been the most important reasons or significant factors 
for your participation? 
Follow-up topics.  When you have made decisions not to participate or to withdraw from 
pursuing/selling/transferring specific licenses, what were the reasons or factors at work?  
Reasons for succeeding?   For not succeeding?
TOPIC 8.	Suggestions and recommendations of remedies and/or improvements

Opening Question.  Based on your experiences, what suggestions can you give us which would 
have made your experience in the past easier, or more fair, or which might level the playing field 
for citizens like yourself in the future? 

Follow-up questions.   How could these suggestions have helped you in acquiring, selling 
and/or transferring FCC licenses?


CLOSE

Thank you for time and perspectives.  Youve been most helpful to our study.  I hope you would 
not mind if we called to clarify or follow up on any points weve covered today.  Please feel free 
to contact us toll free at (877) 448-9477, ext. 29 if you think of additional points or information 
that may pertain or contribute to our study.  Thank you again. 




















APPENDIX C - DEMOGRAPHIC BREAKDOWN OF INTERVIEWEES


Demographic Breakdown Of Interviewee Pool


A total of 150 licensees, unsuccessful license applicants and key market participants  were 
interviewed for this study of market entry barriers from 1950 to the present in broadcast and 
wireless licensing. The pool of interviewees was comprised of 123 licensees/unsuccessful 
applicants and 27 key market participants (e.g., brokers, lenders, attorneys). 

The following table presents the distribution of the 123 interviewees (82%) who made up the 
licensee/unsuccessful applicant pool.  Of the total, 91 (74%) were from the broadcast industry 
and 32 (26%) were from wireless.  The groups are comprised as follows: (1) licenses owned by 
minorities (large and small businesses); (2) licenses owned by women (large and small 
businesses); and (3) licenses owned by white men (small businesses only). 


Demographic Breakdown of 123 Interviewees
(Out of a Total of 150)


TYPE OF OWNERSHIP
NUMBER IN INTERVIEW POOL

Broadcast
Wireless
Total
African American

35

 4

 39
Hispanic
22
 2
 24
Asian American
 1
 5
  6
Native American
 2
 1
  3
Women
20
 7
 27
White men (sm. bsn. only)
11
13
 24
           TOTALS
91
32
123

The remaining 27 interviewees (26%) were key market participants.























APPENDIX D - LIST OF INTERVIEWEES

Federal Communications Commission
Historical Market Entry Barrier Study
List of Interviewees - Licensees

						        Type of			 Demographic
	Last Name	First Name	Business                          Group  *         	
	Acker	Gary	Radio	Black
	Adelman	Robert	Radio/TV	Small
	Alonzo	Alfredo	Radio	Hispanic
	Arroyo	George	Radio	Hispanic
	Bailey	Bob Carl	Radio	Black
	Banks	Joyce	Radio	Woman (Black)
	Barro	Mary Helen	Radio	Woman (Hispanic)
	Barton	Ernesto	Radio	Hispanic
	Beech	Richard	Wireless	Small
	Bennet	Caressa	Wireless	Woman
	Blount	Frank	Wireless	Small
	Boaldin	Trent	Wireless	Small
	Broz	Robert	Wireless	Small
	Brunson	Dorothy	TV	Woman (Black)
	Bustos	Amador	Radio	Hispanic
	Byrne	Jerry	Wireless	Asian American
	Caballero	Eduardo	Radio/TV	Hispanic
	Camarillo	Mateo	Radio/Wireless	Hispanic
	Carter	Michael	Radio	Black
	Carter	Michael	Radio	Small
	Charles	Merrill (Butch)	Radio	Black
	Chase	Anthony	Radio/Wireless	Black
	Cherry	Charles	Radio	Black
	Chu	Narisa N.Y.	Wireless	Woman (Asian 
				American)
	Chung	Sejin	Wireless	Asian American
	Clark	Susan	TV	Woman
*Small = White male;  Woman (without racial designation) = White woma

Federal Communications Commission
Historical Market Entry Barrier Study
List of Interviewees  Licensees
(continued)

