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          5                     MEDIA DIVERSITY:

          6      MINORITY MEDIA OWNERS CONQUERING NEW FRONTIERS

          7   

          8            NTIA Minority Ownership Roundtable

          9   

         10                  Tuesday, July 18, 2000

         11                         9:00 a.m.

         12   

         13   Ronald Reagan Building and International Trade Center

         14              Polaris Suite, Concourse Level

         15                      Washington, DC

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          1                      P R O C E E D I N G S

          2                  MR. ROHDE:  Good morning everyone.  Welcome

          3   to this roundtable hosted by the National

          4   Telecommunications Information Administration.

          5                  First of all, I wanted to apologize for the

          6   room change.  We had this scheduled in a different room

          7   in the Commerce Department, but the responses and

          8   interest in the roundtable got so overwhelming that we

          9   had to find a different room.  So I apologize for that;

         10   and I think that may account for the fact that we have

         11   people that are still starting to trickle in, and we're

         12   starting a little bit late because of all that.  So I

         13   apologize for all that.

         14                  For those of you who may know, with great

         15   deal of detail, what the National Telecommunications

         16   Information Administration does is that NTIA serves as

         17   the chief policy shop for the administration with respect

         18   to the Information and Telecommunications Policy.

         19                  Underneath that broad umbrella of

         20   responsibility that we have at NTIA, we also play a

         21   critical role within the administration for developing

         22   policy with respect to media ownership.  And in fact, we

         23   have an office called Minorities Telecommunications

         24   Development Program which is a very important office

         25   within NTIA.  One of the primary functions of this office


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          1   is to produce reports on the status of minority

          2   ownership, and that brings us to today's roundtable.

          3                  This roundtable is, indeed, part of that

          4   overall information-gathering process of which we are

          5   engaged at NTIA throughout this year to come out with a

          6   report that we anticipate will be toward the end of the

          7   year, some time late fall or early winter.  This report

          8   in our judgment is critically important.  Unfortunately,

          9   we have not had a report such as this come out in a

         10   couple of years, so it is long overdue, particularly at

         11   this time in which the medial industry is changing so

         12   dramatically, as we all know, particularly since the 1996

         13   Telecommunications Act which dramatically changed a lot

         14   of the ownership rules.  We have seen very significant

         15   changes within the industry, and so we believe it's very,

         16   very important for us to conduct this report.

         17                  And if I could be allowed an

         18   advertisement -- I'll probably repeat at this end -- is

         19   that shortly NTIA will be sending out a survey to

         20   minority broadcasters throughout the country, radio and

         21   television.  And I know many of you who are here in this

         22   room are going to be receiving that survey, and we'd

         23   really like to ask your assistance in filling out that

         24   survey.  The results of that are kept anonymous.  There's

         25   nothing held specifically to the individual or


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          1   responders.  The data is incredibly important to us, and

          2   that will provide a key piece of information as we

          3   prepare this report.

          4                  NTIA, as I said, is responsible for policy

          5   development and a broad range of telecommunication and

          6   information issues, but there probably is no other area

          7   of which NTIA works on that really gets to the heart of

          8   the fundamental constitutional principle in this country,

          9   and that is the ability of people of our society to have

         10   the right and exercise the right to speak and to be

         11   heard.  And that's so critically important.  Particularly

         12   now, as our economy and our society moves into more of an

         13   information-based society, it's critically important that

         14   all segments of our society have an opportunity to speak

         15   and be heard through the electronic means.  Traditionally

         16   we've known that as television and radio.  Now with the

         17   advent of high-speed Internet access, we see the

         18   emergence of new technologies that are changing this

         19   dynamic.  They're creating new opportunities, they may be

         20   creating new challenges, all of which we need to be as

         21   policymakers cognizant of and look toward in developing

         22   policy.

         23                  So we live in a very exciting time right

         24   now, a time in which there's a lot of change, there's a

         25   lot of new opportunity.  There's also a lot of


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          1   challenges.  And the purpose of this discussion and the

          2   two panels we'll have this morning and the workshop we

          3   will have this afternoon is to try to have an airing out

          4   of a number of these issues and to have a frank public

          5   discussion about this.

          6                  Following this roundtable discussion today,

          7   NTIA will continue to receive comments on this subject,

          8   or you can access our website, ntia.doc.gov, where you

          9   find information about this roundtable, as well as an

         10   invitation for further comments.  So for those of you

         11   here who want to collect some of your thoughts and share

         12   them with us in written form, we certainly welcome all

         13   that.

         14                  Now, without any further delay, what I'd

         15   like to do is begin over here to my left and ask each of

         16   the panelists we've invited here this morning to

         17   introduce themselves and speak of your affiliation.  Then

         18   after you've all introduced yourselves, we will then get

         19   into a series of questions and proceed.

         20                  MR. TWIST:  Kade Twist with the Benton

         21   Foundation and the Digital Divide Network.

         22                  MS. TRIGG:  Good morning, S. Jenell Trigg,

         23   Fleischman and Walsh, a law firm here in Washington, D.C.

         24   I'm a member of the Broadcasting Internet E-Commerce

         25   Groups.


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          1                  MR. PEREZ:  I am Ben Perez from Abacus

          2   Communications Company.  We're an FTC, a legal and

          3   engineering consulting firm, and I'm also the principal

          4   of Abacus Television, a low-power TV broadcaster in and

          5   around Pittsburgh, Pennsylvania.

          6                  MR. HAMMOND:  Al Hammond, Santa Clara

          7   University School of Law.  I guess the affiliation is

          8   first director of Minority Telecommunications.

          9   Basically, a century ago (Laughter).

         10                  MR. EDWARDS:  Eddie Edwards, President and

         11   CEO of Glencairn Broadcasting and Chairman of the Black

         12   Broadcasters Alliance.

         13                  MR. CASEY:  Jim Casey.  I'm with Greenberg

         14   Traurig, a law firm here in town.  I represent tribal

         15   telephone and telecommunications companies as well as a

         16   number of tribal broadcasting interests.

         17                  MR. CAMPOS:  Good morning.  My name is Roel

         18   Campos.  I'm with El Dorado Communications.  I'm one of

         19   the principal owners along with my partner, Tom Castro.

         20   We operate a company in Houston, Texas, and we own and

         21   operate three radio stations there and have made

         22   contracts to acquire more.  We broadcast principally to

         23   the Hispanic community in Houston.

         24                  MS. BUSH:  I'm Tony Cook Bush.  I'm with

         25   Broadwave USA and Northpoint Technology, a new technology


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          1   start-up that will be providing multiple channels of

          2   video programming and Internet access.

          3                  MR. BANKS:  I'm Lyle Banks.  I started

          4   Banks Broadcasting to own and operate television stations

          5   recently formed.  And we just acquired a couple of

          6   television stations in the last 12 months.

          7                  MR. ROHDE:  Thank you all very much for

          8   coming here.  I would like to begin by turning to the

          9   professor in the group, Mr. Hammond.

         10                  Maybe you could set the stage for

         11   us a little bit since you claim to go back a century,

         12   which I know is not true.  It's slightly less than that,

         13   I know, but take us back a couple of decades at least,

         14   and kind of set the stage as to what your perspective is

         15   and how the broadcast industry -- how the overall stage

         16   has changed and evolved.  And take us up to the point you

         17   see us at today.

         18                  MR. HAMMOND.  Okay.

         19                  When we started the minority ownership

         20   policies back in the '70s, broadcasting was pretty much

         21   sort of a country club sort of business.  It was an "old

         22   boy" sort of business.  There were a lot of folks who

         23   owned stations, and they saw them basically as cash cows.

         24   They were very profitable at that time.  And that was the

         25   stage in which we started to press to get entry.


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          1                  By the time the '80s hit with the

          2   relaxation of the multiple ownership rules, we started to

          3   notice that prices for acquiring stations went up

          4   substantially, and this was despite the fact that we had

          5   an acquisition fund that was made available, and we had

          6   the tax certificate sale, and a recognition that minority

          7   ownership improved or increased the amount of diversity.

          8                  With those price increases came higher

          9   demands for money to get in, and as people began to buy

         10   in higher multiples, they sort of had to sell the farm as

         11   it were.  And when the recession hit, a lot of

         12   broadcasters, both minority and majority, found

         13   themselves not able to cover their debt.

         14                  That in turn produced a great deal of

         15   pressure from broadcasters to try to minimize the amount

         16   of expenses, and to do that, in part, by acquiring more

         17   stages and/or reducing the amount of competition within

         18   market.  That's when the LMA started, among other things,

         19   and a lot of that's when the pressure to reduce the

         20   duopoly rule started.

         21                  Along with that the entire information

         22   industry was changing, so we had increased competition

         23   from cable and, again, greater pressure for multiple

         24   ownership in order to combat the need to basically

         25   protect your market share.  And more recently competition


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          1   from telecommunications which I don't think people are

          2   really addressing as much yet.  But if telecommunications

          3   is competing with cable in the local market for the

          4   distribution of video programming and oral programming,

          5   generally, and if the Internet is becoming the place over

          6   time for webcasting, the entire structure and the focus

          7   of broadcasting has got to change.

          8                  And along with that you have a change in a

          9   perception of the value of spectrum.  Spectrum is no

         10   longer something to be just separated off, cordoned off

         11   for only one activity.  Spectrum is now something that is

         12   fungible and that's usable for lots of different things.

         13   And if anyone should have been aware of that, it should

         14   have been the broadcasters after Teletext and the use of

         15   BDI for transmission of information for the hearing

         16   impaired.

         17                  A spectrum can be split up, it can be

         18   multiplexed, it can be used in lots of different ways.

         19   The pressure on everybody for the use of that spectrum is

         20   going to increase over time.

         21                  Now, if you look at all those things

         22   together, it changes the way in which broadcasting has to

         23   be operated.  Any broadcaster their self is looking to

         24   acquire more stations, is looking to acquire more

         25   spectrum and is looking to use that spectrum in as many


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          1   ways as possible with as little restriction on the use of

          2   that spectrum as possible; and that's where we find

          3   ourselves today.

          4                  MR. ROHDE:  Okay, thank you.  Very

          5   insightful.

          6                  I'd like to turn to Mr. Perez.  You are

          7   actually focused on a particular minority community, the

          8   Hispanic community which is a very fast-growing segment

          9   of our population.

         10                  What, from your perspective -- given the

         11   outline that Mr. Hammond has just given us about the

         12   current circumstance that is increasing costs, the kind

         13   of external competition which is putting pressures on

         14   ownerships to become larger group ownerships -- what

         15   effect does that have for Hispanic broadcasters, from

         16   your judgment?

         17                  MR. PEREZ:  Well, they both have a niche

         18   market in those markets where there's significant

         19   Hispanic population.  The niche market has a protective

         20   effect for them because they are specialized and more

         21   adept at serving that market.  But on the other hand, in

         22   the many other markets where the Hispanic population

         23   constitutes a small percentage of population, it becomes

         24   extremely difficult for them to play equally because

         25   acquiring stations in those markets when their format


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          1   doesn't fit isn't feasible, and they would either have to

          2   diversify into other formats where there are small

          3   Hispanic populations or be limited to those markets where

          4   the population base is there.  So it's both a blessing

          5   and a handicap.

          6                  MR. ROHDE:  I'd like to turn to Antoinette

          7   Bush.  Tony I think, in my judgment -- you have at least

          8   established in my mind -- I go way back with you when you

          9   were working with Senator Hollings -- to put on your old

         10   hat -- from the days in which you had a broader policy

         11   objective.

         12                  Share some of your thoughts about where you

         13   think we're at today with respect to broadcasting, and

         14   the ability of minority groups to seek ownership of

         15   broadcasting properties.

         16                  MS. BUSH:  Well, I think there's good news

         17   and bad news.  I think obviously we've been through a

         18   tremendous amount of consolidation in the radio industry

         19   and to some extent in the television industry; and I

         20   think that that's had the statistics that NTIA produces,

         21   and demonstrates that that's had a negative impact

         22   overall on the number of minority broadcasters.

         23                  There have been some benefits, and some of

         24   the benefits is not a result of the Telecommunications

         25   Act, but really the Clinton Administration and the


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          1   efforts of the NTIA and the SEC to encourage minority

          2   ownership, which has resulted in the sale of stations to

          3   minority owners in numbers that were significant higher

          4   than before.

          5                  So while overall I think there's been a

          6   decline in the number of minority owners, there has been

          7   some success in the existing minority owners acquiring

          8   stations and in there being some new entrants into the

          9   broadcasting business.

         10                  I think that the challenge is going to be

         11   the ability of minority owners to sustain their ownership

         12   interest as consolidation increases.  I think there will

         13   be continue to be pressure brought by large, non-minority

         14   owners for further relaxation.  I know it's hard to

         15   imagine, but certainly it's constantly there in the

         16   television area, and I think that over time we'll

         17   probably see it in the radio area.  Once everybody gets

         18   done with the current consolidation that's going on, I

         19   think some of these big guys are going to say, well now,

         20   I'd like to have some more and what do I have to do and

         21   seeking further relaxation.

         22                  So I think that's going to be something

         23   that we have to continue to be vigilant on and to be very

         24   concerned about and to work not just with the FCC and the

         25   Department of Commerce on these issues, but I think


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          1   members of the minority broadcasting community have to

          2   continue to be active in Congress and letting members

          3   know how important it is to keep the current restrictions

          4   in place and to continue to promote minority ownership.

          5                  And I think there needs to be an additional

          6   focus by minority broadcasters on what other

          7   opportunities there are.  I think when Al was talking

          8   about the increasing pressures to maximize the use of the

          9   spectrum that minority owners, as do all broadcasters and

         10   I think all spectrum licensees, have to continue to look

         11   at what new opportunities there are to use the existing

         12   spectrum that they have and being creative on a

         13   going-forward basis.

         14                  MR. ROHDE:  Lyle Banks, I know we've had

         15   discussions in the past year.  You're a broadcaster,

         16   you're somebody who's got some big ideas.  In fact, if I

         17   was a venture capitalist, you've sold me enough to want

         18   to give you money, but I don't have any to give you.

         19   You're certainly a man of vision.  You want to go places

         20   and you're interested.

         21                  What are the challenges that you see lying

         22   ahead of you?  You're in the business, you want to expand

         23   your role in the business, and you're also caught in the

         24   center of other minorities who want to get more into the

         25   business.  Just articulate for us the challenges you see


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          1   in front of us.

          2                  MR. BANKS:  A challenge right now is

          3   growth.  Our industry has consolidated so much that it's

          4   very difficult for a company my size to really break

          5   through as quickly as at least I want to break through or

          6   our investors want to break through.  If anyone here is

          7   backed by a venture capitalist, you're working with a

          8   four to six-year time line, and you have to get in and

          9   get out, get the returns within a period of time.  So

         10   it's kind of tough.  It's taken me about a year to a

         11   year-and-a-half to get funding and to get a couple of

         12   stations.

         13                  This is a very different environment that

         14   existed about five or six years ago and the kind of money

         15   that we have backing us, we would have been able to

         16   purchase large groups before.  So growth is an issue in

         17   this consolidated industry.

         18                  The other thing is scale in terms of

         19   economies, programming.  The fixed-cost items are tough

         20   to lever down if you are a small company.  So to the

         21   extent that you can get some scale, you can start to

         22   control those costs a little bit better.

         23                  I guess the third thing is figuring out

         24   what exactly you're going to do with your assets over

         25   time.  Everyone is a little bit confused about the


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          1   prospects of up digital and data casting and use of the

          2   digital spectrum.  There isn't really that many clear

          3   business plans on how to use that.  So that's a little

          4   bit of a challenge right now.  There needs to be some

          5   leadership on the broadcast side other than these big

          6   footprints of spectrum that Iblast and other companies

          7   are employing.  There has to be some local application

          8   for that that can really start to increase the values on

          9   the television side.

         10                  So I'm working on those sorts of visions

         11   and trying to sell those to my investors as well.

         12                  MR. ROHDE:  Let me ask a similar question

         13   to Eddie Edwards.  You've been in the business a few

         14   decades.  You go way back.  You've been at many different

         15   levels from on-air talent to management and a whole range

         16   of things.

         17                  What, in your judgment, are some of the

         18   challenges with respect to access to capital,

         19   programming, the whole range of things?  Can you tell us

         20   your perspective?

         21                  MR. EDWARDS:  I think that the money's out

         22   there today.  It seems as though everybody's got money

         23   that they want to throw your way.  Trying to find the

         24   right property is a big problem.  How can we competitive

         25   when we have these mega companies that literally own


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          1   everything today?  When you find a station, it's going to

          2   be in a very, very small market, and you're not going to,

          3   in my opinion, be able to really turn it around and make

          4   the kinds of profits that a capital venture firm would

          5   want to see or that you personally would want to see.

          6                  So I'm very concerned about the properties

          7   that are available today.  There aren't too many to

          8   choose from.  And once again, when you do find them,

          9   you're going to find them in very, very small markets,

         10   and in some cases undesirable markets.

         11                  MR. ROHDE:  One of the issues that I've

         12   heard a great deal of discussion about is the concern

         13   about advertising revenues for minority broadcasters.

         14                  Jenell, I know you've worked in that area a

         15   little bit.  Maybe you can speak to some of the issues

         16   you see related to advertising revenues.

         17                  MS. TRIGG:  Well, I think Lyle and Eddie

         18   addressed some of the issues that are present for

         19   minority broadcasters.  First of all, minority

         20   broadcasters are usually late entrants into a market, so

         21   if you're looking for television, you're looking at not a

         22   wide choice of network affiliation.  You're looking at

         23   smaller markets, you're looking at sometimes weaker

         24   signals.

         25                  On radio, you now have majority-owned


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          1   groups competing in a minority format, so you're not the

          2   only game in town anymore when it comes to urban format.

          3   And what consolidation has done is really I think

          4   exacerbated some of the already inherent problems that

          5   have existed.

          6                  You've got multiple combination groups now

          7   competing locally, up to eight stations in some market.

          8   And nationally, there are local dollars, spot dollars and

          9   national dollars.  Large groups can leverage not just the

         10   acquisition of programming but also spot dollars.

         11                  It certainly is easier to negotiate with a

         12   media buyer -- and Lyle and I have a media buyer-seller

         13   relationship from way back -- when you've got multiple

         14   stations and you're able to sell and package some of the

         15   weaker stations with some of the stronger stations.  And

         16   again, majority-owned stations in groups can do that.

         17   They indeed go into a media buy looking to acquire a

         18   certain amount of share revenue.

         19                  Now, minority-owned stations, regrettably,

         20   have had other problems for years without consolidation,

         21   and these are in particular radio stations.  The no-urban

         22   dictate from advertisers that you should not buy

         23   minority-formatted stations.  Supposedly, that audience

         24   is less desirable.  Don't spend as much money, don't eat

         25   as much product that they're selling; and yet, that's


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          1   immediately to the contrary.

          2                  Particularly today, when you're looking at

          3   the growth of Hispanic and African American consumerism,

          4   household income is increasing, you're looking at higher

          5   per capita consumption on many core products, but yet

          6   those advertisers are not placing their dollars

          7   proportionately on minority-owned and particularly on

          8   minority-format stations.

          9                  The FCC -- as Greg will tell you -- we had

         10   an opportunity to look at some of these advertising

         11   discriminatory practices through a study that originated,

         12   believe it or not, from a provision of the 1996

         13   Telecommunications Act.  Section 257 requires the FCC to

         14   eliminate, identify small business market entry barriers;

         15   and part of that study was the Civil Rights Forum

         16   issuance of When Being Number One Is Not Enough:  The

         17   Impact of Advertising Practices on Minority-Owned and

         18   Minority-Formatted Broadcast Stations.

         19                  This was a significant study because this

         20   has been going on for years.  Television stations, radio

         21   stations, but for the first time we had a statistical

         22   disparity analysis as well as one very large smoking gun

         23   which was the Katz memo.  If you remember, it was a memo

         24   that was issued internally with Katz media, and the

         25   phrase that we all remember greatly is, "Advertisers want


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          1   prospects, not suspects," and this was in regards to

          2   reaching minority audiences.

          3                  So this is what minority owners have to

          4   deal with, the devaluation of their advertising

          5   programming, devaluation of their advertising consumers,

          6   the viewers and listeners, as well as sometimes lesser

          7   programming.  And consolidation post the 1996 act really

          8   has just enhanced those difficulties.

          9                  MR. ROHDE:  Thank you.

         10                  Mr. Campos, do you have some perspective to

         11   show on this advertising issue?  What Jenell said, is it

         12   a similar experience which you've had?

         13                  MR. CAMPOS:  Yes.  Jenell I think has

         14   summarized it very nicely in terms of the overall

         15   situation with advertising.  In the Hispanic marketplace

         16   when it comes to advertising, you have much of the same

         17   phenomena, and things vary market to market.  There are

         18   inherent prejudices and stereotypes that are out there on

         19   the part of buyers of advertising.  And the Hispanic

         20   community often times, like all minority communities, is

         21   viewed as less economically capable, less desirable as

         22   far as a consumer or as a purchaser of products.

         23                  Indeed, that's not the case at all.  Both

         24   the African American community and the Hispanic community

         25   are the significant growth areas in America.  An


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          1   incredible number of high percentage of all the babies

          2   being born in the next 50 years are going to be Hispanic,

          3   for example, in America.  That happens to be a factor of

          4   demographics, of numbers.  It just is the case; you can't

          5   hide from statistics.

          6                  And the recent census will show a lot of

          7   those figures, and there will be some very surprising

          8   growth that will be demonstrated in many markets,

          9   including our market of Houston which has suffered from

         10   an undercount of the last census that occurred.

         11                  So what has to occur is constant effort,

         12   constant vigilance and constant education on the part of

         13   minority business people because it's a problem that all

         14   of us share, not just the media.  The people who are

         15   spending certain dollars for family products, for baby

         16   products, for cars in our particular market -- and we

         17   make this example all the time -- are, in our view, our

         18   audience, our Hispanic numbers because you have a

         19   huge -- again, demographics don't lie -- skewing to the

         20   younger-age individuals that are buying, that are

         21   purchasing and that are raising families.

         22                  So these are the kinds of statistics that

         23   we need to do to educate.  And ultimately, the economic

         24   incentives and economic drive of business hopefully will

         25   overcome many of these problems.  But they're still


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          1   there, and we have to deal with them on a day-to-day

          2   basis in our particular marketplace.

          3                  MR. ROHDE:  Thank you.

          4                  Let's continue our discussion, maybe focus

          5   more on programming.

          6                  I believe it was last summer that there was

          7   a huge controversy where the NAACP was threatening to

          8   boycott a lot of the network programming because it felt

          9   that it didn't have an adequate portrayal of minorities

         10   within the content of it.