						        Type of			 Demographic
	Last Name	First Name	Business                          Group           	
	Colon	Pablo de Jesus	Radio	Hispanic
	Cook Bush	Tony	Wireless	Woman
	Cornwell	W. Don	TV	Black
	Correa de Garcia	Marti	TV	Hispanic
	Crutchfield	Ronald	Wireless	Black
	Culpepper	Ricahrd	Radio	Black
	Davenport, Sr.	Ronald R.	Radio	Black
	Davila	Manuel	Radio	Hispanic
	Davis	Carl	Wireless	Small
	Davis	Greg	Radio	Black
	Davis	Willie D.	Radio	Black
	DeBose	Helena	Radio	Woman (Black)
	Dobbins	George	Wireless	Black
	Douglas	Nancy	Wireless	Woman
	Douglas	N. John	Radio	Black
	Ehlinger	Phyllis	Radio	Woman
	Evans	Mutter D.	Radio	Woman (Black)
	Faush	Erskine	TV	Black
	Ferrufino	Zenon	Radio	Hispanic
	Fink	Robert K.	TV	Small
	Fong	Peter W.	Wireless	Asian American
	Ford	Richard	Radio	Small
	Frank	Peter	Wireless	Small
	Galloway	William	Radio	Black
	Garcia	Joe	Radio	Hispanic
	Gehman	Dale	Radio	Native American

Federal Communications Commission
Historical Market Entry Barrier Study
List of Interviewees  Licensees
(continued)

						        Type of			 Demographic
	Last Name	First Name	Business                          Group           	
 Gilliam	Art	Radio	Black
	Gomez	Nelson	Radio	Hispanic
	Gomez	Ed	Radio	Hispanic
	Guernica	Tony	Radio/TV	Hispanic
	Guerra	Belinda	Radio	Woman (Hispanic)
	Harris	Leodis	Radio	Black
	Hawes-Saunders	Ro-Nita	Radio	Woman (Black)
	Helton	Nora	Wireless	Native American
	Heyward	Isaac	Radio	Black
	Hoffman	Roger	Wireless	Small
	Howard	Samuel	Radio	Black
	Hutton	Jeffrey	Radio	Small
	Ishihara	Glenn	Wireless	Asian American
	James	Ernest	Radio	Black
	Kessler	Bennett	Radio	Woman
	Keys	Brady, Jr.	Radio	Black
	Langston	Andrew A.	Radio	Black
	Laurel	Oscar M.	TV	Hispanic
	Lee	Jang	Radio	Asian American
	Love	Ross	Radio	Black
 Lovink	Mia	Wireless	Woman
	Lucas	Henry M.	Wireless	Small
	Lucas	Rochelle	Wireless	Woman (Black)
	Malcolm	Colin B.	Radio	Small
	Marchant	Byron	Wireless	Black
	Marshall, Jr.	Pluria	Radio	Black
	Martin	Stuart T.	TV	Small

Federal Communications Commission
Historical Market Entry Barrier Study
List of Interviewees  Licensees
(continued)

						        Type of			 Demographic
	Last Name	First Name	Business                          Group           	
	McCollum	Amy	Radio	Woman
	McCullah	Tazbah	Radio	Native American
	McKinzie	Ronda	Wireless	Woman
	Miller	Dennis E.	Wireless	Small
	Molina	Jose	Radio/TV	Hispanic
	Morgan	Tommy	Wireless	Small
	Myrick	Charles	Wireless	Small
	Nash	Bernadine	Radio	Woman (Black)
	Neidig	Andres	Radio	Hispanic
	O'Luck	Mark	Wireless	Black
	Oxendine	John	TV	Black
	Perres	Luis	Radio	Hispanic
	Phillips	Martin	Radio	Small
	Portillo	Ernesto	Radio	Hispanic
	Price	Bud & Cathy	Radio	Small
	Prout	Patrick	Radio	Black
	Puri	Harish C.	Wireless	Asian American 
	Rienstra	Francine	Radio	Woman
	Riordan	Robert	Wireless	Small
	Roberts	Michael	TV	Black
	Ruiz	Patty	TV	Woman (Hispanic)
	Salva	Isabelle	Radio	Hispanic
	Saunders	William	Radio	Small
	Shatz	Carol	TV	Woman
	Shaw	Johnny &Opal	Radio	Black


Federal Communications Commission
Historical Market Entry Barrier Study
List of Interviewees  Licensees
(continued)

						        Type of			 Demographic
	Last Name	First Name	Business                          Group           	
	Sherrell	Charles R.	Radio	Black
	Simms	Raymond	Radio	Black
	Spann	Pervis	Radio	Black
	Spann-Cooper	Melody	Radio	Woman (Black)
	Sutter	Diane	TV	Woman
	Sutton	Pierre M.	Radio	Black
	Terry	Mical J.	Wireless	Small
	Thomas	John C.	Radio	Black
	Tortolero	Carlos	Radio	Hispanic
	Tupper	John B.	TV	Small
	Turner	Edna	Radio/Wireless	Woman (Black)
	Unger	Ruby	Radio	Woman
	Valasquez	Art	Radio	Hispanic
	Vega, Jr	Richard Pablo	Radio	Hispanic
	Walls	Willie	Radio	Black
	Waters	Nancy	Radio	Woman (Black)
	Weaver-Bey	Richard	Radio	Black
	Wolfe	James E., Jr.	Radio	Black
	Yunis	Enrique	Wireless	Hispanic