         11                  I know that, Jim Casey, you and I have some

         12   common background and that we're familiar with some

         13   Native American people in the same part of the country.

         14   I grew up around the Sioux Indian people in the Dakotas

         15   and very familiar with them.  I can't recall anything

         16   I've ever seen on television that remotely relates to the

         17   Sioux Indians that I grew up around and know about that

         18   community.  I mean, the Native American community seems

         19   to be almost entirely absent from any kind of

         20   representation, either positive or negative, in

         21   programming.

         22                  I'd be curious about some of your thoughts,

         23   James, as well Kade Twist, some of your thoughts about

         24   some of the Native American issues with respect to

         25   programming.  How do Native American people see this


                                                                       22

          1   medium of television that's so dominant in our culture

          2   and our society as Americans?  But yet, Native Americans

          3   struggle with a lot of assimilation issues in our

          4   society.

          5                  What are your thought about that?

          6                  MR. CASEY:  The programming issue for

          7   Native Americans and Indian tribes is somewhat different.

          8   People get tired of hearing Indians say, "We're

          9   different," so the issue's come across in a different

         10   way.

         11                  When you talk about Native American

         12   programming from the concept of what the Native Americans

         13   are looking for, you very rapidly move into the

         14   non-commercial broadcast realm and not the commercial

         15   broadcast realm.  These groups don't tend to identify

         16   commercial radio and television as responsive in any way

         17   to their needs, their desires and to serving Indian

         18   people.

         19                  In the non-Indian areas you haven't got the

         20   demographics to support a commercial station.  With the

         21   consolidation of the media and everything you're hearing

         22   people talk about right now, the Indian demographic in

         23   non-reservation areas simply does not support an Indian

         24   format -- a tribal format -- it just doesn't work.

         25                  In some urban areas, you have programming


                                                                       23

          1   available through groups like the Native American Public

          2   Telecommunications, American Indian Radio and Satellite.

          3   They produce shows like Native America Calling and Native

          4   Voices that get shipped out over non-commercial stations

          5   into some of the urban markets, an hour here, an hour

          6   there, 3:00 in the morning, whatever.  So it's not a

          7   major portion.

          8                  On the reservations, the focus is on

          9   cultural redevelopment, language preservation and

         10   restoration-- very focused community needs.  And again,

         11   that does not support the commercial model.  So as a

         12   result, what you see is there's a fair amount of "Indian

         13   programming."  You only see it on the reservations for

         14   the most part.

         15                  And you don't see commercial stations.

         16   There are three that I'm aware of.  Well, there are two

         17   that are in existence.

         18                  MR. ROHDE:  Radio?

         19                  MR. CASEY:  Radio stations.  There is one

         20   that I'm aware of, non-commercial, low-power television

         21   station on the Squanamish-Kootenai reservation right in

         22   conjunction with a college up there.  Television

         23   broadcast has just not been a medium that the tribes have

         24   been able to get into because of expertise and lack of

         25   capital.  Tribes have a serious problem with capital


                                                                       24

          1   because they can't pledge assets, meaning their assets

          2   just simply can't be pledged.  They can't pledge land,

          3   for example, so capital becomes a real problem.

          4                  But there are about 33 non-commercial

          5   tribal radio stations serving the needs of the immediate

          6   tribal groups, and they have their own set of problems

          7   with getting applications for the FCC.  Many of them

          8   don't think that they need an application from the FCC,

          9   but that's a whole other issue.  (Laughter)

         10                  MR. ROHDE:  We won't go there.

         11                  MR. CASEY:  We won't keep talking about

         12   that.

         13                  So the problem is very different, and it's

         14   been pushed mainly to the non-commercial realm.

         15                  The commercial realm is starting to move.

         16   I know of one application right now before the FCC for a

         17   commercial FM radio station in Minnesota.  There's talk

         18   of one in Florida.  So they're starting to move, but many

         19   tribal people on content are looking now to leapfrogging

         20   to the new technologies.  Why start where everybody else

         21   started and fight your way through?   Let's start with

         22   the webcasting and combine that with the broadcast.  So

         23   that if I am broadcasting from Window Rock, but I need

         24   advertising to support that, I'll do my advertising over

         25   the Internet and use that advertising to support the


                                                                       25

          1   broadcast because I'm not going to sell ad space out in

          2   the middle of the desert; it's not going to happen.  So

          3   it's a very interesting new development.

          4                  MR. ROHDE:  Kade, I'm interested in your

          5   thoughts about this.

          6                  MR. TWIST:  Well, there's two things that

          7   really affects the consolidation media.  One is the lack

          8   of Indian content, which is obvious, and two is the lack

          9   of stability in Indian country.  Media is a great form of

         10   stabilizing, community-building, consensus, building

         11   constituencies, developing ideas, closing ideas.  You can

         12   popularize things.

         13                  A lot of tribes, if you poll 558 tribal

         14   nations, 557 of them are trying to reformulate their

         15   constitutions.  And without having a public discourse

         16   that's community-centered around those very, very

         17   important issues -- self-determination issues -- where do

         18   you go, what do you do?  It's slowed down; the process is

         19   incredibly inefficient.  And maybe the Internet and the

         20   local area networks will help facilitate that, but it's a

         21   very severe problem.

         22                  But the consolidation of media definitely

         23   removes community from media.  One thing in particular is

         24   the idea of identity in cultural and social wills of the

         25   community-- of Indian country.  It gets removed from that


                                                                       26

          1   context as well.  And one of the problems with that is

          2   that the quality and the existence of identity becomes

          3   something that is commodified; it's a consumer rather

          4   than a producer.

          5                  And unfortunately, the way new mediums are

          6   developing, and specifically the Internet -- the way web

          7   pages are formulated -- they're totally consumerist in

          8   nature.  All of the information has to be up front, it

          9   has to be positioned in a way to where it can give

         10   consumer gratification rather than inspire consumer to

         11   transform himself or herself into a producer.

         12                  What we have then as a end result is

         13   throughout Indian country we have this image that has

         14   been largely produced.  Indians have become signs.  We're

         15   like strip malls, virtual and non-virtual.  We're all

         16   over the place, and it's nothing that we've created

         17   ourselves.  This helps us remove ourselves from our

         18   histories and a way to contextualize present experience

         19   with past experience, and a lot of Iron Eyes Codys are

         20   dangling around in our subconscious because a lot of

         21   times that's what non-Indian people really want to see.

         22   They want to see product justification from sort of stoic

         23   construct.  And that is what has happened, that is what

         24   is continuing to happen.  I don't see an end to that any

         25   time soon.  And I don't see a new medium of the Internet


                                                                       27

          1   doing anything to change that.  I see consumers and

          2   consumers and consumerism all over the foreheads of

          3   Indian country.

          4                  MR. ROHDE:  You know for years we've

          5   assumed that diversity is connected with ownership.  In

          6   other words, if you want to address and audience or a

          7   segment of our population, that the ownership matters,

          8   and that ownership is going to determine what the

          9   programming and the make-up of the information that's

         10   going to be communicated.

         11                  I wanted to read a couple of statistics.  I

         12   know that some of these are dated because they're based

         13   upon 1998 data that NTIA did in its Ownership report.

         14                  The African American population in this

         15   country is around 12 percent which is recent census data.

         16   But in 1998, we found that black ownership -- this is

         17   radio and television combined -- accounted for

         18   1.7 percent of that.

         19                  Hispanics constitute about 11 percent of

         20   the population, but with respect to media ownership,

         21   1.2 percent, radio and television combined.

         22                  Asian Americans, 3.8 percent of the

         23   population, but .04 percent of broadcast ownership.

         24                  And Native Americans which are .09 percent

         25   of the population were down at .02 percent, probably even


                                                                       28

          1   have dropped further in the last couple of years.

          2                  The question is, there's such a dramatic

          3   difference between the breakdown of these certain

          4   societal groups and the access they have to owning media

          5   properties to communicate within our society.

          6                  I'd like to maybe turn to you, Mr. Edwards.

          7   Does ownership matter?  If we want to make sure that all

          8   segments of our society have a chance to have their

          9   voices heard, they feel represented in what they see on

         10   television, they're connected to it, in the programming

         11   you're going to address these certain audiences, does it

         12   need to be owned by, in proportion, these segments of the

         13   population or can the same people who own all the

         14   stations speak to all these different people of society.

         15                  MR. EDWARDS:  Absolutely.  Minority

         16   ownership is a must, and I don't think that you can

         17   equate their programming to our

         18   community -- satisfactorily anyway, to our liking because

         19   ownership is far more than just programming.  Let me say

         20   that clearly.  It's a voice in the community.  It's

         21   power, the power to make decisions, the power to do

         22   business with people in your community which we don't see

         23   enough of in these times.  So there is no doubt that we

         24   need to continue to fight to survive among the ownership

         25   ranks and program to the communities that we serve as


                                                                       29

          1   well.

          2                  Let me say this-- the producers.  Tim Reed

          3   just build a major studio in Petersburg, Virginia that I

          4   had a chance to visit, and we had what I considered to be

          5   a very deep conversation because we talked about that.

          6                  Of course, you have the WB network, you

          7   have UPN, you have Fox, and they've all done a fairly

          8   good job I think with programming to our community; but

          9   when we talk about depth, there's not enough depth.  When

         10   we talk about documentaries and we talk about educational

         11   programming, doing specials on black business people, we

         12   just don't see enough of that today.  And I personally

         13   feel, as he does and many others in our industry, that if

         14   we had more owner operators, that picture would

         15   drastically change.

         16                  So there's no doubt that there is a

         17   difference.  We have to be represented at the table as

         18   far as ownership is concerned; no doubt about it.

         19                  MR. ROHDE:  Well, this is a real challenge

         20   because, as Mr. Banks has pointed out and others, we're

         21   dealing with a fixed market here.  There's only so many

         22   licenses that one can access, and the ownership is

         23   growing consolidated.

         24                  Mr. Perez, I think you operate some

         25   low-power stations.  Can you speak to a little bit about


                                                                       30

          1   how some of the low-power television stations have helped

          2   minority ownership and where you see that headed?

          3                  MR. PEREZ:  Yes, but let me lead into it

          4   with one comment.

          5                  One of the things we can't forget is that

          6   the federal government is very tightly, constitutionally

          7   constrained from getting involved in programming and

          8   programming format.  So both NTIA and the FCC were driven

          9   to focus their efforts on ownership and employment

         10   because those were areas where at least we had -- we,

         11   when I was back in government -- some constitutional

         12   latitude to do pro-minority things.

         13                  Now that latitude has been recently

         14   constrained greatly by court cases, but there still is

         15   more room to maneuver in the EEO or employment area and

         16   the ownership area than there is in programming.  The

         17   courts instantly slap the FCC when it gets anywhere near

         18   programming, and the FCC as a philosophical matter

         19   accepts that.

         20                  So unless somebody comes up with a better

         21   handle, I think ownership and employment are the only

         22   ways that the government can assist in solving the lack

         23   of programming dilemma.

         24                  One of the areas that there's been some

         25   sort of just accidental significant progress is in the


                                                                       31

          1   low-power TV area.  Low-power TV was a small secondary

          2   service made up of television stations that only have a

          3   10 to 15-mile service radius, which is about comparable

          4   to a Class A FM service radius.  It was created in 1982

          5   somewhat as a second thought by the FCC, but unexpectedly

          6   they got literally tens of thousands of applications from

          7   all over the country, including many applications by

          8   minorities in the big cities trying to get into

          9   television, who found that both the economics and the

         10   spectrum of full-power television was just out of bounds,

         11   impossible to tackle.

         12                  Unfortunately, because it was a secondary

         13   service, it was very difficult to get funding, very

         14   difficult to get advertising and very difficult to grow.

         15   The service continued to grow until there was about 2,400

         16   low-power TV stations in the country, roughly twice as

         17   many low powers as there are full-power television

         18   stations.

         19                  Recently, the low-power industry pushed

         20   through Congress legislation to convert low-power from

         21   the secondary status to primary status.  And that

         22   legislation is in the process of being implemented by the

         23   FCC; and about a thousand low-power stations have filed

         24   for authority to become primary Class A television

         25   stations, the Class A nomenclature being copied from the


                                                                       32

          1   FM service.

          2                  So now you have about 1,200 full-power

          3   large stations, and you have about 1,000 of these new

          4   Class A stations.  They're in the process of being

          5   licensed, and the process will be completed in about five

          6   more months.

          7                  What's unique about the low-power service

          8   and what's relative about it for minority ownership

          9   purposes is that in the low-power service about

         10   10 percent of the licensees are minority.  So when the

         11   Class A licenses are issued, suddenly the number of

         12   "television stations controlled and owned by minorities"

         13   would jump by a factor of about 10, just by one swoop,

         14   not because anybody was trying to do anything for

         15   minority ownership, but because the low-power TV industry

         16   fought and got legislation to give it primary status.

         17                  The thing that's ahead of us is that the

         18   television industry, because of duopoly and the pressure

         19   on the FCC to raise the television ownership limits is

         20   going to go through very rapid consolidation much as the

         21   radio industry did.

         22                  FCC Chairman Kennard in a recent speech

         23   said that the FCC has calculated a drop of about 1,000

         24   radio station owners since the implementation of the 1996

         25   Telecommunications Act.  Those were radio station owners


                                                                       33

          1   that dropped out of the mix because of consolidation.

          2                  I think everyone in low-power TV and

          3   full-power TV is expecting the same thing to happen in

          4   television as soon as the ownership limit's lifted, or at

          5   least raised, which I think the FCC has signaled the

          6   willingness to do.

          7                  I think one of the things that this group

          8   can look at is to focus on groups like the full-power and

          9   the minority-owned low-power stations and say, well, what

         10   can we do to preserve those minority owners so that

         11   duopoly television and television ownership relaxation

         12   doesn't result in them disappearing over the next five

         13   years much as a lot of radio station owners have

         14   disappeared?

         15                  We've just enjoyed a ten-fold increase in

         16   ownership, but that could just be erased in the next five

         17   years because people are going to come to people like me

         18   and offer ten times what was ever available for my

         19   stations, and for a small businessman that's very hard to

         20   say no.

         21                  MR. EDWARDS:  Greg, can I go back to the

         22   programming question that you raised too?

         23                  MR. ROHDE:  Sure.

         24                  MR. EDWARDS:  I was sitting here thinking,

         25   and I said to myself, I could probably accept


                                                                       34

          1   non-minorities programming to minorities -- meaning the

          2   networks -- providing that we were represented in that

          3   decision process.  But in most cases today we're not

          4   represented in that process which is why ownership is so

          5   important.

          6                  If you go behind the walls of any of these

          7   networks, I can't think at any of the networks of one

          8   person that's involved in the decision to pick up a

          9   program.  So if we were at that table, just like this

         10   roundtable, discussing what it is that the African

         11   Americans out there watching whatever network want to

         12   see, then I could accept that.

         13                  MR. ROHDE:  Mr. Hammond, you had a comment.

         14                  MR. HAMMOND:  Let me just say, minority

         15   ownership does matter.  The court decision basically took

         16   issue with the fact that there was no statistical

         17   substantive support for the notion that diversity of

         18   ownership translated into diversity of programming.  But

         19   I think shortly we will have statistical evidence that

         20   establishes that, and I think that will change,

         21   especially with regard to radio; that there's statistical

         22   evidence that supports the conclusion that minority

         23   ownership does make a difference.  It also makes a

         24   difference in employment.

         25                  So I think that's about to change.  But


                                                                       35

          1   what also has to happen is it can't be a one-time only

          2   study that's done to justify, or to confirm, the value of

          3   minority ownership.  That study has to be ongoing, and as

          4   a responsibility of every broadcaster -- especially those

          5   who are given an opportunity to participate because they

          6   are suppose to be providing diverse programming to

          7   otherwise not-served communities -- to establish that

          8   they are doing that and to continue to do that.

          9                  MR. ROHDE:  Thank you.

         10                  James, you had a comment.

         11                  MR. CASEY:  Yes.  I just wanted to make a

         12   point, a follow-up to what Mr. Edwards said.

         13                  The idea of ownership, while it may not

         14   need to be controlled, there needs to be participation.

         15   And the difficulty for -- I can make an example of what

         16   the non-Indians providing programming to Indians will

         17   give you as an example of why ownership is so important.

         18                  If you have a bunch of people with no

         19   Indian knowledge, no Indian background, no Native

         20   American heritage, whatever, and you put them in a room

         21   and say, let's come up with some Indian programming, what

         22   are they going to come up with?

         23                  Well, let's run a special on Indian gaming,

         24   maybe we'll send some cameras out to a few pow-wows, and

         25   we'll run Dances with Wolves.  (Laughter)  That's your


                                                                       36

          1   Indian programming.  And so, without the Indian

          2   participation in the process, you're not going to get

          3   programming that speaks to anybody but Hollywood.

          4                  And for Indians that's been a particular

          5   problem.  Mr. Twist mentioned Iron Eyes Cody.  There's

          6   been controversy over as to whether he was even Indian.

          7   I think he was actually Italian.  (Laughter).  So it's a

          8   problem, and so the ownership becomes a critical piece to

          9   get the participation, whether that's a

         10   minority-ownership position for minorities, whether

         11   that's controlled -- maybe the definition needs to be

         12   looked at -- but the participation is critical.

         13                  MR. ROHDE:  Mr. Campos, you had a comment.

         14                  MR. CAMPOS:  I want to make the point that

         15   both Mr. Edwards and Mr. Hammond made, but also put it

         16   from a different perspective.

         17                  I think we all have to remember that the

         18   airwaves are controlled by government.  It's "the"

         19   government that has established licenses.  It's the

         20   "government" that, in the '20s and '30s when the first

         21   licenses were given out, that created the "old boy"

         22   network or the existing or the vestiges and the progeny

         23   of the ownership that exists today.

         24                  So when we talk about minority ownership,

         25   we can't allow ourselves -- this is my view -- and put


                                                                       37

          1   ourselves in the dangerous niche of having to justify it

          2   solely with programming; and solely saying that, if you

          3   have minority owners, then you will have a certain "type

          4   of programming."

          5                  I think that does happen, but the real key

          6   here I think is that because it is a government-created

          7   right, then all people, especially minority people,

          8   deserve the ability to be an owner and to own those

          9   rights that the government created.

         10                  The danger here in getting involved and

         11   justifying our ownership by programming is a huge danger.

         12   We can't fall into that trap, if you will, in my view.

         13   And so, what we have to do is basically say -- to pick up

         14   what Mr. Edwards said in the beginning -- that owning

         15   media is very important in our society.  Why is it

         16   important?  Because it's a high-level, high-profile kind

         17   of business.

         18                  If you own media as a minority person, you

         19   have disproportionate impact on your community.  You have

         20   other members of the community being involved in

         21   business, creating not only employment, but creating

         22   entrepreneurs out there, creating other opportunities for

         23   sales, other opportunities for business.

         24                  The benefits are so huge that we can't

         25   forget that.  In my community by being a minority owner,


                                                                       38

          1   we bring access to business people in our community that

          2   would never have access to media, that would never

          3   understand that they need to get business plans.  We

          4   provide a consulting role, if you will, or a push and a

          5   development.

          6                  So it's our right.  It's a

          7   government-created situation; therefore, we don't have to

          8   justify it by what exactly is on the air.  We deserve to

          9   be owners in the proportion that we are in the community.

         10                  MR. ROHDE:  Jenell, you had a comment.

         11                  MS. TRIGG:  Certainly.  I'd like to expound

         12   on that a little bit.  I think Mr. Campos and Mr. Edwards

         13   touched on some of the other benefits of minority

         14   ownership.

         15                  Having worked in broadcasting for 15 years,

         16   there are so many other advantages for minority

         17   ownership, and I think it's critical that we remember

         18   that all broadcasters are required as a matter of law to

         19   serve their communities, serve the public interest,

         20   convenience and necessity.  And it is, indeed, more than

         21   programming.

         22                  Let's look at what else happens at the

         23   operations of a broadcast station.

         24                  First of all, there are community

         25   involvement and the decisions of what organizations to


                                                                       39

          1   support, what not to support and what degree to support

          2   are made at the ownership level.  And that includes

          3   whether you're running public service announcements for

          4   what issues are important to the minority community,

          5   everything from the news broadcast.

          6                  Look at competing news broadcast.  News is

          7   some of the most profitable program areas on television

          8   and radio, but yet what stories lead first to what

          9   degree, whether you send a news truck with a full camera

         10   crew and an anchor to the tenth riot of the week or

         11   whether you're focusing on an awards ceremony for

         12   disadvantaged kids.  Those are the nuances in decisions,

         13   in programming, how stories are portrayed, how people are

         14   portrayed, how the community is supported that are made

         15   at the ownership level.  So, yes, every station's got

         16   news, but a minority owner has control over the direction

         17   of that news.

         18                  Again, having worked and been at the table

         19   when we're deciding on a PSA budget, who gets the prime

         20   time PSAs as opposed to the 3:00 a.m. spots?  Who gets

         21   the primo news anchor at their dinner event or they get

         22   the sales account executive who got recruited the last

         23   minute?  Those are the decisions that are made at the

         24   ownership and employment level that get a station

         25   involved in its community and involved in the people it


                                                                       40

          1   serves.  And that's way beyond programming, and those are

          2   the inherent nuances that are critical to maintain

          3   minority ownership.

          4                  MR. TWIST:  There's one thing that all of

          5   us minorities understand in America, and that is the

          6   client-patron relationship.  We either tell our stories

          7   or we listen to our stories.  And ownership allows us to

          8   tell our stories.  The lack of ownership allows us to

          9   listen to our stories.

         10                  When we listen to our stories from an

         11   Indian perspective, we are bombarded with rich gaming

         12   tribes-- the battle of the Piquots without reservation,

         13   alcoholism, wandering, homeless Indian people in inner

         14   cities.  We're not seeing the reality of our lives.

         15   We're not seeing the reality of our culture or families

         16   or clans or identity; it's something that is being

         17   shaped, formulated and articulated by our patrons.  And

         18   if history has proven anything over the last 500 years,

         19   it's that the client-patron relationship is self-serving,

         20   and it has not gone anywhere to promote a better

         21   understanding or a better sense of self-determination for

         22   the so-called client.

         23                  MR. ROHDE:  Before we close out this panel,

         24   I wanted to get to a couple questions.  And since you're

         25   volunteering to speak, Lyle, you can speak, but I'd like


                                                                       41

          1   you to answer a question too.