 Federal Communications Commission
Historical Market Entry Barrier Study
List of Interviewees  Key Market Participants


	Last Name	First Name	Company Name	Type of business
	
	Baldon	Virgil	Baldon Media Service	Consultant/Educator
	Brown	Tyrone	Wiley, Rein & Fielding	Communications Attorney
	Casey	Jim	Greenburg & Traurig	Communications Attorney
	Cobb	Brian	Media Venture Partners	Media Broker
	Dickenson	Bruce	Daniels & Associates	Media Broker
	Ellis	Dwight	National Association of	Industry Organization
			Broadcasters (NAB)	
	Fontes	Brian	Cellular Telecommunications	Industry Organization
			Industry Association (CTIA)	
	Healey	Steve	Fleet National Bank	Media lender
	Honig	David	Minority Media	Advocacy Group
	Kalil	Frank	Kalil & Associates	Media Broker
	Kilrea	Jeff	FINOVA Capital	Venture Capital
	Krasnow	Erwin	Verner, Liipfert, et. al.	Communications Attorney
	Lauer	John		Media Broker
	Lee	Tony	Swidler Berlin Shereff 	Communications Attorney
	Logan	Nancy	American Women in Radio	Advocacy Group
			and Television (AWRT)	
	McNeill	Brian	Burr Egan (Alta 	Investment banker
	Montero	Frank	FCC-Office of Communications	Former Director of OCBO
			Business Opportunities (OCBO)	
	Parker	Rev. Everett	United Church of Christ 	Advocacy Group
	Perez	Benjamin	Abacus Communications 	Communications Attorney
	Rivera	Henry	Ginsberg Feldman & Bress	Former FCC commissioner
	Schwartzman	Andrew	Media Access Project	Advocacy Group
	Smith	Chic	Benton Foundation	Industry Organization
	Trigg	Ms. S. Jennell	Fleischman & Walsh LLP	Communications Attorney
	Wilkins	Herbert	Syncom	Venture Capitalist
	Williams	Darrell A.	Telecommunications 	Venture Capitalist
	Last Name	First Name	Company Name	Type of business

Winston	James (Jim)	National Association of	Industry Organization
			Black-Owned Broadcasters	
	Winston	John	Federal Communications	Former head of Office
			Commission	of Communications
				Business Opportunities 






















APPENDIX E  IVY PLANNING GROUP PROFILE

COMPANY PROFILE

Ivy Planning Group LLC is a full-service management consulting firm.  We assist organizations 
in becoming customer-driven by focusing on strategic and tactical planning, organizational 
development and redesign, and diversity.  Named after the principals Ivy League educational 
backgrounds, Ivy supports its customers continuous improvement processes through the 
formation of the organizations strategy; translation of strategy into tactics; and implementation 
through training, change initiatives and consulting services.

Ivy was honored as a Black Enterprise magazine Year 2000 Emerging Company of the Year 
Finalist and by Working Woman magazine for Entrepreneurial Excellence.  Ivy was profiled in 
DreamMakers:  Putting Vision & Values to Work, a book that chronicles how leading-edge 
organizations are able to succeed and realize their vision and values.  Ivys President, Janet C. 
Smith, author of The Diversity Action Book:  143 Things To Go Do, was named one of Twenty-
Five Influential Minority Women in Business by Minority Business & Professional Network, 
Inc.

Some of the worlds most comprehensive and respected methodologies have come from the U.S. 
governments Reinventing Government initiative, where Ivy Planning Group has been a key 
player.  Ivy was selected by the Federal Quality Institute to participate as a partner in the design, 
development, and rollout of President Clintons National Performance Review (NPR) 
Reinventing Government initiative.  Ivys responsibilities included creating strategies to address 
valuing diversity, benchmarking, the changing role of leadership, and creating a customer-driven 
government.  Ivy was selected for its ability to translate private sector concepts into public sector 
initiatives, proven planning methodology, curriculum development and training skills, and its 
expertise in change management.

Ivy Planning Group supports customers in the public and private sectors.  Ivys clients include 
the U.S. Environmental Protection Agency; the U.S. Departments of Labor, Treasury, and 
Justice; the U.S. Patent and Trademark Office; the U.S. Postal Service; the Federal 
Communications Commission; The Chase Manhattan Bank; Morgan Stanley Dean Witter & 
Company; IBM; Pennzoil-Quaker State; Xerox; Bell Atlantic/Verizon; United Way of America; 
and Special Olympics International.