          2                  And my question is, last summer, the FCC

          3   relaxed the duopoly rules, and I'm curious what your

          4   thoughts are as to what impact that has had on the

          5   ability of minority owners, such as yourself, to try to

          6   acquire more properties?

          7                  MR. BANKS:  It's had just a huge, negative

          8   impact on me, and I think it will have the same sort of

          9   impact for other people coming with me or behind me.

         10   It's just close another door of opportunity.  It's very

         11   tough right now to even get into the top 75 or maybe even

         12   85 DMA-ranked markets.  Because of the consolidation and

         13   duopolies this is very difficult.  And I think as Jenell

         14   pointed out before, you have a lot of consolidators that

         15   are now fishing in DMA-ranked waters that I would

         16   normally fish in now, so it just makes it much more

         17   difficult.

         18                  And plus it also impacts the ability to buy

         19   programming and other services.  So to the extent that

         20   you could find a way to keep your programming costs down

         21   in light of that, it was very tough to do that.

         22                  One of the things I wanted to just touch on

         23   as far as following up on some of the nice things that

         24   Jenell said is, having been a general manager for many

         25   years in different stations and an owner now, this issue


                                                                       42

          1   about programming or minority-targeted programming can be

          2   important from minority or diverse owners, but I think

          3   the important thing is the fact that our existence makes

          4   our services and our programming more representative of

          5   the communities in which we serve, and that's the

          6   important thing to me.

          7                  The other thing is, as an owner, and trying

          8   to either get funding or looking at the landscape, the

          9   numbers of minority owners and women owners is so small,

         10   and I think a lot of that has to do with the fact that

         11   there isn't a huge pipeline of people that are coming

         12   through the broadcasting system to be able to take on

         13   ownership.  And so, we need to do a better job in

         14   improving employment opportunities for women

         15   minorities-- managers and entrepreneurs coming through.

         16   And I think that's one of the responsibilities that we

         17   each have as owners and as managers to open up the

         18   pipeline.

         19                  When I graduated from school, I had no idea

         20   that opportunities existed on the television side.  I got

         21   on the TV side just by happenstance.  You don't have role

         22   models and access to people who are decision-makers or

         23   who have an interesting and influential jobs on the

         24   television side unless you're actually there.

         25                  MS. TRIGG:  Everybody wants to be an


                                                                       43

          1   anchor --

          2                  MR. BANKS:  Exactly.

          3                  MS. TRIGG:  -- or a TV cameraman.

          4                  MR. BANKS:  But they don't know that the

          5   programming director or the community affairs director or

          6   the news director-- that there are jobs that yield an

          7   enormous amount of influence at a television station, and

          8   there are ways in which you can get into those jobs.  And

          9   I feel it's my responsibility -- and I have done so in

         10   the last 15 years -- to stay as accessible as possible

         11   and open to people and giving people those opportunities.

         12                  MR. EDWARDS:  But Greg, the question too

         13   is -- if I may -- and I had this discussion with a couple

         14   of broadcasters the other day -- is there really equal

         15   opportunity behind some of the job opportunities within

         16   the broadcasting industry?  And as much as it hurts, I

         17   would have to say no.

         18                  I applaud the NAACP and Kwasi Mfume for

         19   what he has started and continues to do, looking behind

         20   the doors of the networks and local stations at the

         21   makeup of their staffs.  There are a lot of young people

         22   today coming out of school with degrees in mass

         23   communication and journalism who can't even get entry

         24   jobs who are minorities.  It's not fair, and it's been

         25   long overdue for an organization such as the NAACP to


                                                                       44

          1   seriously, seriously look into.

          2                  I applaud you for hosting this roundtable

          3   because we have a serious problem in this industry, not

          4   just with ownership opportunities; we have a serious

          5   problem in this industry with employment, period.  So if

          6   we can conquer employment, we can conquer ownership.  But

          7   we need a start; we need job opportunities.

          8                  MR. BANKS:  Of 1,200 television stations,

          9   how many African American general managers are there?

         10   About six?

         11                  MS. TRIGG:  On a good day.

         12                  (Laughter).

         13                  MR. ROHDE:  Let me ask this question.

         14                  Last night, I spoke to Commissioner Susan

         15   Neff.  She called because she really wanted to be here,

         16   but could not because of a conflict.  And she asked me a

         17   question which I didn't know an answer to.

         18                  And that was, what about female ownership?

         19   Does anybody know the status of female ownership?

         20                  Toni?

         21                  MS. BUSH:  The last report was done in 1987

         22   when the Census Bureau broke down those standard

         23   industrial classification codes into the four level.  In

         24   fact, some of the statistical data that we collected as

         25   part of the market entry barriers report back in 1996


                                                                       45

          1   were already nine years old for women ownership, and

          2   there has been no study.

          3                  AWRT looked to the FCC to get statistics,

          4   and yet the commission has never collected that data

          5   before.  So we're working with 13-year-old numbers on

          6   statistical and way before the 1996 act; so no, we really

          7   don't have an idea where it is for women-- radio,

          8   television or any communications group.

          9                  MR. ROHDE:  This may be a speculative

         10   question, but perhaps maybe you can speak to it or anyone

         11   else here.  Maybe Lyle, since you've been involved in

         12   management before.

         13                  Assuming we'd like to expand more

         14   opportunities for female ownership and broadcasting, do

         15   they face the similar challenges that minorities face or

         16   are there unique things about female ownership or what do

         17   you suspect is the issue?

         18                  MS. TRIGG:  Having been in management and

         19   looked at some ownership properties and trying to

         20   transition, it still very much an old boys network, "old

         21   white boys" network.  So in that context, there are some

         22   inherent difficulties on both sides, and sometimes it's

         23   tough to tell which obstacle you're dealing with.  You

         24   don't know whether you're being hampered, particularly in

         25   access to the capital side, whether you're a minority or


                                                                       46

          1   whether you're a female; or whether you're asked to get

          2   your husband to sign your papers or whether you need to

          3   bring more collateral to the table because they don't see

          4   you making money.

          5                  So there are times when it's both.  There

          6   are some advantages, however, having both disadvantages,

          7   but those are far and few between.

          8                  MR. ROHDE:  Toni.

          9                  MS. BUSH:  And I'm going to approach this,

         10   Greg, from a slightly different perspective, because

         11   we've been talking about the radio industry and the

         12   television industry.  But I think the problem is larger

         13   than that, and we've got the same problems in the cable

         14   industry.  There is no minority ownership that I'm aware

         15   of in the satellite radio industry, the DBS industry.

         16                  And the concern that I see, while we talk

         17   about radio and television stations -- and I think there

         18   are some opportunities that minority owners need to

         19   explore as to what they can do as the conversion to

         20   digital happens.  But my big concern is that as the new

         21   technologies come along, we're seeing zero ownership by

         22   minorities and/or women.  And I think that in large part

         23   it goes back to the point that Roel made, which is this

         24   is the government's spectrum, and the government has to

         25   decide how it's going to license the spectrum and what it


                                                                       47

          1   is going to do to promote ownership by a diverse group of

          2   Americans in its licensing process.

          3                  I, of course, can't resist the opportunity

          4   to point out that our company currently has license

          5   applications pending at the FCC.  Broadwave USA is made

          6   up of affiliates all over the country.  We have 69

          7   affiliates; 65 percent of our affiliates are minorities,

          8   30 percent are African American, 30 percent are female.

          9   Amongst the females, we have African Americans and

         10   Hispanics.  We have 12 percent Hispanic ownership, we

         11   have Native American and Asian American ownership.

         12                  And so, assuming that we are going to be

         13   successful, we will be the first company to have a

         14   significant number of minority and female entrants into

         15   the broadcasting industry in decades, maybe forever.

         16                  MR. PEREZ:  When you think of the

         17   stereotype for an Internet geek, it's always male.  You

         18   never see a female Internet geek.  And I think the

         19   stereotype probably has a lot to do with the level of

         20   participation in the new media and the new industry.

         21                  And it's particularly problematic that the

         22   Internet media is almost totally male dominated and

         23   predominantly white dominated because when you think of

         24   broadcasting, particularly television, being the other

         25   alternative media to reach people and to influence


                                                                       48

          1   people -- the FCC in 1996 four years ago announced the

          2   end of all new analog television licenses being

          3   accepted -- television is done growing as an analog media

          4   forever.  There will be no more licenses to steer to

          5   minorities, so the only game will be buying what's there.

          6                  And I yesterday, in preparation for today,

          7   spoke to some of my friends back at the commission, and

          8   they're projecting, at the earliest, five years before

          9   they're really ready to start accepting digital licenses.

         10                  So there have been no new television filing

         11   opportunities for five years past, and there will be no

         12   more for another five years.  So that's 10 years at least

         13   before there's any new minority applicants.

         14                  MR. ROHDE:  We're going to close this panel

         15   off in a couple of minutes, but I'd like to close by

         16   asking a question.  I'm just curious if anybody on the

         17   panel has a response to it, and that is kind of looking

         18   ahead a little bit.

         19                  We all know the Federal Communications

         20   Commission is considering some further liberalizations

         21   coming up soon with respect to the national ownership cap

         22   and maybe some other rules-- cross-ownership rules and

         23   all of that.

         24                  I'm curious as to what the members of the

         25   panel think.  Since the FCC's not here, it's clear for us


                                                                       49

          1   to talk about them, right?

          2                  What advice do you have for the commission

          3   as they consider these changes?  Should the FCC move

          4   forward with some more liberalization, should they hold

          5   the line, should they make some changes in another

          6   direction?  What advice do you guys have?

          7                  MS. TRIGG:  When the Adarand case was

          8   decided in 1995, then Chairman Hunt pledged to do what

          9   was called an Adarand study to look at the disparity

         10   between minority ownership and majority ownership

         11   licensing -- that whole process -- in fact, across the

         12   board.

         13                  The commission has never conducted a

         14   full-blown Adarand study.  To their credit, they have

         15   conducted some smaller studies -- and one I know that

         16   Professor Hammond is working on -- in the discriminatory

         17   advertising.  But there is a need to stop and assess I

         18   think, first, the impact of the 1996 act on minority

         19   ownership before they take that additional step.  And

         20   there are a couple statutory provisions that I would

         21   encourage them to read again or to take a look at that

         22   give them the authority to do that.

         23                  And as a matter of law, they are to look at

         24   promotion of minority and small businesses.  And because

         25   minorities fall in that small business context, they need


                                                                       50

          1   to take a look at the industry first and the impact

          2   first-- do that Adarand study before they further open

          3   the gates for consolidation.

          4                  MR. HAMMOND:  I think it goes a little

          5   further than that.  You can't just look at broadcasting

          6   as an isolated industry anymore.  It's the information

          7   industry.  It's got equipment, it's got program

          8   distribution, it's got content, it's got

          9   telecommunications distribution, it's got software.

         10                  We need to know where minority ownership is

         11   across the board.  If we're going to make sure that

         12   minorities actually participate in the 21st century and

         13   the information industry, broadly defined, then we have

         14   to look at all of these segments.

         15                  MR. EDWARDS:  And I might add that when it

         16   is discussed, that everybody be invited.  And I've got to

         17   go back to I salute you for having this.  They've got to

         18   invite everybody to the table to se what that impact will

         19   be, that I don't think has happened.

         20                  We need to do a better job.  We're in the

         21   communications business, and sometimes we're the worst at

         22   it.  But we need to do a better job of communicating

         23   what's happening and the impact that it might have on any

         24   segment of our population.

         25                  MR. BANKS:  When the test went away that


                                                                       51

          1   made an immediate negative impact on minority ownership,

          2   and combined with the increased consolidation has just

          3   been heinous.  So I think if there's some discussions

          4   that are more substantive about creating incentives to

          5   increase access to deals, to lower the cost of capital

          6   and financing for women and minorities, and to maybe

          7   improve the valuations or incentives for sellers to sell

          8   to minorities, women, that would be what I'm for.

          9                  MR. CAMPOS:  There's absolutely no doubt

         10   that consolidation has been the worst thing that ever

         11   happened to minority ownership and small business

         12   ownership; let's just be brutally blunt about it.

         13                  Any further liberalization will just create

         14   and exacerbate the issue.  In radio, which is the

         15   industry that I'm familiar with, there will, in short

         16   order, be a company that owns almost a thousand radio

         17   stations across America.  And as was said earlier, no

         18   longer are the large companies only interested in small

         19   markets; there are "business plans" to have clusters in

         20   small markets and wheel and hub, and all these kinds of

         21   situations to basically control huge numbers of radio

         22   stations, in particular, across America.

         23                  I have seen a phenomena recently in which

         24   in a divestiture situation, the company that's divesting

         25   is concerned about where they're placing particular


                                                                       52

          1   signals, what signals are going to be left potentially

          2   that could come back and be owned by somebody else to

          3   compete against them later.  So now they have an interest

          4   in what is out there that may come back, and they want to

          5   keep sort of a potential control on that situation.

          6                  There is a tremendous chilling in terms of

          7   having properties available for anyone else, especially

          8   minorities, and this is going all the way through all

          9   levels of markets; that's just the way it is.  So at a

         10   minimum, there can't be any more liberalization.  In

         11   fact, what we need is a re-study of what has happened.

         12   Is this good for America?  Is this really what we want?

         13                  Do we want three or four or five companies

         14   all across America to basically own all the radio

         15   stations that broadcast and program to about 80 percent

         16   of the population?  Is that what we want?  I mean, that's

         17   what we got.

         18                  And this isn't the marketplace winning out.

         19   You can't tell me that, oh, it's because minorities can't

         20   compete.  These were government policies, these were

         21   licenses that were issued, this is a government-created

         22   situation.  So therefore, we are entitled to a equitable

         23   playing field.  The fact that new media and so forth is

         24   not being attended to is also a big problem.  So we have

         25   that issue.


                                                                       53

          1                  Government has to get involved and has to

          2   create diversity and ownership because ownership is the

          3   most important factor.  Employment's important;

          4   everything follows after that.

          5                  Secondly, government has to find a way to

          6   get a new model for private capital.  Lyle explained very

          7   clearly what the typical minority entrepreneur problem

          8   situation is.  You've got venture capitalists who want

          9   returns in three years, and they've got to have a certain

         10   amount of money, and that money cost more for minorities

         11   to get than it cost existing companies.  We start off

         12   almost with a minority situation in ownership of our

         13   company because that's what it takes to attract capital.

         14   So you start off in the negative.

         15                  So government-- create incentives to create

         16   a new venture capital situation in which a venture

         17   capitalist because they're only responding to their

         18   particular limited partners who want their money back in

         19   a certain number of years, let's find a way to have a

         20   longer time span for returns.  We're not talking about

         21   not making money.  We've got to make money.  We've got to

         22   basically be successful in business, but let's have a

         23   different situation to allow minorities to build up their

         24   companies and to stay in business.  That's a big thing

         25   also, to stay in business for the long run.


                                                                       54

          1                  VOICE:  Are you going to take any questions

          2   from the floor?

          3                  MR. ROHDE:  I'll address that in a second.

          4                  MR. PEREZ:  It's always a very difficult

          5   task to swim upstream against economic forces, and the

          6   economies that flow out of consolidation are a

          7   tremendously powerful economic advantage.  And so, I

          8   think it behooves us to both do what we can to limit or

          9   fight further consolidation but also to plan for what we

         10   can do within the context of consolidation for fear that

         11   we might totally lose that fight.  My understanding is

         12   that there's tremendous pressure on the FCC to do

         13   something in this direction, and I think it's going to

         14   happen.

         15                  Recently, in the radio area, where the

         16   consolidation process is much further along, some of

         17   these mega companies have spun off some very nice big

         18   city properties to minority groups, I think in large part

         19   because of pressure coming from the FCC, Rainbow, PUSH,

         20   NAACP and other people that are trying to encourage

         21   diversification.

         22                  And, in fact, if you just look at big city

         23   radio properties, you might say that minority ownership

         24   in that small class of stations has gone up very recently

         25   because of the spin offs that are coming out of


                                                                       55

          1   consolidation.  So you could look at this problem and

          2   turn it into an opportunity if you're successful at

          3   controlling or encouraging the right outcome of the

          4   spin-off process.

          5                  I think that for fear that we lose the

          6   fight on the TV side, we also want to look at how we can

          7   ensure that when the inevitable spin offs come out of the

          8   TV consolidation, that those properties go to minority

          9   owners.

         10                  MR. ROHDE:  I want to conclude this panel.

         11   This has been extremely enlightening, and I really

         12   appreciate all of you being here and really thank you for

         13   that.  What I'd like to do is go to a short break.

         14                  I know, sir, you've been quite eager to

         15   address a question.  And I was going to say, well, hold

         16   your questions to the end, but since you've been so

         17   eager, I'll let you throw the final shot here.  Then

         18   after you've raised your question, if anybody has a

         19   comment to that.  We'll take about a 10-15-minute break,

         20   and we'll come back for the second panel.  And then

         21   toward the end of the second panel, I'd like to have some

         22   time of which others in the audience who want to make a

         23   comment or ask some questions would be able to do that.

         24                  So please, go ahead.

         25                  MR. PEARSON:  My name is Hugh Pearson.  I'm


                                                                       56

          1   from Urban Box Office Network.

          2                  First of all, I'd like to say to Mr. Rohde,

          3   you said that there are few Native Americans here

          4   present.  I'd like for you to know that 40 percent of the

          5   African Americans have Native American blood, so there's

          6   a lot of Native Americans present in this room.  Okay,

          7   number one.

          8                  My question is the following.  In your PR

          9   materials you talk about one of your aims is to make sure

         10   that foreign governments open themselves up to American

         11   companies.

         12                  I'm wondering why isn't one of your aims to

         13   make sure that some of these major conglomerates that are

         14   buying up everything, why aren't you questioning some of

         15   these major mergers and acquisitions?

         16                  MR. ROHDE:  Why is not NTIA questioning --

         17                  MR. PEARSON:  Why isn't the NTIA looking

         18   into it and telling the FCC to question some of these

         19   major mergers and acquisitions?  Let's cut through the

         20   chase and not do this, "okay, let's talk to the

         21   minorities about what they don't own now."

         22                  Let's cut through the chase, and ask the

         23   question, why you are not questioning some of these huge

         24   mergers and acquisitions and recommending that they be

         25   denied?


                                                                       57

          1                  MR. ROHDE:  Thank you.

          2                  With respect to the mergers, within the

          3   administration, we've been trying to respect the desire

          4   of the Administration to allow the Justice Department to

          5   do the review and not to impose a view upon that.  So

          6   that's why we have stood back and allow the Justice

          7   Department to do its review under the antitrust laws and

          8   to give them that independence.  And that's been a desire

          9   within the administration to allow for this kind of

         10   structure.

         11                  However, getting to the content of the

         12   concern you're raising, I think you raise a very, very

         13   good point and a very important point for us to look at.

         14   I think the wave of mergers, not only in just the media

         15   area but in the broader telecom area, are raising a whole

         16   host of new questions that I don't think we've really

         17   confronted before as a government.  And particularly,

         18   with the globalization of all these mergers are raising

         19   new issues.

         20                  So it's something that we have to be very,

         21   very sensitive to, and I think you raise a very good

         22   point.  Thank you for asking that.

         23                  Thank you all for being here, and we'll

         24   take

         25   about a 10-minute break, and we'll come back for the


                                                                       58

          1   second panel.

          2                  (Recess)

          3                  MR. ROHDE:  I'd like to begin.

          4                  The intent of the first panel was to kind

          5   of take a snapshot or a pulse check of where we stand

          6   today with respect to minority ownership and the industry

          7   in general.  And with this panel we want to look forward

          8   a little bit and look to see where things are headed, and

          9   also to have a discussion about the role of new

         10   technologies and what new technologies hold and what kind

         11   of policy issues are related to all that.

         12                  I'd like to begin by starting over here to

         13   my right.  If each of the panelists could state your name

         14   and your affiliation.  Just go around and we'll begin a

         15   series of questions just like we did the other panel.

         16                  So, please, Mr. Wilkens.

         17                  MR. WILKENS:  My name is Herb Wilkens, and

         18   I manage the Syncom group of venture capital funds.

         19                  MR. WINSTON:  I'm Jim Winston.  I'm the

         20   Executive Director of the National Association of Black

         21   Owned Broadcasters and a partner in the Washington, D.C.

         22   law firm of Rubin, Winston, Diercks, Harrison & Cooke.

         23                  MS. KONG:  Hi, I'm Jacqueline Kong.  I'm

         24   the executive director of the Asian American Media

         25   Development, and the president of a new media Internet


                                                                       59

          1   company broadcasting, webstreaming video on the Internet

          2   called HotPopTV.com.

          3                  MS. LEW:  I'm Ginger Lew with the

          4   Telecommunications Development Fund.  We make investments

          5   in early-stage communications companies.

          6                  MR. SAMARA:  I'm Noah Samara.  I'm the

          7   founder, chairman and chief executive officer of

          8   Worldspace Corporation, who has had two satellites built

          9   and launched over Africa and Asia, and a third one is

         10   being built to be launched over Latin America.

         11                  MS. HAYLES:  I'm Dahlia Hayles.  I direct a

         12   media and telecommunications project for the Citizenship

         13   Education Fund at Rainbow PUSH Coalition in Washington,

         14   D.C.

         15                  MS. HONIG:  I'm David Honig.  I'm the

         16   Executive Director of the Minority Media and

         17   Telecommunications Council in Washington, D.C.

         18                  MS. HODGE:  I'm Millicent Hodge.  I'm a

         19   general partner of the New Markets Equity Fund.  It's a

         20   recently founded fund that will focus on low and

         21   moderate-income areas in urban and rural communities.

         22                  MR. CHINLOY:  Peter Chinloy.  I'm a

         23   professor of real estate and finance at American

         24   University, and I'm interested in telecommunications

         25   issues.


                                                                       60

          1                  MR. ROHDE:  Well, thank you all very much

          2   for coming here.  I'd like to begin kind of where we left

          3   off in the previous panel and talk a little bit about

          4   financing and capital.  Maybe we can begin with

          5   Mr. Wilkens and Mr. Winston and go to Ginger, since

          6   you're all involved with the establishment of funds and

          7   looking at the capital issues.

          8                  Mr. Wilkens, could you just maybe share

          9   some of your thoughts about where you see the issues

         10   headed because of one of the issues we discussed in the

         11   previous panel was the challenges that minority

         12   broadcasters have in facing capital.  Looking ahead a

         13   little bit, how do you see this issue unfolding, and what

         14   opportunities are out there?