Founded in 1990, Ivy takes pride in the reputation it has built with Federal agencies, Fortune 500 
companies, and large non-profits.  Ivy is unique in its commitment to provide senior consultants 
with proven methodological/process skills and experience, who also bring real experience as 
managers, and as change agents, in large organizations.  Thus, Ivys consultants provide practical 
solutions to the challenges associated with organizational change initiatives.

Ivy Planning Group provides the skills, experience and professionalism of a large management 
consulting firm and the flexibility, senior level access, service, and caring attitude of a small, 
founder-led business.

Ivy Planning Group is a minority- and woman-owned firm certified under the U.S. SBAs 8(a) 
program.  Ivy holds GSA/MOBIS Schedule #GS-23F-9805H.













CONTACT INFORMATION

Janet C. Smith, President
Ivy Planning Group LLC
15204 Omega Drive, Suite 110
Rockville, Maryland  20850-4601

Phone:  (301) 963-1669
Fax:  (301) 963-8068
Toll Free:  (877) 448-9477

JSmith@ivygroupllc.com
www.ivygroupllc.com
  The Commission contracted with the Ivy Planning Group, LLC to do this study pursuant to 
Purchase Order No. PUR00000292, Requisition No. AUC00000135, under the GSA MOBIS 
schedule GS-23F-9805H.
  See, e.g. Civil Rights Forum on Communications Policy, When Being No. 1 Is Not Enough 
(1999); and R. Suarez and R. Cull, Capital Formation and Investment in Minority Business 
Enterprises in the Telecommunications Industries (1995).

  Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996), Section 257.
  In addition, the Commission has full authority and power to conduct an inquiry for any 
question [that] arise under any of the provisions of [the] Act pursuant to Section 403 of the Act.
  We note that gender-based classifications need only satisfy intermediate scrutiny. See United 
States v. Virginia, 518 U.S. 515, 531-33 (1996).
  In addition, The Commissions Office of Communications Business Opportunities (OCBO) and 
its Office of General Counsel (OGC) held a Market Entry Barriers Forum to further explore 
impediments that small businesses experience.  See FCC Public Notice, Forum on Small 
Business Market Entry Barriers, No. 64975 (Sept. 5, 1996) (Market Entry Barriers 
Forum)(hearing was held on September 24, 1996).
  Id. at 6283. 
  In the Matter of Section 257 Proceeding to Identify and Eliminate Market Entry Barriers for 
Small Business, Report, 12 FCC Rcd 16802 (1997).
  Id. at 16824-34.
  These studies examine:  (i) whether there is a link between minority broadcast ownership and 
news and public affairs programming; (ii) the utilization ratios and probabilities of success in 
wireless auctions for minorities, women, and non-minorities; and the impact, if any, of capital 
market discrimination on Broadcast and wireless spectrum business opportunities for minorities 
and women; (iii) the estimation of utilization ratios and probabilities of obtaining broadcast 
licenses from the FCC through the comparative hearing process; and (iv) the impact of 
advertising practices on minority-owned and minority-formatted broadcast stations.

  Halper, Donna.  Marie Zimmerman  Broadcastings First Female Owner. 
<http://www.oldradio.com/archives/people/zimmerman.html>.
  Alston, Roland (1978, July). Black-Owned Radio: Talking to the Airwaves in a Hurry. Black 
Enterprise, p. 22.
  Id., p.23.
  Molden, Vaughncille. Telecommunications and Black Americans:  A survey of Ownership, 
Participation and Control. Washington University: St. Louis, Missouri. August 1975, p. 128. 
Master of Arts Thesis.
  See Appendix C for a copy of the Interview Guide.
  Key persons are defined as those who: (1) have voting control or an equity interest in the 
company which holds the license and (2) were a driving force behind the companys acquisition 
of or attempt to acquire a FCC license on either the primary or secondary market.
  Key market participants are defined as those individuals who act in an intermediary capacity 
with respect to FCC broadcast and wireless license acquisition (e.g., media brokers, lenders, 
venture capitalists, investment bankers, and attorneys) or who are or were part of the FCC (e.g., 
former Commissioners, Directors, staff members).
  With the consent of the interviewees, telephone interviews were recorded and subsequently 
transcribed.  Parenthetical notations after each quote in this document refer to the particular 
transcript file and page number(s) from which the quote was taken.
  Sources used included the following: FCC database and other information; National 
Telecommunications and Information Administration (NTIA) Minority Commercial Broadcast 
Ownership Report, 1997-1998; Broadcast Investment Analysts (BIA) databases; American 
Women in Radio and Television (AWRT); National Association of Black-Owned Broadcasters 
(NABOB); and referrals from interviewees.
  In 1985, while the rules generally stayed the same with respect to local ownership, the 
Commission relaxed the rules so that an individual or company could own as many as 12 AM, 
FM or TV stations in the national market under certain circumstances.  In addition, since 1985, 
the Commission has gradually relaxed the ownership rules.  In 1992, one could own 2 AM and 
2FM stations, in markets with 15 or more stations, provided the combined share of audience is 
less than 25%; in markets that have less than 15 stations, 3 stations with no more than 50% of the 
markets stations.  In the national market, an owner could own 18 AM and 18FM stations, plus a 
non-controlling interest in 3 AM and 3 FM, provided they are controlled by minorities.  
Thereafter, in 1996, the Commission removed the ownership restriction allowing no numerical-
station limit, but limiting the audience reach to 35% as to the national market. The FCC also 
relaxed the local ownership rules:
(a) 8 stations in markets with 45 or more stations (with no more than 5 stations in AM or 
FM;
(b) 7 radio stations in markets with 30-44 stations (with no more than 4 in either service);
(c) 6 radio stations in markets with 15-29 stations (with no more than 4 stations in either 
service); and
(d) in markets with less than 15 stations, 5 radio stations (with no more than 3 stations in 
either service.
  In accordance with the Communications Act of 1934, The Federal Communications 
Commission has allocated and licensed the radio spectrum for use in radio, television and 
telecommunications.  From 1945 until 1993, this spectrum was allocated by comparative 
hearings from which the successful applicant paid no compensation to the Federal government.  
If there were mutually-exclusive competing applicants, they went through the comparative 
hearing process wherein an Administrative Law Judge (ALJ) reviewed the applications and 
heard the arguments from the applicants, ultimately deciding which one could and would best 
serve the public interest.  While the applicants generally expended significant sums of money for 
engineering advice and legal representation during the application and hearing process, 
regulatory and application fees were minimal.
In an effort to refine the process and to provide consistency in decision making, the Commission 
issued the Policy Statement on Broadcast Comparative Hearings, 1 F.C.C. 2d 393 (1965).  This 
Statement articulated the areas in which applicants would receive credit (or points) and on 
which their applications would be judged.  The seven areas of review were:  diversification of 
control, integration of ownership into management, proposed program service, past broadcast 
record, efficient use of the frequency, character, and any other significant and relevant factors to 
be considered in the decision-making process.
Minority ownership policies did not commence until 1973 in the wake of TV 9, Inc. v. FCC, 495 
F.2d 929 (D.C. Cir. 1973); and gender ownership policies did not commence until 1978 and the 
Mid-Florida Television Corp., 69 F.C.C. 2d 607, 651 (Rev. Bd. 1978), set aside on other 
grounds, 87 F.C.C. 2d 203 (1981).
The 1978 Statement of Policy on Minority Ownership of Broadcasting Facilities formalized the 
use of minority and gender credits in the comparative hearing process, thereby providing a 
measure of preference to both minority and female applicants.  In 1990, the FCC declined to 
extend enhancement credits for minority ownership under the diversification of ownership 
criterion.  The 1993 decision, Bechtel v. FCC, 10 F.3d 875 (D.C. Cir. 1993), had the effect of 
freezing comparative hearings.  The Telecommunications Act of 1996 eliminated the role of 
comparative hearings in the renewal of broadcast licenses.
  The 1978 Statement of Policy on Minority Ownership of Broadcast Facilities, 68 F.C.C. 2d at 
981, 42 Rad. Reg. 2d (P & F) at 1691, created the Distress Sale policy which allowed for license 
owners that were under scrutiny by the FCC (and under threat of license revocation) to sell their 
station to a minority for 75% of the appraised value.  In return, the FCC would cease its inquiry 
into the suspect license owner.
  Interviewees reported that in some instances non-minority men would offer ownership and/or 
financial resources to minorities and women to become part of their license application team in 
order to take advantage of the minority and women ownership programs during the comparative 
hearing process, but rarely giving these fronts control over the operation of the business.  In 
these instances, their participation was generally sought after to increase the odds of license 
award.  Alternatively, others would review FCC filings to see if a minority or woman had filed 
for a new frequency.  The apparent motivation was either to:  (a) get paid off with greenmail to 
withdraw their application, knowing full well that most women and minorities did not have the 
resources for a protracted hearing before the Commission and would therefore pay the 
greenmailer to go away; or (b) come in on the back of someone elses engineering study and 
wear down the minority or female applicant through appeals or other means, expecting that this 
applicant would eventually withdraw because he/she did not have the money for a protracted 
hearing process, thereby leaving the non-minority in a position to receive the license.  There 
were instances where these practices, as described, were quite predatory in their nature.
  The 1978 Statement of Policy on Minority Ownership of Broadcast Facilities, 68 F.C.C. 2d at 
981, 42 Rad. Reg. 2d (P & F) at 1691, created the tax certificate program.  This program which 
provided incentives to broadcast owners who sold their properties to minorities (minority buyer 
with 50.1% of voting control and 20.1%  equity interest).  The seller could then defer any gain 
realized on the sale of that broadcast property provided it was sold to a minority, and the gain 
was rolled over into a qualified replacement broadcast property within 2 years.  Specifically, the 
tax certificate program encouraged and promoted minority ownership by giving a two-year like-
kind-transfer tax break for the sale of licenses to minorities if the proceeds were reinvested in a 
similar communications industry.  Since the seller was able to defer its tax payment on the 
capital gain by selling to a minority, the price was frequently lowered, enabling minority 
purchasers to mitigate the associated barrier of lack of access to capital. 
Prior to 1978, minorities owned approximately 40 broadcast licenses, one-half of one percent of 
approximately 8,500 total broadcast licenses granted by the Commission.  From 1978 to 1995, 
the FCC granted approximately 356 tax certificates to promote minority broadcast and cable 
ownership (287 radio, 40 TV and 30 cable licenses).  This program helped give a much needed 
boost for minority ownership.  In 1982, the tax certificate program was expanded to include 
cable systems.  Subsequently, Congress repealed the tax certificate program with the passing of 
the Self-Employed Persons Health Insurance Act of 1995, Pub L. No. 104-7, S 2, 109 Stat. 93 
(1995).
 