         15                  MR. WILKENS:  Well, you can't really look

         16   forward unless you look back, and Syncom over the years

         17   has financed a whole host of minority-broadcast

         18   companies.  We have financed Radio 1, Z-Spanish,

         19   El Dorado, Worldspace, District Cable Television, South

         20   Chicago Cable Television, Buenavision Telecommunications,

         21   on and on and on.  We're now financing Internet

         22   companies, Net Noir is a new company, and we will

         23   probably finance, and continue to finance, a host of

         24   other companies.

         25                  I make that point because most people would


                                                                       61

          1   say, wait a minute -- oh, and I missed BET, Black

          2   Entertainment Television -- one company, one venture

          3   capital fund, managed to finance all those companies?  A

          4   lot of them are household names.

          5                  How did Syncom with very little capital

          6   manage to finance all those companies?  Well, the answer,

          7   quite frankly, is we have taken a different view of

          8   minority telecommunications and minority-owned

          9   telecommunications companies.  Our view is that the

         10   talent in the minority community -- and most of you won't

         11   believe this, but the proof of the pudding is in what

         12   we've done -- exceeds the talent pool available in the

         13   majority community because most of the talent in the

         14   majority community is employed, perhaps gainfully,

         15   perhaps not, but nevertheless they've been absorbed.  And

         16   there's plenty of talent -- unused talent, capable

         17   talent -- in a minority community, so much so that you

         18   can offset the capital against that talent, that

         19   capability.

         20                  And what we have done is focused on the

         21   best and brightest in our community; the people who

         22   really understood what they wanted to do and what they

         23   wanted to achieve.  And because they have that kind of

         24   capability, we're able to reduce the amount of capable,

         25   and those people with the talent took those talents and


                                                                       62

          1   created the companies that you now see.

          2                  Noah Samara's a perfect example.  Syncom's

          3   investment in Worldspace was $500,000.  Worldspace is

          4   presently capitalized at $1.4 billion.  It is the only

          5   direct-satellite-to-earth operating system in the world.

          6                  Now how did that happen?  That happened

          7   because Noah Samara created the industry.  He understood

          8   more about satellites and direct-satellite-to-earth

          9   operational systems than anybody we had come in contact

         10   with, white or black, across America.  He knew it.

         11                  This goes back 10 years ago, Noah?

         12                  MR. SAMARA:  Yes.

         13                  MR. WILKENS:  Ten years ago.

         14                  There are a lot of Noah Samaras probably

         15   sitting right here in this room who understand various

         16   segments of the telecom industry who we will finance.

         17   And if we can do deals -- and by the way, I think

         18   Worldspace today is conservatively worth maybe

         19   $5 (billion) or $6 billion plus dollars.

         20                  So if we can put up $500,000, take a

         21   significant equity stake in the company, and work with an

         22   entrepreneur so that he or she can realize their dreams,

         23   we can create all the minority owned companies in the

         24   world in the future.  In fact, we can control

         25   communications in this country in the future; and that's


                                                                       63

          1   going to scare a lot of people, but that's the truth.

          2                  MR. ROHDE:  Mr. Winston, do you share the

          3   view that there's plenty of capital available for

          4   minority broadcasters if they get the means?  I mean, the

          5   capital's there?

          6                  MR. WINSTON:  First, I wanted to ask Herb

          7   what kind of return they got on that $500,000 investment.

          8   But I'll add that off the record later.

          9                  But on a serious note, Herb obviously goes

         10   way back in this industry.  We've been on many panels

         11   together, and we've hosted him in NABOB conferences in

         12   the past.

         13                  The issue with capital is, obviously, a

         14   fairly complex one.  Herb has taken his magic and applied

         15   it in some very creative ways to help some very

         16   significant companies.  Unfortunately, not everyone's

         17   business plan is as ambitious and has the vision to carve

         18   out a brand new niche.  For many people, they just want

         19   to be the African American or Hispanic broadcaster in

         20   their local market, and that is there overriding

         21   ambition.  And for those kinds of entrepreneurs, money

         22   has always and continues to be tight.

         23                  Certainly today, if you're going to a

         24   venture capitalist, as was talked about on the last

         25   panel, most of them -- and I will exclude Herb; I'll let


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          1   Herb talk about his investment strategies -- are saying

          2   we want a business plan that shows us that you're going

          3   public or you have some other plan for taking us out in

          4   three years, definitely no more than five.  And for an

          5   entrepreneur who wants to just be a broadcaster to his

          6   community, his business plan is not going to fit that

          7   model.

          8                  It used to be that that entrepreneur would

          9   go to his local bank and take out a loan to purchase a

         10   radio or TV station, but that was back when TV and radio

         11   stations sold for 8 and 10 times cash flow.  Now they're

         12   selling for 20 times cash flow, and your bank's lending

         13   it 5 times cash flow -- if you're lucky, they're lending

         14   it 5 times cash flow -- then there's a huge gap between

         15   what you need to purchase a radio station and what you

         16   can get from traditional forms of debt financing.

         17                  So as a result, there continues to be a gap

         18   for smaller to mid-level entrepreneurs, and it's not one

         19   that is currently I think adequately being filled.

         20                  MR. ROHDE:  Let's turn to Ginger.

         21                  Ginger, you are the administrator of the

         22   Telecommunications Development Fund which was a creation

         23   of the '96 Telecommunications Act.  Maybe a lot of folks

         24   don't really know a lot about the fund that you

         25   administer.  Maybe you can give us a little bit of


                                                                       65

          1   background about what this fund is, where you're at right

          2   now, how much money you have to work with and what kind

          3   of financing you're doing.

          4                  MS. LEW:  The Telecommunications

          5   Development Fund was part of the 1996 Telecom Act.  The

          6   purpose of the fund, which was set up to be a private

          7   company, is to make investments in early-state

          8   communications companies.

          9                  We initially receive our funding from the

         10   interest paid by financial institutions on spectrum

         11   auction deposits.  Up until 1996 when the FCC received

         12   deposits from interested bidders in the spectrum

         13   licenses, they used to place the money into non-interest

         14   bearing accounts.  Don't ask me why, but that's what

         15   happened.  (Laughter).  And Congressman Towns in

         16   particular, who is the father of this particular piece of

         17   legislation, proposed the idea that the FCC be authorized

         18   to place money into interest-bearing accounts.  And in

         19   this case, Mellon Bank pays a whopping 3.3 percent

         20   interest on these spectrum auction deposits which accrue

         21   to the benefit of TDF.

         22                  When TDF was first created, one of its

         23   initial hopes was, in fact, to increase minority

         24   ownership broadcast properties, but no one knew how much

         25   money TDF was ever going to accrue through this process.


                                                                       66

          1   And over the course of the last 3 years, we've

          2   accumulated approximately $25 million from this

          3   interest-earning process.

          4                  Twenty-five million dollars in today's day

          5   and age when you talk about broadcast properties doesn't

          6   go very far.  So as a result of this, the TDF, which has

          7   been operational for the past year-and-a-half, has

          8   instead chosen to focus on making equity investments at

          9   early-stage new media, new communications technology

         10   companies because this is where we think a million

         11   dollars here and a million dollars there can, in fact,

         12   make a difference.

         13                  We've made approximately six investments to

         14   date, all in the range of anywhere from $700,000 to a

         15   million dollars.  We'll make up to $2 million for any one

         16   investment.  We have approximately $20 million to invest

         17   total, so that's approximately 10 investments.

         18                  My investment partner, Daryl Williams, who

         19   used the vice president of Ameritech's venture

         20   fund -- Daryl and I are proposing to our board that we go

         21   out and raise a new fund from traditional investment

         22   sources -- from banks and pension funds -- in the very

         23   new future because we think we've hit upon a very

         24   interesting niche of opportunity because when we think

         25   about communications and broadcast, we often times focus


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          1   on traditional broadcast.  And the reality is, in today's

          2   day and age we're talking about webcasting, Internet

          3   radio, satellite radio-- all new forms of communications.

          4   And I think these are opportunities of ownership that we

          5   should be exploring and promoting.

          6                  MR. ROHDE:  Thank you.  Maybe this is a

          7   segue to have Noah speak for a minute.  You've already

          8   had an advertisement from Mr. Wilkens.

          9                  MR. SAMARA:  I should be on every panel

         10   with him.  (Laughter)

         11                  MR. ROHDE:  Tell us a little bit about your

         12   satellite technology, how it works, and also about what

         13   kind of a role you see this playing domestically within

         14   the U.S. in terms of creating more opportunity for media

         15   ownership or media delivery.

         16                  MR. SAMARA:  First, before I get into this,

         17   I was thinking, $25 million, I'd give it to Herb Wilkens,

         18   and it would go pretty far.

         19                  About 10 years ago, I set up a company, and

         20   I didn't have anything at the time -- no money and no

         21   financial backing -- but just went off to set up a

         22   company that would ultimately have satellites built and

         23   launched to cover some 4.6 billion people living in

         24   Africa and Asia and Latin America in the Middle East and

         25   in the Caribbean.


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          1                  That was what we started with.  I really

          2   didn't know how far this was going to go, whether I was

          3   going to start the company, create all of the enabling

          4   regulatory environments, et cetera, and somebody would

          5   come and buy it up or how exactly it would evolve.  But

          6   what I did know is that this was something that just

          7   needed to get done.

          8                  First of all, it was a great market

          9   opportunity.  Just think of being able to reach some

         10   4.6 billion people or maybe 10 percent of those people or

         11   take 5 percent of those people; it's still a huge market

         12   whichever way you cut it.  And that was basically the

         13   idea, and ultimately 10 years later we actually did end

         14   up launching the first satellite ever that does this kind

         15   of a service.  In fact, we did it in Africa in advance of

         16   such a service even being delivered here in the United

         17   States.  And it's the first such satellite system ever

         18   launched that's dedicated; in fact, it's the first

         19   satellite system, period, that has ever been launched

         20   that is dedicated to cover Africa.  So these are like two

         21   points that make us mighty proud.

         22                  But what the satellite does is, instead of

         23   direct TV, imagine having a small receiver that

         24   looks -- in fact, this is a working receiver.  It works

         25   all over Africa and all over Asia.  We have two


                                                                       69

          1   satellites that have already been launched.  Imagine,

          2   instead of a direct TV, just a satellite broadcasting

          3   signals directly from the GO stationary orbit to a radio

          4   that's this size.

          5                  And this radio basically has this antenna;

          6   that's the satellite dish.  That's all you need.  And the

          7   radio itself can be connected to a computer or you can

          8   have a computer card that replaces the radio, and the

          9   computer card plus this antenna is all you need to

         10   actually receive all kinds of multimedia without the need

         11   for telephone infrastructure.

         12                  The whole idea behind the service is -- the

         13   company's mission is to create information affluence.

         14   I've always believed that, really, the problem is not one

         15   of poverty or one of politics or whatever; the real

         16   problem around the world, particularly in the developing

         17   world, is one of lack of information.

         18                  If you were to provide lots and lots of

         19   information to people from universities over the air to

         20   help broadcasting to lots of great entertainment -- I

         21   have taken this radio in very remote areas and have heard

         22   Louis Armstrong do his thing.  It's just an incredible

         23   experience.  It's just an incredible experience that

         24   we're providing, but that's what this is.

         25                  MR. ROHDE:  What are the capital costs for


                                                                       70

          1   this, for launching this system?

          2                  MR. SAMARA:  It has cost us so far about

          3   $1.1 billion, and to fully launch the business into this

          4   marketplace will cost another, maybe, $200 million, maybe

          5   $300 million more, and we should break even fairly

          6   quickly.  It's a huge market.

          7                  VOICE:  Are you publicly trading yet?

          8                  MR. SAMARA:  That's the next step.

          9                  MR. ROHDE:  What about the subscribers?

         10   What does it cost to have one of those units?

         11                  MR. SAMARA:  Imagine a radio band.  We have

         12   quite a large radio spectrum actually that's dedicated

         13   for the service in one of the choicest parts of the radio

         14   spectrum, as you know -- inside joke here.

         15                  So we have this L band frequency, and if

         16   you could imagine a radio spectrum just like AM/FM,

         17   there's this new frequency which is the satellite

         18   frequency.  And what we do is, once a subscriber buys one

         19   of these receivers, we have dedicated a good chunk of

         20   that radio bank basically to deliver service for free.

         21                  So if somebody just buys this radio, they

         22   will forever until the life of this radio -- or until

         23   their life, whichever, as lawyers tend to say -- they get

         24   a free service.  Then we've also dedicated a smaller part

         25   of the spectrum, but still fairly large, to do very


                                                                       71

          1   specialized services that user would pay $10-12 a month

          2   for.  And we do most of our multimedia that way; we

          3   deliver like a huge file into people's computers.  And in

          4   the U.S. a one-way broadcast of multimedia doesn't make

          5   as much sense because of how well developed our telephone

          6   infrastructure is; but in much of the developing world

          7   you're on line for about 15 minutes and it drops,

          8   particularly if you're downloading a big file.

          9                  So what we do is we aggregate great

         10   content, and we deliver those contents across our

         11   satellites across the developing world; and that we

         12   charge subscriber fees, and then we have an advertising

         13   model.

         14                  So basically we have three models for

         15   making money; we lease capacity to broadcasters, we

         16   advertise or co-advertise on content -- that's other

         17   people's content if we don't develop the content -- and

         18   then we charge subscribers for specialized services.

         19                  MR. ROHDE:  Thank you.

         20                  Jacqueline, let's turn to Internet

         21   technologies.  What can you tell us about the future of

         22   the Internet with respect to -- traditionally we know

         23   television and radio broadcasting.  And, in fact, this

         24   weekend I remember reading in the Washington Post a story

         25   about a radio station -- and I think it was in Los


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          1   Angeles -- that has completely switched its format from

          2   broadcasting over the airwaves and is now entirely an

          3   Internet radio station-- a new experiment.  Where do you

          4   see this happening?

          5                  MS. KONG:  I see this as a future for

          6   broadcasters, and, in fact, I see with the mergers -- you

          7   were talking earlier about mergers -- I think that is

          8   what is happening with the communications and field.

          9                  And what's happening is the technology is

         10   here now to watch video on demand, at your convenience,

         11   at real time, no download time.  What hampered the

         12   ability to actually broadcast earlier was the fact that

         13   you would have to download large files off your computer,

         14   off the server, in order to watch.

         15                  What HotPopTV does -- and we're pretty much

         16   a new, start-up company utilizing this technology,

         17   working specifically -- in fact, I really was very

         18   excited about being here today because what we are doing

         19   with HotPopTV is it is a network on the Internet

         20   dedicated to ethnic programming.  In other words, I spoke

         21   at NATPE -- which is the National Association of

         22   Television and Program Executives -- at their big meeting

         23   in New Orleans with Kwasi Mfume, with Felix Sanchez from

         24   the Latino community, and I represented the

         25   Asian-American community, and it was very interesting


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          1   what the coalition was trying to do which was try to

          2   create more awareness for more inclusion, meaningful

          3   inclusion, in programming that accurately portrays ethnic

          4   minorities.

          5                  And what I did find there in January was

          6   that no one from the network bothered to take the

          7   escalator upstairs from the convention floor.  And it was

          8   actually well publicized in U.S Today and the L.A. Times

          9   and Variety and the Hollywood Reporter, but I just don't

         10   see; if they don't bother to take the elevator upstairs

         11   to find out about what the issues are for ethnic

         12   minorities as far as what we would like to see happen and

         13   how we would like to be included as far as programming

         14   and management, I don't see that happening in traditional

         15   major broadcast networking in the near future.

         16                  What I do see happening is this new

         17   technology on the Internet being at a place where

         18   communities are forming very rapidly on the Internet.

         19   Black Planet is a major concern right now.  And these are

         20   not broadcast communities; these are communities that are

         21   communicating through chat rooms and bulletin boards of

         22   what is happening in their community.

         23                  What is happening is that major

         24   broadcasters aren't satisfying the needs of our

         25   communities, so what's happening is a lot of our younger


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          1   college students are running to the Internet, especially

          2   the Asian-American community in a large form.

          3                  Asian Americans have been pretty much left

          4   way behind.  I believe African Americans and Latinos have

          5   paved the way, but still if you look at last year's line

          6   up for the fall network, out of 26 shows, not one show

          7   that featured any ethnic minorities, and that's why the

          8   coalition was formed.

          9                  Now we're talking a year later, and they've

         10   canceled one of the only Asian faces on television which

         11   is Martial Law.  They did not pick up Gregory Nava's new

         12   show which was about a Latino-American family which got

         13   rave reviews in the L.A. Times but was not picked up by

         14   any of the networks.  Cable companies are talking about

         15   doing that now.

         16                  But what I'm saying is, what we found at

         17   NATPE was that we were getting a lot of lip service

         18   without any results.  And why I was excited about being

         19   here is, I feel this is a wonderful forum to talk about

         20   solutions, not only solutions but a multicultural

         21   coalition to actually have some impact on the Internet

         22   because I don't want to see us left out of that

         23   technology as well.

         24                  I see what's happening with AOL and Time

         25   Warner merging.  I see a heavy-hitting, community-based,


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          1   20 million subscribers linked with a major studio which

          2   is not really taking into account in a significant way

          3   ethnic and minority inclusion.

          4                  So what I have done pretty much -- and I'd

          5   like to actually talk to people here afterwards about

          6   partnering up because I think that's the way it's going

          7   to go.  We have to partner up; we have to split some of

          8   these costs because the technology is not as expensive as

          9   broadcast technology or satellite technology, but

         10   certainly it does cost money, and we have to start

         11   hitting the communities off these sites or off HotPopTV.

         12   I'm looking for content that can service all communities

         13   and partners from all ethnic communities to work with me

         14   and having us work together to create our own

         15   consolidation before we get swallowed up.

         16                  MR. ROHDE:  One of the more challenging

         17   communications issues in this country is closing the

         18   Digital Divide, and it's something that we work on and

         19   take a great deal of concern at NTIA.  But let's assume

         20   for a moment that we can succeed in building an advanced

         21   telecommunications infrastructure across this country, in

         22   all regions of the nation that we can make broadband

         23   infrastructure almost as universal as we have the

         24   telephone network today or cable network.  Let's assume

         25   that we can achieve that goal.


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          1                  Assuming that, for someone to do any kind

          2   of business on the Internet or put up a web page,

          3   regardless of what it is, including to have a radio

          4   station or maybe even with a television station as the

          5   technology improves for video streaming and for the

          6   quality to improve, we're talking about a very, low-cost

          7   entry medium here.  It's significantly a lower cost to

          8   start a business and to put a message on the Internet

          9   than it is to go buy a radio station or television

         10   station and try to communicate through that means.

         11                  Assuming we have the infrastructure, is

         12   this going to be just a completely wide open new

         13   opportunity for minority communities now to have another

         14   way to speak and to be heard in our society or are there

         15   other issues out there associated with the Internet to be

         16   concerned about?  Are there impediments in front of us?

         17                  MS. KONG:  For the Internet?

         18                  MR. ROHDE:  Yes.

         19                  MS. KONG:  I think that the issue is always

         20   the same as it is for traditional broadcasters, and that

         21   is acquiring enough content to satisfy viewers and to

         22   bring them back repeatedly that would then constitute

         23   advertising dollars that will be thrown on to your site.

         24                  So the idea is, as we have a lot of these

         25   small sites, we're going to be competing against each


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          1   other.  Like the earlier panel had said, the reason why

          2   you're consolidating is because it's easier to sell

          3   multiple advertising.  If each one of us has to go out

          4   and sell advertising, we're quadrupling the workload.

          5   Actually, the costs aren't as prohibited as a broadcast

          6   entity, but certainly you have to have venture capital to

          7   build the site, to pay the engineers -- and it's very

          8   competitive right now because they're getting a

          9   premium -- to acquire and create content.

         10                  Now creating the content is the power tool

         11   here.  And one of the things we found out in talking at

         12   NATPE is was, in fact, our images, ethnic minority

         13   images, were being created by people that weren't from

         14   our community which meant if you were an American Indian

         15   or you're Asian American -- I brought Garrett Wong from

         16   Star Trek with me, and basically he was doing All

         17   American Girl, which was the first Asian-American network

         18   television show, and basically, they were trying to tell

         19   everyone how to act Asian American.  And it was pretty

         20   offensive because they kept telling them talk really

         21   slowly and over-articulate because that's the way Asian

         22   Americans talk.

         23                  Now, the problem is, we find that all of us

         24   end up getting defined if we're not included -- and I say

         25   beyond the management and ownership, and of course, that


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          1   would be ideal.  But obviously, the creation of these

          2   shows -- that's why I think the Internet is a very

          3   exciting medium because we are now talking about

          4   producing at a much lower cost, getting a targeted market

          5   that spends, which is your college-age student that's on

          6   the Internet that has access to the high speed modems on

          7   campus and will purchase the DSL lines that are necessary

          8   to watch, and the formats are shorter.

          9                  And so you're holding a larger audience for

         10   lower costs, you're getting your advertising dollars,

         11   you're hitting a very targeted demographic.  If you can

         12   do that with every, let's say, aspect of HotPopTV -- of

         13   there's one arm that's connected to Black Planet that is

         14   African American programming that's created by an African

         15   American community, that has accurate role models and

         16   portrayals, that empowers the community.  If there's

         17   another arm of that that's broadcasting Asian American

         18   programs created by Asian Americans with accurate

         19   portrayals and good role models, then you're empowering

         20   that community.

         21                  So I think it does so much more than just,

         22   we want to own something.  The idea is to empower the

         23   community, speak to the community, and you have that

         24   power on the Internet at a much lower cost, and I believe

         25   that you'll grab those dollars.


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          1                  We just got our first account.  I can't

          2   disclose who it is, but it's quite exciting; they want to

          3   sponsor the webesodes on line.  And the webesodes, again,

          4   are a fraction of the cost to produce, the advertisers

          5   are happy, they hit the demographic they want to hit, and

          6   I'm looking for partners.  So if anyone is out there,

          7   traditional broadcasting --

          8                  When Mr. Banks was saying there's a limit

          9   of where you can go with traditional broadcasting, I say

         10   let's partner up and let's take it to the next level

         11   which is Internet broadcasting.

         12                  MR. ROHDE:  I have a question.  Is

         13   "webesode" a real word?

         14                  (Laughter)

         15                  MS. KONG:  They're using it in Variety all

         16   the time.  It is now a coined work for like a series.

         17                  MR. ROHDE:  Okay, you learn something new

         18   everyday.

         19                  I'd like to turn to Professor Chinloy.  And

         20   I understand you're involved with kind of alternative

         21   financing models in the media and also for new types of

         22   businesses.  Share with us some of the things that you're

         23   seeing and some thoughts you have.  What kind of new

         24   ideas are you seeing in general, and are minority

         25   communities coming up with some of these new ideas, and


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          1   what kind of issues lie in front of them?

          2                  MR. CHINLOY:  Well, just in terms of

          3   background, what's happening -- quite apart from the

          4   large scale consolidation like Time Warner/AOL -- there's

          5   consolidation going on in the minority media as well.

          6   Herbert Wilkens mentioned the local broadcaster, for

          7   example, in the minorities station area who can't get the

          8   capital.

          9                  And what's happening there is, frequently

         10   what happens is that station -- for example, it's in

         11   Sacramento -- might be operated as one station, simply

         12   broadcast content in maybe six or seven locations at the

         13   local level.  So you have consolidation there.

         14                  What's interesting is that you don't see

         15   some developments in the broadcast area that seem to go

         16   on in other minority or immigrant business cultures in

         17   this country.  In other words, for example, you take a

         18   dry cleaner or you take any other small business -- I

         19   come from Jamaica, and there it's very common when

         20   Jamaicans come to the U.S. to set up a small business,

         21   almost entirely outside of the formal capital market,

         22   through this system called partnering.  And yet, the

         23   situation occurs in most small business immigrant

         24   communities, but it doesn't tend to operate in the

         25   broadcasting sector.  And I'm not quite sure why that is


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          1   the case.  Perhaps it because the barriers of entry in

          2   terms of capital cost is very large.

          3                  But the operation of the thing is fairly

          4   straight forward.  What happens is that people pool their

          5   resources.  Everybody is required to put in draws in

          6   every particular time.  Front-end people -- the ones who

          7   want to run the business -- in effect, take a discount.

          8   So if everybody puts in $1,000, and you've got 10 of

          9   those, that's $10,000; and the one who wants to start up

         10   gets $9,000, and in effect, has been provided by a loan

         11   from the other people.   Somebody else is going to get

         12   $11,000 out of this deal.

         13                  So why does this not work more formally?

         14   Part of it is because there is a risk that somebody is

         15   left holding the bag.  There isn't any sort of formal

         16   institutional arrangement -- I'm not saying government

         17   should be involved in this, but someplace where the money

         18   is held that someone doesn't abscond with all these

         19   funds.

         20                  And the second thing is monitoring the

         21   people who actually set up these businesses will perform.

         22   In the small, informal businesses there seems to be a

         23   structure, say in dry cleaning, where other minority

         24   members will come to the aid of a dry cleaners whose

         25   almost is going to go out of business because they all


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          1   have a stake in that business.

          2                  Perhaps there needs to be some kind of

          3   structure that would enable assurances or guarantees to

          4   occur in the minority-owned broadcasting business as

          5   well.  That would then focus largely on the spectrum

          6   frequency type businesses that actually require capital

          7   to enter.

          8                  MR. ROHDE:  Millicent, are you the director

          9   or executive director of the New Markets Fund?  What are

         10   you seeing in terms of opportunities in new technologies

         11   and new media for minority communities and what kind of

         12   financial issues do you see at stake there?

         13                  MS. HODGE:  Just to give you a little bit

         14   of background on what we do, we're focused on low and

         15   moderate-income areas, but we're also doing -- and 

         16   to follow up on Jacqueline's point -- is that we are

         17   doing a lot of partnering.

         18                  Back in April, the White House announced

         19   the launch of our fund, and in conjunction with that

         20   announcement we talked about our new strategic

         21   partnership with AT&T which is valued at $30 million in

         22   terms of deal flow.

         23                  And so we will be doing additional

         24   strategic partnerships with other Fortune 500 companies

         25   and other entities.  And as part of that we anticipate


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          1   seeing a lot of the new media and new technologies coming

          2   across the table and having sort of the first seat at the

          3   table to talk to minority suppliers to these various

          4   industries because we're not only focused just on

          5   telecommunications but also on transportation.  And we

          6   also have a very interesting board which we hope will

          7   allow us to see a lot of these kinds of deals.

          8                  Larry Irving, who is your predecessor, is

          9   on our board.  Darian Dash, who some of you may know is a

         10   28 year old entrepreneur.  He is the first African American-owned

         11   Internet company that went public, and Isaiah Thomas, Mel

         12   Farr and a number of other individuals.  Allen Wheat is

         13   the chair of our advisory board; he's a former

         14   congressman from Missouri.  And so, we hope AT&T will be

         15   on our board as well as a number of other representatives

         16   from Fortune 500 companies.

         17                  And so, based on our board, and also with

         18   these strategic partnerships, we're hoping really to see

         19   a lot of the new opportunities coming down the pike.

         20                  MR. ROHDE:  Thank you.

         21                  I'd like to turn to Dwight Ellis of NAB.  I

         22   know that the NAB has certainly been a bystander in a lot

         23   of these discussions.  The NAB has had some of its own

         24   initiatives, tried to promote minority ownership.

         25                  Can you speak to some of the things that


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          1   the NAB has been doing?  And also, not to talk too much

          2   inside the Beltway politics, but as far as trade

          3   associations go, the NAB is faced with some very

          4   interesting internal politics because of the

          5   rapid-changing nature of the industry and these new

          6   technologies.  And what kind of things are you seeing on

          7   an industry-wide perspective of how the Internet and

          8   satellite TV are changing the nature of broadcasting, and

          9   also looking ahead, what kind of opportunities are

         10   provided?

         11                  MR. ELLIS:  Okay.  Thanks a lot.

         12                  I'm glad to be here.  Sorry I got here a

         13   little late.  I was in San Diego at a conference.  In

         14   fact, I got in at 2:30 this morning.  I was on the same

         15   plane as Charles Dutton.  We had a conversation about

         16   ownership that I'll share with you that sort of relates

         17   to some of the comments that were made.

         18                  As all of you know, the NAB has been in the

         19   business and in the process of helping minorities to

         20   empower ourselves in the world of telecommunications well

         21   over 20 years.  I brought with me -- for those of you who

         22   may be a little bit short on the side of history -- a

         23   publication that my department published in 1978.  Some

         24   of you may remember Max Robinson, who was our first black

         25   network correspondent, inside of this publication, Air


                                                                       85

          1   Time; and there's never been anything like it since

          2   because we talked about, during those two years that Air

          3   Time was published, the world of minorities, not only in

          4   telecommunications but also in the allied arts.

          5                  In 1978, the NAB, and especially my

          6   department, was dedicated to looking at opportunities not

          7   only for minorities -- African Americans, Asian

          8   Americans, Hispanic Americans and others -- involved in

          9   traditional broadcast but also in the area of the film

         10   industry and the music industry.

         11                  Well, we had a two-year conference in 1979

         12   that's almost like history repeating itself right here.

         13   At that conference was then Commissioner Tyrone Brown,

         14   who was our first black commission at the FCC, and of

         15   course, Herb Wilkens was there too.  So that,

         16   Mr. Secretary, is one of the benefits of age, seniority

         17   and all that; you can see time sort of repeating itself.

         18                  The NAB has been very supportive of

         19   minority ownership over the years.  We worked with NABOB

         20   in the early '70s in pulling that organization together,

         21   and we ended up having several conferences such as this

         22   one.

         23                  Bringing it up to current, as you know,

         24   last year, the Chase Fund was established.  NAB is not

         25   involved in that effort.  As you well know, that is an


                                                                       86

          1   independent entrepreneurial effort by Chase Bank, and

          2   Lawry Mays, our former joint-board chairman, was very

          3   instrumental in pulling together influential broadcasters

          4   to raise a target of $174 million, hopefully going to a

          5   billion very soon.

          6                  Sort of jumping ahead to a question that

          7   might be posed as to how that fund may be different from

          8   the fund that NAB helped to establish back in the early

          9   '70s or late '70s that was later run by John Oxendine,

         10   called Broadcap, Broadcap was a not-for-profit entity

         11   versus this Chase Fund which is a for-profit entity.  And

         12   of course, Broadcap was funded largely by the broadcast

         13   industry, and it was the first effort made by the

         14   commercial industry to infuse capital into this effort.

         15                  As I said earlier, NAB is not involved with

         16   the Chase Fund now.  The Chase Fund, in addition to being

         17   an entrepreneurial, for-profit entity, it has expanded

         18   its efforts to reach out to the ".com" community to new

         19   technologies as Reg Hollinger said at that press

         20   conference.

         21                  Of course, this reflects, as you mentioned,

         22   a new era, a new situation at the NAB.  We have members

         23   who are not only radio and television owners, but also

         24   cable owners, also owners of .coms.  Jeff Smulyan has a

         25   .com company.  I could name a number of major


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          1   broadcasters who are involved in new media as well as

          2   traditional media.  I think this will continue.

          3                  The challenge of Eddie Fritts as president

          4   of the NAB, as you can imagine, is to balance all of

          5   these various equities and competition just as he did

          6   years ago when we had to deal with the vagrancies of

          7   Hollywood versus the television industry, and this is one

          8   of the things that happens with a trade association.

          9                  I think, sort of in finality, that progress

         10   will continue.  The NAB will continue to be a viable

         11   organization and go on record as supporting not only

         12   minority ownership with a history involved in that area

         13   but also in the area of employment, and if we ever get to

         14   that, we can touch on that.

         15                  I had my staff to send over a lot of

         16   material, that apparently are in the packets,

         17   illustrating some of the current efforts and diversity

         18   that NAB is involved in through our NAB foundation which

         19   has funded close to a million dollars now to develop

         20   avenues and programs for not only bringing more

         21   minorities into the business of ownership, but more

         22   importantly into the business of management which is a

         23   step in that area.

         24                  MR. ROHDE:  I'd like to diverge a little

         25   bit into kind of a subset of issues such as news and


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          1   information in media.  And I know that if any of us here

          2   did a little search about what kind of websites do you go

          3   to, to find news and information, we find that it's the

          4   major newspapers that own them, we find it's the major

          5   networks that own them.  I think one of the biggest sites

          6   available is NBC.

          7                  My question is, are we seeing, in terms of

          8   the new media -- those that are using the Internet in

          9   this new way to provide information to the public and to

         10   speak out -- are they being largely acquired by the same

         11   people who own traditional media properties such as

         12   broadcasting, or are we seeing new entities emerge that

         13   are becoming major players in the distribution of

         14   information?

         15                  I'd have that question to you and anybody

         16   else who might want to speak on it.

         17                  MR. ELLIS:  Sure, I'll jump on that.

         18                  Of course, you're going to find the source

         19   of major capital is the first entrance pretty much into

         20   that area.  Bloomdale is in a big way and getting bigger,

         21   for example, as somewhat of a new person following Ted

         22   Turner's operation as a new entity years ago; MSNBC, of

         23   course, CNBC is well in there.

         24                  I think the trend is more toward

         25   partnering.  I know that a friend of mine, former counsel


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          1   for New Media Policy at the FCC, Marcellino Floyd Levine,

          2   has just joined Iblast.com in a very strong marketing

          3   position there which is indication of such partnerships.

          4                  I know that, for example, MS Communications

          5   is involved with Iblast, and I think you'll find that

          6   many traditional broadcasters are partnering, reaching

          7   over to younger entrepreneurs and younger companies and

          8   making sure that their companies are on target for this

          9   new, burgeoning opportunity/opportunities.

         10                  MS. KONG:  I'd like to add a comment.

         11                  MR. ROHDE:  Sure, go ahead.

         12                  MS. KONG:  What is happening, the trend

         13   right now -- the Internet -- it's going for a second wave

         14   right now.  The first wave were young entrepreneurs that

         15   got incredible amounts of venture capital, basically

         16   overspent, blew through it pretty fast and went out of

         17   business.  And the technology was not there; there was a

         18   long download time for looking at information, so people

         19   would not stay on line.  That was started about a couple

         20   years ago, and they pretty much are weeding themselves

         21   out.

         22                  What you're seeing right now in the latest

         23   trend are the big boys in Hollywood coming in to play.

         24   That's the former head of Disney, Joe Roth, who has got

         25   deep pockets, to go and spend a tremendous amount on the


                                                                       90

          1   technology, hire up his own in-house programmers for

          2   writing code, creating special sites.

          3                  We can't compete with that.  You can't try

          4   to compete with a Joe Roth coming in and creating his own

          5   revolution company with deep venture capital funds to do

          6   that.  The issue is capitalization.  You have to grow it

          7   in a way that shows that you can bring in advertisers,

          8   share some of the risks with partners.

          9                  One of the things we've done in order to

         10   get our broadband is we didn't pay for that broadband,

         11   we took on a strategic partner.  If we had to pay for

         12   that, it would cost us $30,000 a month and would pretty

         13   much break the company pretty quickly.

         14                  And that's why I think it's really an

         15   important thing to stress here.  If you don't want to

         16   spend all that money and go through a lot of venture

         17   capital initially, the idea is to partner up with maybe

         18   some content companies, broadcasters.  You can't afford

         19   to buy the broadband right now and to pay the

         20   webmasters.  We're already doing that, so why do it?

         21   Partner up.  The idea is to try to lower the risks so

         22   that you can gain on the back end if you build up the

         23   audience base; that's the whole key.  And once you have

         24   that audience base and you know your demographic, you

         25   can sell advertising like you're doing now on your


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          1   traditional stations.

          2                  But I think the idea here now is you're

          3   seeing a whole new trend.  The big creative guys in

          4   Hollywood are now coming into the .com arena with lots of

          5   money, and that's why you're seeing the CNBC, you're

          6   seeing Joe Roth.

          7                  There's nothing out yet.  The interesting

          8   thing about what we're doing right now with HotPopTV,

          9   it's actually up.  You can go on to your computer, click

         10   on to it.  We did a big Asian American cultural event at

         11   the L.A. County Museum of Art, streamed it for eight

         12   hours, and we're getting an unbelievable amount of

         13   traffic without any advertising.  So it just shows that

         14   we're satisfying a need for a programming for that

         15   audience.

         16                  I think the niche market is really the way

         17   to go and to partner up without having to spend money.

         18   Den (sp) just went belly up about a month ago.  They're

         19   taking huge salaries, the Porches filled up the parking

         20   lot.  It's a really young industry, and the idea is not

         21   to overspend.  You want to be able to keep that down,

         22   partner up so you don't have to lay out the cash for the

         23   technology.

         24                  MS. LEW:  Greg, you made a point earlier in

         25   your presentation about the fact that the Internet


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          1   creates very low thresholds for entry.  And that's true

          2   also from the standpoint of the creation of content in

          3   this day and age with digital cameras, video streaming,

          4   et cetera.

          5                  You can put together a news program or a

          6   news report in a very edgy, catchy sort of way, and we

          7   are seeing a number of young entrepreneurs, college-age

          8   kids, graduate students are going out and putting

          9   together these programs and streaming it over the Web.

         10   For example, you have programs, what I refer to as audio

         11   Internet radio stations.  They're not even traditional FM

         12   or AM radio stations; they are pure Internet plays.

         13                  There was an interesting report yesterday

         14   in The Wall Street Journal about the Napsterization of

         15   movies, so that you can now capture a full-length movies

         16   off of the Web and stream it into your home.  The real

         17   trick here is how you monetize it.  People are creating

         18   all this content and making content available, and if you

         19   are creating this new company, how do you monetize it,

         20   how do you create the revenue that allows your company to

         21   make some money and for you to become a wealthy

         22   entrepreneur?  And I think that is the real challenge.

         23                  MS. KONG:  Can I answer that?

         24                  MR. ROHDE:  Well, let me go to Dwight

         25   first, please.


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          1                  MR. ELLIS:  I wanted to tag on to what my

          2   colleagues across the way said.

          3                  One of the key answers to this is the

          4   partnerships.  We know in the old business, the

          5   relationships, especially in Los Angeles, what are key

          6   relationships, are the same in .com.  One of the great

          7   challenges that I think my colleagues of the past who

          8   were with me in 1978-79, like Herb and others, we had,

          9   and still have, our infrastructure that we still work

         10   from.  We talk about minority ownership, whether it's

         11   black ownership, Hispanic or whatever.  There's a whole

         12   new infrastructure that many of us are not part of

         13   related to the .com industry.

         14                  We speak of young entrepreneurs and all of

         15   that, but I would like to give certain examples of some

         16   old-school people who are a part of this new generation.

         17   People like Joel Dreyfus, who as many of you know is an

         18   older newspaper-honed guy who, incidentally was the first

         19   black editor-in-chief of PC magazine or any national PC

         20   magazine, who is our editor-in-chief of Urban Box Office.

         21   And he was sought after by our Urban Box Office which is

         22   a major portal that some of you should know about, or all

         23   of you should know about, and there are many others.

         24                  I think what has taken place for those of

         25   us who can't accrue the capital to get into this game,


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          1   and it probably will take too long to get that capital.

          2   Partnership relationships is the key way to go.  That

          3   means that not only do you have to show yourself as

          4   having skills in things offered to this emerging

          5   infrastructure of entrepreneurs, but also be willing to

          6   cross over into some younger generation dealings.  And

          7   that is more of an issue than you can imagine.

          8                  In finality, I have found in networking and

          9   bringing people together -- which is part of what I do at

         10   the NAB -- I've found almost as much resistance to

         11   cross-generational partnering as I found back in the '70s

         12   between cross-racial or cultural partnering.  It is a

         13   very interesting thing that is going on and something

         14   that maybe your agency may want to look into.  It isn't

         15   all about capital.

         16                  MR. ROHDE:  You had a point, Jacqueline.

         17                  MS. KONG:  Well, to address that, I see

         18   that it's just a different way of functioning, I suppose.

         19   I think that partnering is the way to go, and I do think

         20   the wisdom of the broadcasters should not be overlooked

         21   in any way, shape or form because certainly some of the

         22   young entrepreneurs are stumbling and making mistakes,

         23   and they certainly need that guidance.

         24                  I think that what is happening, like I

         25   said, is the incompetence or sort of weeding themselves


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          1   out, and those were the young hot dogs, I guess, sort of

          2   running around trying to just open it up and spend as

          3   much money as they can and buy their way into an

          4   industry.  The idea now is to grow I think at a very

          5   slower manner through partnerships and through the wisdom

          6   of what everyone brings to the table.

          7                  And one of the things I would like to

          8   mention, everyone talks about this capitalization.  Where

          9   is the capitalization?  Because I have to tell you right

         10   now, it is a new frontier.  It is less money, but are

         11   there funds available to .com companies?

         12                  MR. ROHDE:  Well, let's turn to the person

         13   to my right here from the Citizens Education Fund.

         14                  What are you folks involved in?

         15                  MS. HAYLES:  We are primarily an advocacy

         16   group.  It's a part of the Rainbow PUSH Coalition.

         17   Reverend Jackson founded this entity back in 1984, and

         18   the Citizenship Education Fund to talk about advocacy to

         19   diversify the media and telecommunications industry

         20   through the work of the media and telecommunications

         21   project that is housed here at Georgetown because it's so

         22   important to create access to capital, access to deal

         23   flow and to try to diversify the industries as much as

         24   possible so that minorities can have a presence.

         25                  Obviously, it's in the public interest to


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          1   have minorities present at each aspect of communications,

          2   the instruments of communications.  And so, we're talking

          3   about traditional broadcast, and now we're talking about

          4   Internet and new media.  And access to capital remains

          5   one of the greatest barriers consistently throughout

          6   traditional, and now, new media entry.

          7                  And so, what our advocacy work is designed

          8   to do is to provide network opportunities, for example,

          9   through Wall Street project conferences that we hold

         10   annually in New York.  And we have had two medium telecom

         11   conferences -- one in New York and one here in

         12   Washington, D.C. back in March -- primarily to bring

         13   together financiers with sellers and buyers and new media

         14   individuals who want to be exposed or get to know to the

         15   Goldman Sachs of the world-- those people and the

         16   Syncoms.

         17                  Herb several times participated with events

         18   and worked along with people who he met or they met

         19   during the events.  And I think that's very important.

         20   Networking, as Dwight pointed out, partnering -- we

         21   support a lot of strategic partnerships.  We have a lot

         22   of what we call trading partners who are a part of the

         23   organization who are majority companies who have sought

         24   now to do business with minorities.  They used to claim,

         25   "Oh, we can't find any minority business people to do


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          1   business with," but that's a misnomer, and we've been

          2   able to show them that that is, in fact, a misnomer, and

          3   that there are opportunities to be had, and there are

          4   opportunities that are comparable to what they would do

          5   with non-minority groups if they were to enter into

          6   business opportunities with them.

          7                  So part of what we do is, is to try to

          8   de-mystify this whole barrier to entry and to try to

          9   bring as many non-minorities together and expose the to

         10   access to capital as much as possible.

         11                  MR. ROHDE:  Thank you.

         12                  I would like to turn to David and ask a

         13   question.  We've heard this very interesting discussion

         14   here, and I feel like I'm in the middle of possible

         15   deal-making going on which I can't be part of,

         16   unfortunately.

         17                  But given all this discussion we've heard

         18   about the need for partnering, and we've had a lot of

         19   discussion about access to capital and some of those

         20   issues, is there a role for government in any of this?

         21   As we are looking ahead at the possibilities of new media

         22   providing more opportunities for people to have voices in

         23   public, is there a role for government to pay attention

         24   to right now?

         25                  MR. HONIG:  Government has had enormous


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          1   potential in this area for being an agent for progress or

          2   for retrogression.  It's important to keep an eye on

          3   history to know what government can do for us or to us.

          4                  Let's keep in mind the radio frequency

          5   spectrum, what we refer to as the basis of old media, is

          6   our property; it belongs to us.  And for 51 years, with

          7   very rare exceptions, the FCC basically in a very

          8   scandalous way mismanaged our public resource, ratified

          9   and validated the actions of segregationists,

         10   deliberately licensed them.  If anyone is from Alabama,

         11   do you remember who they gave all the public TV licenses

         12   to?  They used to train a whole generation of

         13   broadcasters-- the Alabama Educational Television

         14   Commission, which at the time reported to George Wallace

         15   when he was governor.  Who do you think got a chance to

         16   own stations and get the training to own stations in

         17   Alabama?  It's no secret.

         18                  Then after 1978, we had about 17 years of

         19   very moderate affirmative action.  Really, thanks to Dick

         20   Wiley, to Ty Brown and to Ben Hooks, the agency turned

         21   itself around and developed, with the support of NAB and

         22   community groups, the tax certificate policy.  That one

         23   policy alone -- if anyone wants to know the potential of

         24   government -- was responsible for about 60 percent of all

         25   the minority-owned stations on the air today-- about 200


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          1   stations until the policy was killed in 1995.

          2                  Now, as we all know, there are a couple of

          3   Supreme Court decisions that very profoundly affect what

          4   government can do.  One in particular that I want to call

          5   to your attention, of course, is Washington v. Davis.