  On August 18, 1998, the Commission released its First Report and Order setting forth 
procedures governing auctions of broadcast service licenses.  In October 1999, the FCC held its 
first auction for broadcast licenses whose distribution was suspended in the wake of the Bechtel 
case.

  The Small Business Administration in the administration of its opinion molder rule, 
generally prohibits governmental financial assistance to business operations relating to the 
communication of ideas on the basis that the government should refrain from subsidization of 
particular views or ideas, has led the agency to reconsider the rule because it appears to have had 
the opposite effect of entangling, rather that extricating, the government in speech matters due to 
the need for agency determinations of eligibility.  The SBAs opinion molder rule, which was 
lifted several years ago, provided generally that the federal government was prohibited from 
granting governmental financial assistance to applicants engaged in the communication of ideas. 
13 D.F.R. 120.2

  MESBICs are small business investment companies (SBICs) that address the needs of 
entrepreneurs who have been denied the opportunity to own and operate a business because of 
social or economic disadvantage. SBICs were created by Congress in 1958, and licensed by the 
Small Business Administration.  MESBICs are privately organized and privately managed 
investment firms.  Possessing their own capital and with funds borrowed at favorable rates from 
the Federal government, SBICs provide venture capital to small independent businesses. Small 
Business Association, Alternative Financing, (visited Aug. 30, 2000).
 <http://www.sba.gov/gopher/Business-Development/Womens-Business-Ownership/Financial-
Alternatives/wfin1.txt>

  Arbitron is an independent company which collects radio listening habits and market share 
information from a sampling of families throughout the U.S. using various survey instruments 
and methods.  Arbitron measures radio audiences in 270+ local markets.  This listenership 
information is used by broadcasters to attract advertisers.  Only those broadcasters who become 
members of Arbitron are allowed to quote the data during the selling process.


  In the Matter of 1998 Biennial Regulatory Review - Review of the Commissions Broadcast 
Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications 
Act of 1996, 2000 WL 791562, FCC 00-191  (June 20, 2000).
  See Minority Ownership of Broadcasting Facilities, 68 FCC 2d 979, 981 (1978).
  See Public Interest Obligations Of TV Broadcast Licenses, Notice of Inquiry, 14 FCC Rcd. 
21,633 (1999)(The Commissions public interest standard should promote diversity over the 
public airwaves.).
  In 1981, Congress amended section 309(j) of The Communications Act and granted discretion 
to the FCC to award broadcast licenses by lottery.  Subsequently, the FCC claimed that the 
lottery statute was too vague and declined to implement such an allocation scheme.  After the 
FCC requested a statutory mandate with greater specificity, Congress responded in 1982 by 
passing subsection 309(i)(C)(ii), which specified Blacks, Hispanics, American Indians, Alaska 
Natives, Asians, and Pacific Islanders constituting a minority group.  Thereafter, the FCC 
interpreted section 309 as precluding women from being included as minorities under lotteries; 
and thus not entitled to a preference.  In re-Amendment of the Commissions Rules to allow the 
Selection from among Certain Competing Applications Using Random Selection or lotteries 
Instead of Comparative Hearing, 58 RR 2d 1077 (1985).  Accord Pappas v. FCC, 807 F. 2d 1019 
(D.C Cir. 1986).
   1978 Policy Statement, 68 F.C.C 2d 979; Commission Policies Regarding the Advancement 
of Minority Ownership in Broadcasting, 92 F.C.C. 2d 849 (1982), proceeding terminated, 99 
F.C.C. 2d 1249 (1985). 
  109 Stat. 93 (1995), Pub. L. No. 1044-7 (1995).
   For instance, Congress believed that the policy evolved far beyond what Congress originally 
contemplated, and that the FCC granted the certificates routinely for a wide range of 
communications properties Id. Moreover, Congress found that the FCC had developed no 
standard for issuing the certificates and that grants "frequently resulted in transitory minority 
ownership of broadcast properties." See Greg Forster; Tax Breaks for Being Black, The Wall 
Street Journal at A21 (Jan. 8, 1995; but see Testimony, Minority Tax Preferences, Statement of 
William Kennard, General Counsel of the Federal Communications Commission, Before U.S. 
Senate Committee on Finance, 1995 Westlaw 93492 (F.D.C.H.) (Jan. 27, 19995); Statement of 
William Kennard, General Counsel of the Federal Communications Commission, Hearing 
Before the Subcommittee On Oversight of the Committee on Ways And Means, House of 
Representatives, 1995 Westlaw 30799 (F.D.C.H.) (Jan.27, 1995)  thus frustrating the stated goal 
of encouraging minority ownership, 109 Stat. 93 (1995), Pub. L. No. 1044-7 (1995). Congress 
also found that the tax certificate policy was not subject to systematic review by the IRS or any 
other governmental body to evaluate the cost to the government. Id. However, at least one 
senator was of the opinion that there was no showing of  "past (or current) discrimination" to 
justify the tax certificate program.  Senator Packwood, in describing the tax certificate program 
posed the following question: "Do we want a Government policy where there is no evidence of 
discrimination? See Proceedings and Debates of the 104th Congress, 141 Cong. Rec S4532-04 
Mar. 24, 1995).
  Self-Employed Health Insurance Act of 1995, Pub L. No. 104-7, S 2, 109 Stat. 93 (1995).
  The distress sale program was one of two programs explicitly upheld in Metro Broadcasting, 
although under intermediate scrutiny.  No court has addressed the programs constitutionality 
under strict scrutiny since Adarand was decided.
 On January 20, 2000, the Commission adopted new EEO rules that emphasize broad outreach 
to all qualified job candidates for positions at radio, television and cable companies. The new 
rules prohibit discrimination on the basis of race, religion, color, national origin or gender and, 
require, inter alia, broadcast licensees to widely disseminate information about job openings to 
all segments of the community to ensure that all qualified job candidates have an opportunity to 
compete for positions.  See In The Matter of Review of the Commission's Broadcast and Cable 
Equal Employment Opportunity rules and Policies, Report and Order, MM Docket No. 98-204, 
15 FCC Rcd. 2329 (2000).  The rules respond to the D.C. Circuit Court of Appeals' 1998 
decision in Lutheran Church [141 F.3d 344 (D.C. Cir. 1998) which held that the Commission's 
previous broadcast EEO requirements were unconstitutional.  The new EEO rules are also now 
subject to constitutional challenge, and 50 of the state broadcast associations have recently 
appealed their implementation.  State Assns. Appeal New EEO Rules, Television Digest, 
Volume 40, Issue 33, Monday, August 14, 2000. 
  In Office of Communications, United Church of Christ v. FCC, 425 F. 2d 543, 549 (D.C. Cir. 
1969), then-Judge Burger stated that The [Hearing] Examiner and the Commission exhibited at 
best a reluctant tolerance of this courts mandate and at worst a profound hostility to the 
participation of the Public Intervenors and their efforts.  The record now before us leaves us with 
a profound concern over the entire handling of this case following the remand to the 
Commission.  The impatience with the Public Intervenors, the hostility toward their efforts to 
satisfy a surprisingly strict standard of proof, plain errors in rulings and findings lead us, albeit 
reluctantly, to the conclusion that it will serve no useful purpose to ask the commission to 
reconsider the examiners actions and its own Decision and Order under a correct allocation of 
the burden of proof.  The administrative conduct reflected is this record is beyond repair.
The Commission, itself, with more specific documentation of the licensees shortcomings than 
it had in 1965 has now found virtues in the licensee which it was unable to perceive in 1965 and 
now finds the grant of a full three-year license to be in the public interest.  We are compelled to 
hold, on the whole record, that the Commissions conclusion is not supported by substantial 
evidence.  For this reason the grant of a license must be vacated forthwith and the Commission is 
directed to invite applications to be filed for the license.  See Office of Communications, United 
Church of Christ v. FCC, 425 F. 2d 543, 549 (D.C. Cir. 1969).
  In Applications of Alabama Educational Television Commission, 50 FCC 2d 461 (FCC 1975), 
the FCC held that Alabama Educational Television stations engaged in discriminatory practices 
because they had few minority performers. The FCC specifically held while it is true that there 
is no evidence that direct orders were ever issued to discriminate on the basis of race, the absence 
of such evidence is hardly dispositive. A policy of discrimination may be inferred from conduct 
and practices which display a pattern of under-representation or exclusion of minorities from a 
broadcast licensee's overall programming.  Radio Station WSNT, Inc., 27 FCC 2d 993 (1971).  
In light of the facts of the record set forth below, we find a compelling inference that [Alabama 
Educational Television] followed a racially discriminatory policy in its overall programming 
practices during the license period. See In Re Applications of Alabama Educational Television 
Commission, 50 FCC 2d 461 (FCC 1975).
  FCC Chairman William E. Kennard, A New FCC for the 21st Century: Draft Strategic Plan. 
(visited Aug. 30 1999). <http://www.fcc.gov/21st_century.>
  See Non-Discrimination in Employment Practices, 18 FCC 2d 240, 16 RR 2d 1561 (1969) 
  See SUSPENSION OF REQUIREMENT FOR FILING OF BROADCAST STATION ANNUAL 
EMPLOYMENT REPORTS AND PROGRAM REPORTS, 13 FCC Red 21998 (1998)
  Supra note 34.
  Lee Broadcasting Corp., 76 FCC2d 462 (1980);  Statement of Policy on Minority Ownership 
of Broadcast Facilities, 68 FCC2d 979 (1978); and Clarification of Distress Sale Policy, 44 RR2d 
479 (1978).