          6   You thought I was going to say another one.

          7                  Washington v. Davis in 1976 basically

          8   held -- a Supreme Court decision -- that a policy which

          9   on its face appears to be race neutral, it tends to have

         10   an effect tending to benefit one group as opposed to

         11   others, or more than others, does not necessarily violate

         12   the protection clause.  In that case, the group that

         13   arguably benefitted and was a testing program for police

         14   recruiting in Washington, D.C. happened to be white

         15   Americans.

         16                  But keep in mind what that holds in terms

         17   of equal protection.  It means that many policies which

         18   are, in fact, race neutral aren't impermissible simply

         19   because they happen to have the effect of benefitting

         20   minorities who've been kept out.

         21                  One example of such a policy, of course, is

         22   the EEO rule.  And analogy to that, which we proposed to

         23   the FCC, is that sellers of broadcast stations who've

         24   enjoyed the opportunity to benefit from both the power

         25   and influence and economic prosperity that comes with


                                                                      100

          1   broadcast ownership should be required when they leave

          2   the industry or sell stations to market them to

          3   minorities and small and disadvantaged businesses.

          4                  Now, when companies do that

          5   voluntarily -- which they sometimes do.  We're a media

          6   broker, and the brokerage business, if there's any

          7   business that's more segregated than at 11:00 at church

          8   on Saturday, it's the brokerage business.  I don't think

          9   there are more than 3 minority brokers here in the

         10   country out of 150.

         11                  For example, we're proud that we just

         12   assisted Clear Channel in marketing these 110 spin-off

         13   stations to minorities, and the result of that was 46 are

         14   going to minority-owned companies, that's $1.3 billion

         15   worth of properties all at once, most of which were

         16   closed the next two weeks.  That one deal alone will

         17   increase asset value for minority ownership by about

         18   22 percent in the whole country.  Right now it's only at

         19   about six-tenths of a percent of all broadcast industry

         20   asset value.  So you're still talking about an enormous

         21   burden of past discrimination to overcome and to remedy.

         22                  Which really brings me to the second

         23   important issue that we have to focus on in considering

         24   what government can do; and that is that race neutral

         25   alternatives will never be enough to overcome those


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          1   51 years of enforced segregation; it never will.

          2                  Some of the proposals we've advanced at the

          3   FCC here, where we really dug deep -- and many of you I

          4   know were in those meetings where we tried to figure out,

          5   what can the FCC do?  And we came up with options, for

          6   example, allowing owners of two same TV duopoly or

          7   radio-TV combinations, sell them in tact to small,

          8   disadvantaged businesses.  Race-neutral initiative might

          9   tend to help minorities, but very moderate impact.

         10                  The really big ticket impact is going to

         11   have to come from recognizing that under Adarand,

         12   preventing discrimination, remedying discrimination is a

         13   compelling government interest which is really under the

         14   structure of the Communications Act.  Not only can the

         15   FCC take steps to do that, it really ought to and has to

         16   do it.

         17                  Read the first section of the

         18   Communications Act.  It was created for the purpose of

         19   having this spectrum available to all people.  In '96, it

         20   was amended without regard to race, creed, color and so

         21   forth.

         22                  Some of the proposals we've had before the

         23   commission for years --  having an investment tax credit

         24   for minority ownership, creating an entity that we are

         25   calling the American Communications Investment Bank to


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          1   pool, aggregate and then disaggregate and spread

          2   out -- subject to alien ownership limits -- foreign

          3   capital into minority-owned broadcasting.

          4                  Those sorts of initiative, which can

          5   involve billions of dollars of capital formation and

          6   deployment, can only happen once the FCC is

          7   encouraged -- and we're their constituency -- to

          8   undertake and complete the research necessary and have

          9   the political will and the moral authority to put an end

         10   to the years of segregation, moderate but insufficient

         11   action, and benign neglect.

         12                  MR. ROHDE:  Thank you, David.

         13                  Tyrone Brown, we're very fortunate to have

         14   you as a former FCC commissioner here.  And one of the

         15   things David mentioned was the Tax Certificate Program

         16   which was in existence for about 15 years, I believe, and

         17   about 350 or so tax certificates were awarded, and we did

         18   see an increase in minority ownership during that time.

         19   And now there are members of Congress who are talking

         20   about bringing this back.

         21                  I'm curious as to your assessment of the

         22   tax certificate.  Is this an approach that has some

         23   promise or are there other approaches we should be

         24   looking at?

         25                  MR. BROWN:  First of all, let me apologize.


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          1   Somehow I got this panel on my schedule for 3:30 this

          2   afternoon.

          3                  I felt that the tax certificate was a

          4   small, but very effective way, to encourage minority

          5   ownership in a number of respects.  First of all, it

          6   relied on the greed of sellers of communications

          7   properties at a time -- as Wilkens, Winston and Ellis

          8   will recall -- when most communications properties sales

          9   were not public information.  It was a club of

         10   broadcasters and a very small club of brokers who kept

         11   the information to themselves.  And typically, the only

         12   time that one found out about properties being on the

         13   market was when the transaction was announced.

         14                  So the tax certificate policy had the

         15   benefit of making it attractive for sellers of properties

         16   to go out and search for minorities to sell those

         17   properties to because they got a tax benefit by doing

         18   that.

         19                  The tax certificate I think also was very

         20   important symbolically, and maybe that was its most

         21   important aspect.  It served as a statement by the agency

         22   that was responsible for overseeing the radio spectrum in

         23   the country, that it felt that this policy was an

         24   important part of federal policy relating to broadcasting

         25   and later cable transmission in the country.


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          1                  And so, when the tax certificate was

          2   eliminated in a flurry of hysterical action on the Hill

          3   in 1995, I thought that that was an occurrence that also

          4   was symbolic.  It was a symbolic negative statement by a

          5   group of people that that kind of federal policy was an

          6   anathema to them, and they were going to do away with it.

          7                  Over the past year, I've worked actually

          8   with a number of people in this room and with Senator

          9   McCain and Congressman Rangel to see if a

         10   group -- including industry members, broadcasters,

         11   wireless companies, telephone companies, minority

         12   advocacy groups -- could reestablish a tax certificate

         13   that would pass muster as a legislative matter.  And I'm

         14   pleased to say that I think, ultimately, this process

         15   will lead to a reestablishment of a tax certificate.

         16                  What I don't know at the moment is whether

         17   it will be a small business tax certificate or a small

         18   business and minority tax certificate, and that may

         19   depend on the outcome of the coming election.

         20                  MR. ROHDE:  Thank you.

         21                  At this time, I'd really like to take any

         22   questions from our audience.  If anybody has any

         23   questions or comments, please feel free -- we have a

         24   microphone there -- to ask any question of anybody on th

         25   panel.  And I'd greatly appreciate if somebody had a


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          1   question for somebody other than me.  (Laughter)

          2                  MR. WINSTON:  I just wanted to add on to

          3   what Ty said, because I think it's a very important that

          4   we acknowledge, and for those who are new to the

          5   industry, educate some of the people here about the

          6   interplay of the problems we're talking about with

          7   respect to increasing minority ownership and the

          8   political climate in which we operate.  I know as a

          9   federal agency, NTIA has to be careful about political

         10   entanglements, so I'll speak on behalf of NABOB only.

         11                  But what we are seeing is that our

         12   condition as minority owners in the broadcast industry is

         13   directly related to who controls the White House and the

         14   Congress, and it's just that simple.

         15                  When the tax certificate was created in

         16   1978, there were 40 African American-owned radio and

         17   television stations in the country.  In three years, we

         18   went from 40 to 140.  In 1981, Ronald Reagan took over

         19   the White House and made a big difference.  We had a

         20   chairman of the FCC who was hostile to minority-ownership

         21   policy.

         22                  So from 1981, after a 100-station increase

         23   in three years, from '81 to '95, we saw an increase of

         24   only 40 more; it went to 180 African American-owned

         25   facilities.  Then in '95, when Republicans took control


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          1   of the Congress, we saw our numbers start to decrease

          2   with the elimination of the tax certificate.

          3                  So I say that, as we're sitting here in the

          4   2000 election year, as Ty said, whether we're going to

          5   have a tax certificate any time in the near future is

          6   directly related to what happens in the outcome of the

          7   presidential election and the congressional election this

          8   year.  So for people who are interested in influencing

          9   and effecting this process, you need to be looking at the

         10   political process because this is not a academic

         11   exercise; it's a political exercise first and a financial

         12   exercise second.  So if you're going to address it,

         13   you've got to address it in that order.

         14   And that needed to be said here.

         15                  MR. ROHDE:  Thank you.

         16                  MR. WILKENS:  A point that needs to be

         17   added to that is, in reference to the elimination in 1996

         18   of the SSBIC Program, there's probably no program in the

         19   history of this country, including the tax certificate,

         20   that provided more support for minority broadcast

         21   ownership than the SSBIC Program.  That was a program

         22   that established a series of venture-capital funds that

         23   provided support to the minority community.

         24                  In 1996, the Republican Congress eliminated

         25   the funding for the SSBIC Program.  The number of new


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          1   companies financed -- new minority telecommunications

          2   companies -- has declined drastically since that funding

          3   was eliminated.  So again -- not just the tax

          4   certificate, not just policy issues-- all of these things

          5   that support the ownership of minority properties -- and

          6   as was noted earlier by Jim -- small entrepreneurs who

          7   want capital got their capital from these government

          8   policies that have now been eliminated-- the banking

          9   policies, the guarantee of loans.  All of those things

         10   are government related.  So change the Congress, and

         11   we'll have minority ownership.

         12                  MS. HODGE:  I just wanted to follow that up

         13   with a very quick comment.

         14                  There is a new program called the New

         15   Markets Initiative.  It does not take the place of what

         16   Mr. Wilkens was talking about.  What he was talking about

         17   was very critical to the development of this particular

         18   industry.

         19                  However, President Clinton and Reverend

         20   Jackson has put forward what's called the New Markets

         21   Initiative.  I was director of that program.  It's to put

         22   $22 billion of equity, tax credit, loan guarantees

         23   basically into urban and rural areas.  It is not a

         24   race-based program.  Unfortunately, it is geography

         25   based, and as you know, there's a high co-variance


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          1   between minorities in urban areas.

          2                  And so, most of those dollars will be

          3   provided to venture capital companies which is why I am

          4   now outside the government and have set up the New

          5   Markets Equity Fund.  But that legislation is moving in

          6   the Congress on the Senate and House side, and it's

          7   moving very quickly.  So this is an opportunity to weigh

          8   in.

          9                  MR. ROHDE:  Please, go ahead.  You've been

         10   waiting for a minute.

         11                  MR. LLOYD:  Thank you.

         12                  My name is Mark Lloyd.  I'm the executive

         13   director of the Civil Rights Forum on Communications

         14   Policy.  We did the study on discriminatory advertising

         15   practices which was the FCC study.  I think, actually,

         16   Jim Winston made some of the comments that I was going to

         17   make about the fact that this really is, in large

         18   measure, a political matter, and we will have some

         19   choices to make in November, both in terms of the

         20   election of Congress and with regard to the election of

         21   the President which will help determine how far this

         22   moves.

         23                  I am concerned though that, although we

         24   talked about the elimination of the tax certificate, we

         25   have to note the president of the United States didn't


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          1   veto the congressional act which would have prevented the

          2   elimination of the tax certificate; that under this

          3   particular administration we have I don't think shown a

          4   great deal of political courage in standing up to the

          5   Lutheran Church decision made by Republic-appointed,

          6   conservative judges on the District Court.

          7                  There are some things that this particular

          8   Administration must do in terms of speaking out.  But we

          9   have to move beyond the conferences and the panels.

         10   These conferences and panels are 10-20 years old.  Ty

         11   Brown remembers these conferences and panels when he was

         12   an FCC commissioner.  David Honig has been litigating

         13   these issues and remembers these conferences and panels

         14   when we were only talking about broadcasting.

         15                  Is this Administration going to really step

         16   up and take the time to do the Adarand study?  The NTIA

         17   can do it if the FCC does not.  The FCC has not under

         18   Chairman Kennard or under legal counsel Kennard.

         19                  And I know that you didn't want a question

         20   to you.

         21                  MR. ROHDE:  I was going to ask everybody

         22   here what your opinion of that was.

         23                  (Laughter)

         24                  MR. LLOYD:  My first suggestion would be

         25   for the NTIA to take up the Adarand study and try to get


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          1   that done.  Let me also mention, that as I understand it,

          2   the last I understood was that loans under SBA

          3   programs -- the telecommunications industry -- was capped

          4   at $750,000 which is really not substantial enough to

          5   participate in either new market or old market

          6   communications activities.  And someone needs to begin to

          7   peg the limit on the loan to where the limit is.  It

          8   seems to me that the current cap is fairly arbitrary.

          9                  A third recommendation is that we really

         10   need a strong recommendation and push by members of

         11   Congress and by this administration to return the tax

         12   certificate which did not, never did, only support

         13   minorities.  The tax certificate supported all sorts of

         14   ventures that were interested in trend or moving current

         15   owners to new owners to diversify the markets.

         16                  So those are my three recommendations, and

         17   I really would like to hear from you regarding whether or

         18   not NTIA is going to take up the Adarand study.

         19                  MR. ROHDE:  Let me respond in this fashion

         20   and actually challenge you back.

         21                  And that is, I stated from the outset the

         22   reason why we're having this panel, this panel is part of

         23   a larger effort for us to gather information and data in

         24   doing this minority telecommunications development report

         25   we intend to come out with later in the year.


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          1                  What I really like is -- you mentioned

          2   addressing the Adarand decision and for us to look at

          3   that.  Also, I'd like to hear other thoughts you might

          4   have on things that we should be addressing.  Indeed, the

          5   report that we're going to come out with the end of this

          6   year is going to have some limitations to it, but what

          7   I'd really invite is for you and others to provide us

          8   your guidance as to the things we need to pursue.

          9                  One of the things I think is fairly evident

         10   for those of us who work in public policy in this town is

         11   that the first step in trying to create a change in

         12   policy is you need to create an intellectual basis behind

         13   that that starts to drive that.

         14                  All of us now use the words "digital

         15   divide," and it's in the common lexicon across the

         16   country.  Well, the reason why that is, is because NTIA

         17   over a period of years did the work to put together

         18   studies to look at how we're deploying information in

         19   telecommunications technologies, and coined the term

         20   "digital divide," because it did the intellectual work

         21   for that.  That is now driving a very important policy

         22   debate here in Washington.

         23                  We need to do the same thing with respect

         24   to minority broadcasting and generating diversity within

         25   the media world; and we can do that through creating the


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          1   right kind of studies and doing the intellectual work.

          2   And what we need help with is people like yourself and

          3   others to challenge us and to come to us and give us the

          4   suggestions of the things that we need to start pursuing

          5   to make this an institutional exercise within NTIA so we

          6   can fulfill job as creating policy for the

          7   administration.

          8                  MR. HONIG:  I could not agree more.  What

          9   was just said was the most important thing that we may

         10   hear today.  It all starts with the intellectual and

         11   moral framework for this.  When NTIA writes its report,

         12   the first question that people are going to have reading

         13   it is, is this optional, is this discretionary, is this

         14   something that NTIA wants government to do depending on

         15   who happens to be in power?

         16                  We all know that there are certain rights

         17   and privileges of citizenship which we consider to be

         18   basic and fundamental which survive changes of

         19   administration.  That's how we got Medicare, that's how

         20   we got social security, that's how we got the minimum

         21   wage, that's how we got universal public education.

         22   Those are fundamental rights.

         23                  There is yet not recognized, but there

         24   needs to be, a fundamental right of all citizens to

         25   participate freely in both directions in the stream of


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          1   communications.

          2                  Why is that?  Because we're now an

          3   information-based society.  A child graduating from

          4   school, dropping out of school who can't participate,

          5   even to the extent of knowing how to turn a computer on

          6   and access the Internet, is functionally illiterate in

          7   society-- can't participate.  It is as unable to rise and

          8   acquire and benefit from all of the other attributes of

          9   citizenship as a child in 1954 would have been if they

         10   couldn't read.  It's that essential.

         11                  Everyone I hope will leave here today with

         12   in their hearts and minds the moral and intellectual idea

         13   in our heads that this is a fundamental right; it's not

         14   discretionary, it's compulsory.

         15                  MR. ROHDE:  Thank you.

         16                  I know you've been waiting for a minute,

         17   but we've been blessed by the presence of Congressman

         18   Towns from New York who has come here.

         19                  And, Congressman Towns, we've had a very

         20   interesting, lively discussion about a range of issues

         21   with respect to promoting minority ownership.  But I'm

         22   extremely pleased that you stopped by and would like to

         23   recognize you to say a few words if you want to.

         24                  REP. TOWNS:  Thank you very much.  When you

         25   come in late, you do not know what has already been said.


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          1   And my mother said that in a case like that, you

          2   shouldn't say much; that way you cut down on the chances

          3   of repeating something that's already been said.

          4                  MR. ROHDE:  Actually, they had me in the

          5   hot seat, so you're coming to save me.

          6                  REP. TOWNS:  Let me just say, I think that

          7   this is great.  I really feel that it's important that we

          8   have these kind of discussions because this is something

          9   that we probably would never see again during our

         10   lifetime in terms of what's happening now in terms of

         11   telecommunications.  I don't care how long you might

         12   decide to live, I don't think you will see it.

         13                  But I think the thing that I'm hearing as I

         14   move around the country, that people are saying that the

         15   real problem is access to capital; that that is a real

         16   issue.  And that we must find a way to be able to make it

         17   possible for people to get capital and to be able to be a

         18   part of this boom.

         19                  Also to say to you, when we look at what's

         20   happening in terms of education, we have to do more in

         21   that regard as well.  We must find ways and methods to

         22   make certain that all schools are wired and that all

         23   schools have access to computers.  But I think that these

         24   are things that we must find money for.  And we keep

         25   hearing that there is a surplus.  I keep hearing that in


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          1   the Congress.  I've heard it a lot of times.

          2                  If there's a surplus, then I think that

          3   this is what we should be doing with some of that money,

          4   is making certain that our young people have access to

          5   computers as well.

          6                  So let me say to you, Mr. Assistant

          7   Secretary, that I really appreciate the leadership that

          8   you're providing in this, and I think that in years to

          9   come people will realize that this is the way to sort of

         10   get there; that when we come together, we have dialogue.

         11   And I think that we'll know that there will always be

         12   something in our way.  But I think that when something is

         13   in our way, that only means that we're on our way.  And

         14   if you're not going anywhere, nothing will every get in

         15   your way; you will never get stuck.  (Laughter)

         16                  So I think we need to recognize that and

         17   sort of push it out the way, and keep on moving.  So

         18   thank you very much.  I see you have some experts here,

         19   people that I feel very comfortable with and know that

         20   they're doing a lot of good things.  And I think I'll

         21   just close by saying, I look forward to working very

         22   closely with you, the Congressional Black Caucus is

         23   really in tune with this issue, and that we're working

         24   very hard to make certain that there is access all the

         25   way around.  Thank you very much for inviting me over.


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          1                  MR. ROHDE:  Thank you.  Well said, very

          2   well said.  Thank you.

          3                  I know you may have to leave, but please

          4   feel free to stay.  We're taking some questions from the

          5   audience we'd love you to stay as long as you can.

          6                  MS. LEW:  Greg, I would like to offer a

          7   potential solution to one of the challenges that was

          8   offered.

          9                  There have been numerous mentions about the

         10   FCC funding and performing the Adarand study.  And going

         11   back to my days when I was part of the administration and

         12   working at the SBA, one of the things that we explored

         13   that you might want to explore further with Chairman

         14   Kennard is forming an interagency task force with SBA,

         15   NTIA and FCC jointly funding the study because I know the

         16   FCC has encountered various funding challenges, and this

         17   is one area where it is I think critical importance to

         18   our community.  And I think you would find interest and

         19   support from certainly the SBA on this issue.

         20                  I think in following up on another point

         21   that was made about the cap on small business loans being

         22   at $750,000, we should be exploring not only increasing

         23   that cap, but the other major factor is increasing the

         24   knowledge base of bankers and lenders who do not know how

         25   to value telecommunications and broadcast properties.


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          1                  For example, I recently ran into a

          2   preferred lender that participates in the SBA program who

          3   said that an FCC license was valued at zero dollars when

          4   he did a valuation based on a potential loan.  So I think

          5   there are certain program areas that can be explored and

          6   should be explored with the various agencies as well.

          7                  MR. ROHDE:  Thank you.  We'll go to your

          8   question.

          9                  MR. FOSTER:  Thank you very much.

         10                  My name is Bernie Foster.  First of all,

         11   Mr. Rohde, let me thank you for allowing us to be here.

         12   This is very exciting for me, and I've learned a lot this

         13   morning from both panels.  And I won't disagree with

         14   almost anything some of the panelists said this morning

         15   because I really find this real interesting for me.

         16                  By the way, I live in the west, called

         17   Portland, Oregon, way out west.  And they say, "Go west,

         18   young man," well, I went west.  But my experience in the

         19   communications business comes from about roughly 25 years

         20   in the print side, so I'm probably one of the newer

         21   persons in terms of radio.  I own two properties, one in

         22   Eugene and one in Rosebud, Oregon-- small markets.

         23                  But one of the things I have found out for

         24   me when I started this two years ago was information.

         25   And I heard some people talking this morning about


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          1   ownership, how do you do it and some of the things.  One

          2   of the things I really found -- and I hope it's

          3   there -- it was no one kind of mechanism to assist young

          4   entrepreneurs into this industry, so I ended up probably

          5   spending three times the amount of learning the business,

          6   and I'm still learning.

          7                  But I think one of the key elements I've

          8   been hearing about is finances which is a very key

          9   element.  But the other thing I think that's really,

         10   really important is, as we talk about how the new

         11   business is going and the new era -- we don't do business

         12   the way we did 10 or 12 years ago; we certainly do not,

         13   and I think the interest is on relationships now.

         14   Relationship is the key element, so is financing-- all of

         15   the above.

         16                  And so, what's happening, I have found for

         17   me, is that as you go forward with the ownership -- and

         18   I'm really encouraging it because I think it's

         19   important -- is that we really take a look at how we do

         20   business, how we define who we are, how do you define

         21   minority ownerships.  And I know there are some rules

         22   that have been set 10 or 12 years ago.  Is that practical

         23   today?  Is there different ways of doing that?  I think

         24   as we go forward, I think those become some very, very

         25   important elements.