  The most recent NTIA study available is for 1997-1998.  The 1999-2000 report is currently in progress.
  Supra note 14, p. 244.  Numbers are for Blacks only.
  Broadcasting, Coming Through the Front Door of Ownership: A New Direction for Blacks in Broadcasting, October 30, 1972, 
p. 25.  Numbers are for Blacks only.
  Supra note 14, p. 214.  Numbers are for Blacks only.
  Id.  Numbers are for Blacks only.
  Federal Communications Law Journal, Krasnow, Erwin G., Fowlkes, Lisa M., The FCCs Minority Tax Certificate Program:  
Life after Death, May 1999.  51 Fed. Comm. L.J., 671.  Numbers are for minorities taken as a group.
  Ownership numbers for the years 1994 through 1998 are contained in the NTIA Minority Commercial Broadcast Ownership in the 
United States reports for the respective years. Information was collected on ownership in the following four minority groups:  
Blacks, Hispanics, Native Americans, and Asian Americans.  Numbers for television do not necessarily include low power TV.
 See Appendix D for a complete listing of interviewees.


	- 1 -
Table of Contents		  Whose Spectrum Is It Anyway?
		Page ii

Section I.  Executive Summary		Whose Spectrum Is It Anyway?
		Page 4

Section II.  Introduction		Whose Spectrum Is It Anyway?
		Page 8
Section III.  Methodology		Whose Spectrum Is It Anyway?
		Page 10
Section IV.  Findings		Whose Spectrum Is It Anyway?
		Page 125
Section V.  Implications of the Findings		Whose Spectrum Is It Anyway?
		Page 131
Section VI.  Conclusion		Whose Spectrum Is It Anyway?
		Page 134
Appendix A  Statutory, Regulatory and Historical Timeline	Whose Spectrum Is It Anyway?
		Page 135


Appendix B  Interview Guide		Whose Spectrum Is It Anyway?
		Page 157

Appendix C  Demographic Breakdown of Interviewees	Whose Spectrum Is It Anyway?
		Page 159
Appendix D List of Interviewees		Whose Spectrum Is It Anyway?
		Page 167
Appendix E  Ivy Planning Group Profile		Whose Spectrum Is It Anyway?
		Page 170