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          1                  And also, I just want to ask Mr. Rohde

          2   there, Mr. Rhode, on another issue, I've been following

          3   you a little bit, the president new initiative marketing,

          4   I certainly would like to talk to you because I've been

          5   following it for quite some time.  We're in the process

          6   of typically trying to coordinate our talents, and that's

          7   one of the issues we've been looking at.  So it's been

          8   very exciting for me, and I want to thank all of you.

          9                  MR. ROHDE:  Thank you.  Thank you very much

         10   for your comments.

         11                  MR. RENOS:  I wanted to reiterate

         12   Congressman Town's statement that access to capital is a

         13   critical issue.

         14                  My name is Victor Renos, and I'm with

         15   Radiofutura.com.  We are creating an Internet-delivered

         16   radio network targeting the U.S. Hispanic and Latin

         17   American markets.  When I hear people speak in the

         18   Internet space of the digital divide, I hear it most

         19   often referred to an issue of access.  And I would like

         20   to ask that the NTIA and us in general begin to think

         21   beyond the simple issue of access which will allow

         22   minorities to become customers.  The question then is

         23   customers of whom.

         24                  I think that from an access of capital

         25   standpoint, it needs to become a stronger priority to


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          1   make sure that when these minorities have access, that

          2   they have access to content and opportunities that are

          3   driven and shaped by people of their own backgrounds,

          4   people who speak from similar experiences.

          5                  The TDF Fund I think is an excellent

          6   opportunity, and I think they have carved out a great

          7   space for themselves.  But as Ginger mentioned, the

          8   amount of capital that's available there has hamstrung

          9   them.  And I think that something needs to be done

         10   proactively, rather than reactively, to create incentives

         11   for traditional venture capitalists who take higher risks

         12   than banks, for which there are some programs in place

         13   already, to find the incentive to fund high-risk

         14   opportunities in these new markets.

         15                  We hear ongoing struggle against 51 years

         16   of segregation within the broadcasting market.  Again,

         17   the issue of minority supplying in the automotive

         18   industry-- these are older industries for which

         19   minorities now have to fight reactively for their fair

         20   share and for a fair opportunity at the table.  And I

         21   think that now is the time that the NTIA and other

         22   industries, including the incumbent industries and the

         23   minorities who are struggling within the broadcasting

         24   industries -- now is the time to push and to create

         25   incentives for the new market because otherwise we will


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          1   all have access, but once again, we will have access to

          2   industries dominated by those who have a history of

          3   access to capital, to what is really a closed capital

          4   market.

          5                  And so, I wanted to just raise that issue.

          6   And if anybody else had feedback on things that might be

          7   happening to increase that competitive access to

          8   high-risk capital.

          9                  MR. ROHDE:  Dwight, do you want to make a

         10   comment?

         11                  MR. ELLIS:  Thanks.

         12                  As I said earlier, having been here before,

         13   like many of us, I'm concerned about the lack of time

         14   that we really have to go through the process that many

         15   of us went through, through the civil rights movement,

         16   through the development of these infrastructures that I

         17   alluded to earlier on.  And I understanding being a part

         18   of the inside the Beltway crowd, and we develop public

         19   policy, I would suggest whomever becomes president after

         20   the new election, I think that we as minority and as a

         21   people of color will pretty much be in the same place

         22   with or without tax certificate; I think it will be

         23   helpful.

         24                  What I am concerned about is something that

         25   I read that I guess one of the earlier speakers, Bob


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          1   Johnson, recited in The Washington Post when the word

          2   came out about his deal with the airline.  And to

          3   paraphrase, he lauded the fact that you have to be in the

          4   deal flow to gain access to these opportunities, such as

          5   he did.

          6                  With that in mind -- and it's nothing

          7   rocket science about this -- if a person like Bob Johnson

          8   can gain, as he has gained through his relationship, with

          9   the Malones of the world through cable, through the other

         10   industries of the world because he sits on a particular

         11   board, you have to wonder why, say, is the National

         12   Association of Broadcasters, a board of about 75 -- why

         13   we only have in the 25 years that I've been there maybe

         14   only about four minorities on that board continuing on

         15   and on and on?  It is an elected board; it is true.

         16                  What I suggest to you, it represents a

         17   resource that is not being talked about nor focused on as

         18   a part of the strategy to empower our business

         19   communities, not to mention our regular communities.

         20                  To be a member, for example, of the NAB's

         21   board of directors puts you in a position that Bob

         22   Johnson is in as he sits on the board of Hilton, I

         23   believe.  It puts you in a position to mingle with the

         24   Lawry Mays of the world to get involved in a deal flow

         25   from which these relationships happen.


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          1                  Now, aside from that, we talk about where

          2   is the capital.  We have more capital certainly as

          3   African Americans in our community now than we certainly

          4   had 20 years ago.  We have a little golfer whom I

          5   understand produces over $100 million a year in salary or

          6   more, and I'm sure that there are some VCs with whom he's

          7   friends of, and his money is going somewhere.

          8                  We have in New York City a group of

          9   entrepreneurs who started Fubu, and I don't know if they

         10   went to any government agencies to get their money to get

         11   going.  We have entertainers, whether they be in music or

         12   sports, who have been smart enough to establish

         13   foundation to funnel money back into their community,

         14   those who are responsible enough and doing so.

         15                  I would suggest that maybe an idea that the

         16   Congressional Black Caucus could help us with, or even

         17   the Hispanic Caucus -- and this cannot continue to be

         18   totally a black thing; that in addition to the support

         19   from the Congressional Black Caucus that we have had for

         20   a decade, we need to bring the various caucuses together,

         21   whether they be the Asian Americans who sit on Congress,

         22   as well as the Hispanics, so we are not viewed as black

         23   initiative.

         24                  If the Congressional Black Caucus, for

         25   example, when in September has a forum, or something,


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          1   where they begin to bring together some of these highly

          2   monied, very wealthy entertainers whom we support, and

          3   say, look, we're not asking for any handouts from you

          4   guys; we want to develop some sort of

          5   infrastructure -- somewhat like Jim Brown tried to do

          6   many years ago when we didn't have as much money then as

          7   we have now in our community through entertainment.

          8                  We need to develop, in addition to public

          9   policy, an infrastructure of hardcore money.  We need to

         10   develop our own VCs, our own venture capitalists, whether

         11   they be young or old.  And then we will begin to move

         12   forward, and then we can put pressure on the public

         13   policy advocates-- whomever the president is, whomever

         14   the assistant secretary is -- otherwise we're going to be

         15   back here 10 years from now during the same thing as my

         16   brother over there talks about.

         17                  MR. ROHDE:  Thank you.

         18                  I see the line here is growing, and I'd

         19   like to give people an opportunity to make comments or

         20   ask questions, but we're going to do this for about 10

         21   more minutes, so please try to keep them brief and quick.

         22                  Go ahead.  Thanks for your patience.

         23                  MS. MURPHY:  Thank you very much.  My name

         24   is Pearl Murphy.  I'm Executive Director of AAMI

         25   Broadcast Training Center.  We're located here in the


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          1   nation's capitol.

          2                  This is an excellent opportunity for us to

          3   be here with the power and the broadcast industry

          4   represented here today as well as NTIA and other

          5   representatives of our federal government, and people who

          6   are here from across the country.

          7                  We wanted to put a question forth with

          8   reference to the commitment to reinvesting in our future

          9   broadcasters and eventual owners of broadcast entities

         10   through training and entry-level job interviews.

         11                  For those of us in the broadcast industry,

         12   many owners work their way through the industry-- entry

         13   level becoming manager and with a focus on where the

         14   revenue really is in broadcasting and sales.  And getting

         15   young people to understand that the power is not so much

         16   in front of the microphone, it's what's happening in the

         17   board rooms and behind the microphone, and the hundreds

         18   of jobs and opportunities that are behind that microphone

         19   in a broadcast conglomerate and corporation.

         20                  We're looking forward to partnering with

         21   the power base in this room with reference to a focus on

         22   investing in our future.  Even as we speak, the

         23   technology is constantly changing.  It's no longer the

         24   cut and splice back in the days of reel-to-reel.

         25   Everything is digital and computerized.  So we've got to


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          1   have a focus on hands-on training and opportunities going

          2   into the industry for women, African Americans,

          3   Hispanics, other minorities, people of color, of all

          4   genders, races and ethnicities if we are going to grow

          5   and become this power base and own more of our own

          6   broadcast companies and go on to disseminate our own

          7   message.

          8                  MR. ROHDE:  Thank you very much.

          9                  MR. PAGE:  Greetings.  My name is Alan

         10   Page.  I intern with Mark Lloyd here at the Civil Rights

         11   Forum.

         12                  MR. ROHDE:  Okay, next.

         13                  (Laughter)

         14                  MR. PAGE:  I just wanted to say, people are

         15   speaking a lot on the financing of .com companies.  I run

         16   a website, D-amphibians.com, which is essentially a

         17   collective of artists in the D.C. area, visual artists

         18   and musical artists, and it cost me about $100 to start

         19   up that site.  The key thing to starting it was, the

         20   young brother that I partner with is only 18 years old,

         21   but he understands web design.

         22                  So while there's a lot of discussion about

         23   putting computers in schools and increasing access in

         24   inner city schools, I wanted to know if there were any

         25   programs in place to encourage, or rather place web


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          1   design courses in school so that kids could learn how to

          2   create instead of just be consumers.

          3                  The brother from futura.com made that

          4   point.  You're increasing access which merely allows you

          5   to get on a computer and look at whatever content someone

          6   else has created and create revenue for them.  Rather

          7   than that, I was wondering if there were any programs in

          8   place to allow people in the inner city to create

          9   content, to teach them how to web design, to teach them

         10   how to create so they can own?

         11                  MR. ROHDE:  I don't know the answer to

         12   that.  That's an excellent point.

         13                  MS. KONG:  I don't know about on the East

         14   Coast, but the universities on the West Coast, there are

         15   several courses you can take not only in programming, but

         16   certainly web design.  You can purchase programs to put

         17   out your own newsletter.  It's a little different than

         18   what you're talking about, web design.  A web page is

         19   certainly an easy thing to put up, and you can really get

         20   manuals and programs that will teach you how to do that

         21   and take courses at the university level.  And a lot of

         22   kids are figuring it out all by themselves.

         23                  But the area where I'm talking about is

         24   broad-band broadcasting which is a little different, and

         25   you really can't do that out of your home.


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          1                  MS. LEW:  There is a program here in

          2   Washington, D.C. that is funded by the Meyer Foundation,

          3   and what they do is provide computer training and skills

          4   for inner city kids.  And they actually have a program

          5   which is mobile.  It's run by a team of seven people who

          6   go from various not-for-profit organizations and conduct

          7   classes in the communities.  You might want to contact

          8   them.

          9                  MR. ROHDE:  Thank you.

         10                  MR. PAGE:  One last point.  Also, I just

         11   want to say, I think these conferences, you should

         12   consider having them perhaps in inner city schools

         13   because youth don't get a chance to see people who

         14   represent them, who are their own skin color, who are in

         15   their minority group who are successful.  And perhaps you

         16   might want to consider holding an event such as this

         17   inside an inner city school, so kids could see that

         18   people of their background can be successful.

         19                  MR. ROHDE:  Thank you for disagreeing with

         20   your former mentor on that point.

         21                  MS. KONG:  I'd take it one step further.

         22   You can actually this forum and put it up on the

         23   Internet.

         24                  MR. ROHDE:  It is.  This is being webcast

         25   today.


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          1                  MS. KONG:  Okay.

          2                  MR. ROHDE:  Please.

          3                  VOICE:  Good morning.  My name is Ogoro

          4   Manduhanna, and I'm from Amarillo, Texas.  I have a radio

          5   station, and we program in Spanish.  In the hours that we

          6   don't program locally, we have the Z network.

          7                  What the things that I am here to speak

          8   today is, I want help.  I've looked for help everywhere,

          9   and I thought, if I had them all in one room, maybe I

         10   could find the help I need.

         11                  (Laughter)

         12                  I applied for a license in 1990 and was

         13   granted shortly after I applied; and then my partner did

         14   everything he could to take it away from me.  It took me

         15   seven years to fight for that license.  And I think it's

         16   important to address the fact that, it doesn't matter how

         17   much opportunities are given for minorities to obtain

         18   anything, there's going to be other people around the

         19   corner to grab it from you and to take the capital that

         20   you have in order to make this project functionable.  It

         21   doesn't matter; minorities still are at a disadvantage.

         22                  I'm a woman, I'm Hispanic, and it doesn't

         23   matter because I got the license, but I had to fight my

         24   partner off.  And I'm still fighting him because it

         25   became a domino effect.  I cannot get any kind of


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          1   long-term financing because of all the litigation that

          2   went on.  So all of these things I think is important to

          3   bring here.

          4                  Believe me, I don't have the money or the

          5   time to come to these meetings, but I cannot afford not

          6   to come.  And I can assure you that there's not no one

          7   else here -- other than the gentleman from Houston, Texas

          8   that came to be on the panel -- other Hispanics of

          9   minority station from a small community like ours that

         10   would take the time and money to do this.  It is not easy

         11   out there, folks.

         12                  MR. ROHDE:  Thank you so much for coming.

         13   Thank you.

         14                  MR. SCHWEIKERT:  Hello.  My name is Ernesto

         15   Schweikert.  I have a radio station in New Orleans, KGLA;

         16   it's a Spanish radio station.  I want to thank you for

         17   the meeting.  It's very informative.

         18                  I'm a native of Guatemala and Central

         19   America, and my son told me, "Papa, is it true that we

         20   are living in this country because it's free?"  I said,

         21   "Yeah."  "But we have to pay for everything.  Even when I

         22   go play Nintendo, I have to pay."

         23                  I think this is the problem here.  There is

         24   nothing for free; you have to pay something.  And the

         25   bottom line is dollars always, how much you pay for a


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          1   property, how much you're going to sell it for.

          2                  But to your office, I think it's very

          3   important.  We were discussing in an earlier panel that

          4   we have a niche market.  I don't care if it's Asian

          5   American, African American or Hispanic American, those

          6   are niche markets.  And I think we have a monopoly with a

          7   company called Arbitron.  They do the surveys.

          8                  Those surveys, don't put any attention to

          9   these niche markets.  Like the broke Microsoft into two

         10   companies, I think they have to break Arbitron into two

         11   companies and do surveys.

         12                  MR. ROHDE:  I will share your thoughts with

         13   Joe Klein at the Justice Department.

         14                  VOICE:  My comments have more to do with

         15   starting earlier in the educational pipeline.

         16                  If we're going to change the numbers

         17   presented earlier today, then we really need to start

         18   working earlier with youth by providing internship

         19   programs within the industry and also working with our

         20   nation's colleges and universities that serve

         21   predominantly minority youth -- HBCUs, Hispanic-serving

         22   institutions -- and also working with community-based

         23   organizations that serve our communities; they have a

         24   vested interested in changing conditions.  Thank you.

         25                  MR. ROHDE:  Thank you so much.


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          1                  MR. CHARLES:  Hi.  My name is Butch

          2   Charles.  I'm a professor of communications at

          3   SUNY-Oswego in Upstate New York, and I owned two radio

          4   stations at one point in Central New York.

          5                  Within the past five months, we had in

          6   Syracuse two African American owners of radio stations,

          7   both of those -- one mine, the other gentleman is

          8   here -- have sold those stations, sold those stations

          9   mainly because of consolidation.  That's just the fact of

         10   life-- an ability to survive because of we're down to

         11   maybe three -- there are four big groups represented in

         12   our market, and two of them own the lion share of the

         13   stations.

         14                  The Justice Department did come in, did

         15   take a look, did try to see if it was going to be too

         16   much to have those groups in here, and they left and

         17   said, no problem.  Except that you take just those two

         18   groups, and they take up nearly 85 percent of the

         19   advertising income that comes into that market.

         20                  So, we're forced to sell out, and this

         21   community now will probably not have any service speaking

         22   to African Americans, specifically, at all.  Without

         23   ownership by African Americans, our community will not

         24   have any.

         25                  Now, I don't want to get on a soapbox, but


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          1   I got into this 25 years ago because the FCC said you

          2   need diversity, you need minority ownership; we'll open

          3   the door for you.  I went through the '80s and '90s, and

          4   like my friend here, spent most of my time giving my

          5   money to David Honig to represent me, not that I didn't

          6   love him, but I spent more time in litigation trying to

          7   get the station than I could doing it.

          8                  And then by the time I was able to get the

          9   station on the air, one month after I got the station on

         10   the air and was in business, the Telecom Act was passed,

         11   and everybody just started swooping in and taking it up.

         12                  So the government's role, interest,

         13   convenience and necessity, I think that that's lost.

         14   It's gone, it's all about money.  Myself and Robert

         15   wanted to do something for our communities.  I grew up in

         16   New York City.  I grew up with WLIB.  I know how a

         17   community is galvanized with radio especially.  I wanted

         18   to do the same thing for the community I went to school

         19   in, and it could not happen because of this.

         20                  Jim Winston hit the nail on the head,

         21   access to capital.  But, I'm sorry.  You guys all have

         22   money, you're willing to give it away, but you don't want

         23   to help the small guys.  If it's not a deal that is going

         24   to make millions -- I've had Mr. Wilkens organization,

         25   I've had Broadcap.  I've done great jobs in terms of


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          1   business plans.  I got my degree from SU.  I gave them my

          2   $100,000; I know how to put the business plan together.

          3   But if it's not making a bunch of money for a lot of you

          4   guys, you don't want to do it.

          5                  I was lucky that the SBA changed their

          6   rules five minutes before I was ready to go ahead and

          7   give it up, and I was able to get some help from them and

          8   get local banking, but then the Telecom Act came in, and

          9   that was it.  So access to capital is still number one.

         10                  And finally, just so you know -- make no

         11   mistake about it -- consolidation is killing the industry

         12   for radio for small business, not only for programming.

         13   And a lot of you may not be programmers here.  You don't

         14   know how radio stations are programmed and how

         15   information gets to people.  Consolidation is going to

         16   make one person in one city program radio stations for an

         17   entire segment.

         18                  And I just sat down with record

         19   people -- who are shady -- but record people who told me

         20   that that's their problem.  They're worried about the

         21   fact that they can't get the music or the information on

         22   in order to do it.  Ownership is the other way diversity

         23   is obviously going to kill, and employment.

         24                  Two African American-owned radio stations

         25   in my market bought up by larger companies, not one


                                                                      135

          1   African American employee taken from those stations to be

          2   picked up.  Yet, they will have to go through the same

          3   EEO requirements, send out the questionnaires to the

          4   schools, looking, "Where are the African American

          5   students, where are they coming through?"  I had African

          6   American employees, he has; they did not pick up one of

          7   them.  And you can't tell me they weren't qualified.

          8                  I did not lose my station because I don't

          9   know what I'm going to do or how to do it, although I'm

         10   still on your list for your program to go work at other

         11   stations -- I've been on that list for eight years.  And

         12   this isn't an indictment; this is just a fact.  It's not

         13   because I didn't know what to do, so consolidation's

         14   killing it in all of those areas, and you've got to help.

         15                  MR. ROHDE:  Thank you so much.  That was

         16   very thoughtful.

         17                  We'll go for three more comments very

         18   quickly, and then we're going to close up.

         19                  MR. RODRIGUEZ:  My name is Jose Rodriguez,

         20   and I'm the president of the Hispanic Information and

         21   Telecommunications Network which is a non-profit

         22   organization that own frequencies in 43 markets

         23   throughout the United States, ITFS frequencies.

         24                  We have been talking about ownership in the

         25   commercial sector.  I participated in a similar


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          1   conference in 1979-80, as they mentioned here, and I

          2   decided to go a different route.  I wanted to get involve

          3   in this industry.  If I could not get involved through

          4   the front door, I decided to go through the kitchen.  And

          5   the kitchen door represented the non-profit sector.

          6                  NTIA has been very involved in the

          7   non-commercial sector by providing grants, and initially

          8   we were a beneficiary of the NTIA program.  Very -- for

          9   planning -- but when the time for construction came, that

         10   system was not available.  And I haven't seen much in

         11   terms of minority participation in that area.

         12                  Now we have another problem in addition to

         13   the lack of minority representation in

         14   telecommunications.

         15                  Congressman Towns mentioned the two

         16   important areas that we have to address-- capital and

         17   education.  Well, we have education of frequencies now.

         18   We are building systems, broadband capacity, in a number

         19   of markets that we can reach.  For the first time, our

         20   communities are with a number of services-- high-speed

         21   Internet, radio services and other services.

         22                  And now after a decision that was made a

         23   couple of weeks ago at the WORC where the 2 to 3 point

         24   gigahertz spectrum, each country now has an opportunity.

         25   The U.S. was able to prevail in its position.  Now it's


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          1   going to decide how that spectrum is going to be used.

          2                  Now we're hearing there are

          3   attempts -- petitions for rulemaking of the commission

          4   now -- to try to take away that spectrum that has been

          5   set aside for educational purposes, and is now to be put

          6   up for auction so the large companies like AT&T now can

          7   have a chance at getting them.

          8                  I would like to know what is NTIA's

          9   position regarding specifically a 2.5 spectrum and the

         10   attempts now for some large industry players to take away

         11   that spectrum for educational purposes?

         12                  MR. ROHDE:  If you don't mind, I'd like to

         13   go to the other comments, but I'll very briefly give you

         14   a quick answer to that.

         15                  We haven't taken any formal position yet on

         16   that, and I know that there's been some discussion at the

         17   commission that looks at some of those frequency bands.

         18                  I'll just say informally now -- I'm not

         19   speaking on behalf of the Administration -- my initial

         20   reaction is that I think we need to keep our options

         21   open.  And the position we developed at WORC was to

         22   identify multiple bands that could be used for third

         23   generation wireless.  And I would hate to see a premature

         24   action being done now that would preclude some of those

         25   options and take away some of that spectrum.


                                                                      138

          1                  So that's just my initial reaction to you

          2   right now, but I can talk to you about that further.

          3                  MR. RODRIGUEZ:  Thank you.

          4                  MR. ROHDE:  Two other comments, and then

          5   we're going to close.

          6                  MR. MARTIN:  Daryl Martin from Houston,

          7   Texas.  I'm a property owner.

          8                  I know we're speaking about minority media.

          9   If the stations are available, they are so priced out of

         10   range that you can't purchase them no way.  So you're

         11   finding in a lot of areas that the stations are

         12   available, but they're out-priced.  So I'd like for

         13   someone to address that.  Even if you can get the

         14   financing, the financing might be available in some

         15   cases, but the stations are really priced way out of the

         16   price range that the minorities can't really go after and

         17   purchase them.

         18                  MR. ROHDE:  Herb Wilkens, you wanted to

         19   make a comment.  Can you respond to his question quickly,

         20   please?

         21                  MR. WILKENS:  There's no way you can

         22   address the issues quickly.  I just wanted to make a

         23   point.

         24                  We raise capital.  We manage presently

         25   $300 million of investors capital.  Almost all of that


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          1   money is pension fund money.  Pension funds put a rather

          2   high level of return requirements on venture capitalists,

          3   so when we invest their money, we have to earn a return.

          4                  If somebody comes to us with a business

          5   plan to finance a station in the small market, and that

          6   business plan doesn't show that it can earn the return

          7   that we're looking for, and it doesn't show the growth

          8   potential that we think is necessary for us to support a

          9   deal, we can't support it.  There has to be in that plan

         10   something that warrants somebody on my staff to agree to

         11   commit four or five years of their time to a deal so that

         12   they can create a company of some size and some

         13   significance in the marketplace.

         14                  It is absolutely doable.  You can create

         15   those kinds of companies.  Radio One is a perfect

         16   example.  It's a Syncom portfolio company.  We put the

         17   first dollar in Radio One.  Z Spanish is another company.

         18   Syncom put the first dollar into Z Spanish.

         19                  You can create these companies, but there's

         20   got to be a plan and there's got to be a commitment on

         21   the part of the entrepreneur to support our capital

         22   needs, so that when we put capital in, we know that our

         23   limited partners -- all the pension funds out there that

         24   finance us -- will agree to allow us to continue to

         25   finance deals, similar type deals.


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          1                  In other words, you have got to meet the

          2   demands of the marketplace if you want the marketplace's

          3   capital.  The marketplace does not have a color bar on

          4   capital.  I'm telling you, it doesn't.  It does have a

          5   bar on what you do with that capital.

          6                  MR. ROHDE:  Thank you.

          7                  Last word.

          8                  MR. SPELLER:  I guess it's appropriate that

          9   I kind of end this.  My name is Brady Speller, and I

         10   currently work for Dell Computer Corporation in Austin,

         11   Texas.  Pardon me for a bit of my idealism or the fact

         12   that I've been in an incubator for the last

         13   seven-and-a-half years called Dell Computer Corporation,

         14   the fastest-growing company in the world.  And I'm about

         15   to break into broadcasting, and I'm not asking Herb

         16   Wilkens or anyone else for dollars to do that.  I'm going

         17   to retire from Dell in the next few months, and I've got

         18   my own money to be able to jump into this business.

         19                  What's bothering me about what we're

         20   talking about here is there seems to be a lack of

         21   cohesiveness in the African American community, the Asian

         22   community, the Hispanic community, the Indian community

         23   and other minorities, the women's community.

         24                  How many radio station owners are in this

         25   room today?  Raise your hands.


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          1                  How many people own television stations in

          2   this room?  Raise your hands.

          3                  Now, what if we all got together and

          4   created one entity to go compete with Citadel, Infinity,

          5   Clear Channel, and the rest of the conglomerates that

          6   we're all bitching about?  What if we did that?

          7                  Excuse me?

          8                  MR. WILKENS:  I'll do it if you do it my

          9   way.

         10                  (Laughter)

         11                  MR. SPELLER:  I'll tell you what, I'll

         12   match my dollars with your dollars, and we'll do it our

         13   way.  That's where I'm coming from.

         14                  That is a problem.  And because I come out

         15   of an organization that's constantly about shifting

         16   paradigms, excuse me for being futuristic, but if we

         17   don't go this way, if we don't go this route of

         18   consolidation, the small markets will no longer exist.

         19                  I'm talking about buying a radio station in

         20   Wilson, North Carolina.  I've got nothing against Wilson,

         21   North Carolina.  But I'm going to buy a station with

         22   $140,000 of my money, and then put another $400,000 of my

         23   money to build it up to a halfway decent station that

         24   only covers 50,000 people?  For what?  If I were to come

         25   to Herb with that, he'd laugh me out of the room.


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          1                  And so, the problem with getting access to

          2   capital, is the fact that we don't have a master plan

          3   with a number of people who are powerful enough to be

          4   able to bring their resources to the table to challenge

          5   these big boys to be a part of that game.

          6                  So maybe I'm being emotional about this.

          7   Jacqueline hit the nail on the head.  Thank you very

          8   much.  She hit the nail on the head.  We need to be

          9   getting away from the properties.  Because you know what?

         10   If we created a radio station that could broadcast

         11   throughout the entire the world via the Internet, and

         12   start using network appliances that -- I've got a Dell

         13   computer over there; I don't need it anymore.  I've got a

         14   computer that I don't need to be able to broadcast to the

         15   rest of the world because of wireless communication and

         16   the technology that the gentleman, Samara, has in our

         17   hands today.

         18                  So what I'm challenging this group to do is

         19   to meet during lunch, somewhere, and everybody sit down

         20   and figure out a way that we can pool our resources

         21   together and create a conglomerate that will compete with

         22   these big boys and start taking a share out of their

         23   pocketbooks.

         24                  MR. ROHDE:  Thank you very much.

         25                  I guess maybe a sign that you're on the


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          1   right topic is when you have no end to when people want

          2   to speak about it or have thoughts.  So I think maybe we

          3   hit a note here.

          4                  I want to thank everybody for coming.  As

          5   you know, according to our schedule, we're going to take

          6   a short break, but this afternoon we have some workshops

          7   scheduled that I encourage you to attend.  And in

          8   closing, I wanted to tell you just a very brief story

          9   which may reveal a little bit of my motivation for why

         10   I'm interested in these issues.

         11                  And that is, before I came to this job at

         12   NTIA, I worked on Capitol Hill for Senator Dorgan who

         13   represented North Dakota, which is my home state.  And I

         14   spent about the last three years of my social life,

         15   basically, to the development of the Telecommunications

         16   Act of 1996.  And when that bill came to the floor of the

         17   Senate, the language with respect to broadcast ownership

         18   in the bill was to completely wipe out all the ownership

         19   limits.

         20                  If you go back and look at the legislative

         21   history, the bill that emerged out of the Senate Commerce

         22   Committee said, "There will be no more ownership limits

         23   on broadcast," period.

         24                  Well, the senator I worked for, Senator

         25   Dorgan, was very concerned about that and instructed


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          1   me -- said, we're going to offer an amendment on the

          2   floor of the Senate because we think this is nuts.  And

          3   our amendment was simply going to restore status quo and

          4   say that, what we should do is why don't we give the

          5   discretion back to the commission that it currently has

          6   and have them continually review these and consider

          7   changes to the rules on a case-by-case basis.

          8                  So that was the nature of our amendment.

          9   And we've had a lot of discussion here about partnerships

         10   and the need for partnerships.

         11                  Well, the moral to my story is that you

         12   never know who your partner's going to be, and we have to

         13   think out of the box, because my senator told me to go

         14   find a Republican co-sponsor.  I did.  It was Senator

         15   Strom Thurmond and Jesse Helms.  And you can imagine the

         16   look on his face when I came back and said, "Jesse Helms

         17   wants to co-sponsor this amendment with you along with

         18   Strom Thurman.

         19                  That amendment won that day.  We actually

         20   won that amendment for about two hours, until Senator

         21   Doyle took some Republicans, who voted with us, into the

         22   cloak room and twisted their arms and convinced them to

         23   come out and reconsider their vote, and then we lost.

         24                  What that tells me is that, I don't think

         25   there was a complete consensus on Capitol Hill about what


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          1   was going on in 1996; that there still is a very

          2   significant debate going on.  But also, my boss, Senator

          3   Dorgan, is just a little bit less Norwegian than I am.

          4                  And I think part of the message here is,

          5   the reason why we care about minority ownership at

          6   NTIA -- the reason why I personally care about it in my

          7   role at NTIA -- is that it's not just about helping

          8   segments of our population have an opportunity to

          9   speak -- whether it be African American, Hispanic or

         10   Native American or Asian or whatever the group might

         11   be -- but it's also about what benefits a nation as a

         12   whole.  We lose out as a nation as a whole if we have

         13   segments of our population that are alienated and don't

         14   have an opportunity to speak and be heard.

         15                  That's why this is very important.  It

         16   isn't just important to African Americans or Asians or

         17   Hispanics; it's important to everybody in our nation.

         18   And that's why this issue is so incredibly important.

         19   There should be no question in anybody's mind about the

         20   commitment and the interest at NTIA in these issues.  We

         21   really consider ourselves the area of the administration

         22   that has to look out for these issues and develop 

         23   policies.

         24                  We're at a very critical point where the

         25   industry is changing quite rapidly.  We've got a lot of


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          1   challenges ahead of us.  We also have a lot of promise, a

          2   lot of opportunities we've heard about today.  And what

          3   we want to do with this forum is use this as a launch pad

          4   into action, and we need your help to do that.

          5                  And as I said, this is all part of our data

          6   gathering and putting together a report.  The summaries

          7   at this roundtable and the workshops this afternoon are

          8   going to be available on our website for those who want

          9   to look at that.  We're going to continue to receive

         10   comments from the public, from any of you and anyone else

         11   who is following this and has an interest, until

         12   August 8th.  And I really encourage you to share your

         13   thoughts with us in writing and give us your guidance on

         14   all of that.

         15                  And once again, I want to thank all of you

         16   for your time.  Some of you have traveled a great

         17   distance to be here.  I'm very touched by that, and I'm

         18   very grateful for all of you being here.  So thank you

         19   all very much.

         20                  (Lunch recess)

         21                  MS. LEWIS:  Ladies and gentlemen, why don't

         22   we get started?  As I may have said to some of you all,

         23   we are expecting Congresswoman Sheila Jackson-Lee to join

         24   us momentarily.  In the interim, though, I think we're

         25   going to go ahead and get started.


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          1                  Thank you for coming to this second part of

          2   our gathering today.  These working groups, as Assistant

          3   Secretary Rohde said, are going to be very important to

          4   the Minority Telecommunications Development Program at

          5   NTIA in its work to provide important information for

          6   policymakers on issues regarding minority broadcast

          7   ownership.

          8                  My name is Maureen Lewis.  I am the

          9   director of the Minority Telecom Development Program, and

         10   it really is delightful to see so many of you here

         11   willing to roll up your sleeves and do the heavy

         12   lifting, as it were, after you've had an opportunity to

         13   hear from the panel, to talk about some of the key issues

         14   that minority owners are facing.

         15                  One of them really has to do with access to

         16   capital.  And as we heard so much discussion this

         17   morning, access to the capital is very limited for

         18   minority broadcasters, and this is an issue that we'll

         19   continue to contend with it seems like for a long time

         20   if, in fact, we don't begin looking at new ways to

         21   approach some of our old problems.

         22                  So we're gathered here to sort of talk

         23   about access to capital and the definition of minority

         24   ownership and how that impacts capital access, and going

         25   forward to make sure that we continue to present


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          1   ownership and control issues in a way that assures that

          2   minority broadcasters do have access to capital.

          3                  With that, I would like to introduce my

          4   facilitator, Lois Wright, who is the general counsel at

          5   Inner City Broadcasting, and she's also counsel to the

          6   board of the National Association of Black-Owned

          7   Broadcasting.

          8                  As we begin our discussion, I wanted to set

          9   a few little ground rules because we are transcribing

         10   this session for analysis and inclusion in our report.

         11   So I would ask that each panelist, or each discussant or

         12   commenter, state their name before they speak, and we'd

         13   like you to do that each time before you speak.  And

         14   speak into the microphone so that it can be transcribed

         15   for the record that we're trying to create here today.

         16                  So with that, let me introduce Lois Wright.

         17                  MS. WRIGHT:  Good afternoon, everybody.

         18                  Maureen has indicated to us that what she's

         19   trying to do is build up some documentation that she

         20   might use in reports, or whatever she has, to support

         21   what we know is a very dwindling situation in minority

         22   ownership.  We have to start out with the fact that the

         23   FCC has its definition of minority ownership, and that's

         24   50.1 percent.  And as background, the FCC, what they

         25   really are looking for is control.


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          1                  As I was saying to Maureen before we got in

          2   here, I've done a lot of financings.  I have never seen a

          3   bank that said, we want to know what the minority

          4   ownership is.  And so we don't start with an assumption

          5   that minority ownership is what prevents people from

          6   getting financing, but what we do know from reality is

          7   that a lot of people are having difficulty in getting

          8   financing or that there might be other ways to enhance

          9   the financing that they get.

         10                  I guess you want to start with the

         11   audience.  It appears that you brought the audience to

         12   the table, so there's no line here.  But what we would

         13   like you to do is to go to the mike.

         14                  In everyone's packet there was a historical

         15   piece on the FCC, so I hope everybody had a chance to

         16   glance at that, and what minority ownership is right now,

         17   and just give us some of your experiences and any ideas

         18   that you might have as far as what we could do with NTIA

         19   to increase minority ownership.

         20                  And I have to add, in the radio business there

         21   is consolidation -- it's not consolidation in all other

         22   industries.  TV will be soon be in the same position, but

         23   right now it's really radio.  But that's not the only

         24   telecom business that minorities are involved in.

         25                  So if someone would like to be the first


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          1   speaker, and just identify yourself for the record.

          2                  MR. EDWARDS:  Yeah, I'd like to start off.

          3   Eddie Edwards, president and CEO of Glencairn.

          4                  The definition, as stated, was 50.1 percent

          5   as far as the FCC's definition of ownership.  If that is

          6   to be followed, wouldn't that then say that the majority

          7   of minority owners don't qualify to be classified as

          8   minority owners simply because they really don't have

          9   50.1 percent of the equity and/or control of the voting

         10   stock?  It's just a question I'd like to pose.

         11                  Does anybody have any information to

         12   support that?

         13                  MS. WRIGHT:  Well, let me say this.  Since

         14   we're sitting here, and we don't know the status of all

         15   the minority owners, I don't know that we could say that.

         16   I don't think we could pose it as a question to see

         17   whether or not that's true because I don't think there's

         18   anybody here that knows that.

         19                  What's the reason that would be true?

         20   Why wouldn't they have -- that they don't have it.  My

         21   experience is -- and I know a lot of the owners, so

         22   that's not true from my experience.  It could be.

         23                  Jim, you know a lot of owners; it could be.

         24                  MR. WINSTON:  Jim Winston from NABOB.

         25                  Historically, NABOB members have owned


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          1   51 percent or more of their stations.  By and large, that

          2   was true throughout all of our membership for many years.

          3                  Recent years because of the advent of

          4   publicly-traded companies, ownership and control of both

          5   the voting stock and the equity has become more diluted

          6   in the industry.  If you look at the biggest company of

          7   them all -- Radio One, my review of their most recent

          8   filings with the FCC and with the SEC; that they still

          9   control the majority of the voting shares in that

         10   company.

         11                  I don't think that there is any problem

         12   with that definition in terms of the members of NABOB; I

         13   think it still is accurate.  And certainly, there are

         14   ways to address the control issue when you go public.  I

         15   was amazed to see that Radio One controlled so much of

         16   its voting stock because it is a difficult thing to do

         17   when you go public.  But I think ownership and control,

         18   by and large, for most of the African American-owned

         19   companies is still more than 51 percent.

         20                  MS. LEWIS:  I just wanted to say -- since

         21   you bring up the issue of the percentage of ownership and

         22   control -- when NTIA releases its survey in probably the

         23   next couple of weeks, we'll be asking owners to tell us

         24   about their voting control so that we will begin to

         25   develop a picture of exactly what the ownership structure


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          1   of many of the minority broadcasters is.  So we are

          2   beginning to look at that question, and we hope to have

          3   some data that will help us answer the question.

          4                  MS. WRIGHT:  Well, can I say because we're

          5   short on time, if we can focus on the relationship

          6   between the minority ownership, control, lack thereof,

          7   and financing, we'll be more to the point of what Maureen

          8   is trying to get to this afternoon.

          9                  MR. FOSTER:  Hi.  I'm Bernie Foster from

         10   Portland, Oregon.  I would like to use myself as an

         11   example.  I do own 100 percent of my stations; however, I

         12   think it's important.  I think, Lois, you said it quite

         13   clearly.

         14                  If it becomes a point where I need to do a

         15   deal, would I sell 49 percent or would I sell 51 percent?

         16   I don't know.  But I think that's on each individual

         17   case, and I would hate to have that be the stumbling

         18   block for me to be able to advance what I need to do.

         19                  And I think you're absolutely right.  When

         20   I did my deal, as a matter of fact, I had to finance mine

         21   because the banks traditionally wouldn't finance my

         22   business, so I had to a deal out in California, and that

         23   never became an issue.

         24                  MR. BANKS:  This is Lyle Banks.  About a

         25   year-and-a-half ago I started traveling around the


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          1   country to raise funds, and most of the investment

          2   banking companies and venture capital firms I've talked

          3   to had similar structures where, if they were funding a

          4   manager or a team of managers, they were willing to give

          5   up to, let's say, 5 to 20 percent of the equity to the

          6   team.  They would retain the rest of the equity, or it

          7   would be shared with other financial institutions.

          8                  So your equity in these deals is definitely

          9   going to be limited, and then there's opportunities

         10   upside for performance to build back in, higher levels

         11   into your company.  And generally, unless you have the

         12   financial wherewithal to play in this league, you're

         13   going to be looking at some pretty heavy financing.  And

         14   those are the economics that you're going to be faced

         15   with.

         16                  If you look at Granite Broadcasting, do you

         17   consider Granite a minority company?  And if you do,

         18   consider the fact that they're a publicly-traded company.

         19   Don Cornwell, himself, said in the press that he may own

         20   about 8 percent of the company in terms of equity, but he

         21   still has reasonable control over the company as well.

         22                  So there are these issues that we do have

         23   to deal with.  Anybody like me that's coming along is

         24   going to have to be faced with maybe owning up to 10 to

         25   15 percent personally of any of these deals;


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          1   participating in a board of at least, 4, 5 or 7 or 8

          2   other people and sharing that sort of control.

          3                  It's not until we cash out in our first two

          4   or three stations to be able to increase the amount of

          5   equity, thus ownership, for me to put into my next round

          6   of deals.  That's generally what I'm faced with.

          7                  MS. WRIGHT:  So you're saying when you went

          8   out last year -- how much equity did you have when you

          9   started out?

         10                  MR. BANKS:  Started out?  Zero.

         11                  MS. WRIGHT:  So it's a little bit of the

         12   opposite.  The reason why I asked you that is because I

         13   wanted to make it clear.

         14                  Structure is what influences a lot of this.

         15   If you came and had 100 percent of your equity.  I think

         16   most people do.  If you do have 100 percent of your

         17   equity, and you have to give up warrants and everything

         18   else to move a deal along, it would be unlikely, even to

         19   the most voracious investment bank, would you be giving

         20   up even 45.  It depends on your deal.

         21                  Now, if your deal is very, very weak,

         22   anybody -- if they know that you're in extremis -- and

         23   those are venture capital deals.  If you're in extremis,

         24   you might give up more, but a lot does depend on what you

         25   started out with.  So if you started out with


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          1   zero -- you're saying you built up to whatever you have.

          2                  MR. BANKS:  I'm saying, you can start out

          3   with nothing --

          4                  MS. WRIGHT:  And make a deal, and raise

          5   money.

          6                  MR. BANKS:  -- raise money, and those are

          7   the economics and percentages of equity that you'll be

          8   faced with.  And does that not still qualify me as a

          9   minority owner operator?

         10                  MS. WRIGHT:  I think it qualifies you as a

         11   minority owner.  These things come into play when you're

         12   dealing with some regulatory policy, which right now

         13   there are so few, that it wouldn't make -- the FCC's

         14   definition was a definition born of history and

         15   experience.  It makes a lot of sense because they are

         16   trying to get away from fronts, and fronts are a reality.

         17   There are no policies out here now that you'd have to

         18   worry about.  There is no tax certificate policy; I

         19   guess there are a few of the other ones left.

         20                  And if you were trying to take advantage of

         21   one of those, you would expect that you would have to

         22   comply with their definition; that's the same in anything

         23   else that you might go into.  But the fact that you don't

         24   have 50 percent doesn't mean that you're not a minority

         25   that owns and hopefully controls.


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          1                  Control is a reality.  I mean, it's

          2   certainly a reality in financing.  They're looking to see

          3   who controls the deal.  Nobody invests if they don't know

          4   that the guy that they invest in can control the

          5   situation, and next year he may not be here.  So that's a

          6   reality.  Control is even more important, especially with

          7   deals that are structured deals or public deals.  If you

          8   don't have enough in the deal to support 50 percent or

          9   more of the equity, you are unlikely to get it.  But that

         10   doesn't mean that because you didn't bring them a good

         11   deal that they would still allow you to have control.

         12                  That's an aside.  It's kind of harsh if

         13   you're on a board and you're only 1 out of 7; usually,

         14   they take a couple of seats, but you don't know the

         15   particulars.

         16                  MR. BANKS:  And that's the reality that Don

         17   Cornwell faces with Granite.  I mean he's one of -- how many

         18   people are on that board.

         19                  MS. WRIGHT:  Well, Don is different because

         20   he is public, and he's fully public.  And a lot of people

         21   have not gone fully public, but he is.  And that did

         22   happen, but as Jim Winston says the Radio One situation

         23   is totally different.  The documents are all public.  So

         24   in case you don't want to believe what we're saying, it's

         25   all public.  And you can see what their structure is, and


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          1   who has the votes and everything, and who has the stock.

          2                  MR. BANKS:  I don't know how much somebody

          3   wants to spend on defining who's a minority because my

          4   guess is that it's probably not that critical for

          5   purposes of this discussion.

          6                  Who's a minority owner is relevant if

          7   you're going to the government asking for special

          8   treatment.  If you're going to say, I'm a minority owner,

          9   and I want X, then it's relevant.  If you just want to

         10   walk around the street and say I own something, any

         11   structure works.  If you want to come to the government

         12   and say, I want this special treatment because I'm a

         13   minority owner, then it's relevant; and then they should

         14   be looking very closely, and then they should be

         15   dissecting your documents and dissecting your deal.

         16                  Because the fact of the matter is, part of

         17   the reason the tax certificate got destroyed was because

         18   it was so obviously used by a front organization.  They

         19   had two or three different transactions they could point

         20   to, not just one.  They had several different

         21   transactions they could point to that said, this one's

         22   bogus, this one's bogus, this one's bogus.

         23                  So when you put the policy under a spotlight

         24   like that and give the opponents an opportunity to point

         25   out that you've got bogus deals, then you hurt everybody


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          1   else.  So at that point it is relevant to look very

          2   closely at who's in control and go beyond the documents

          3   and see what the real structure is; and that's relevant.

          4   I think that in that situation, a very thorough and close

          5   scrutiny of who is a minority-controlled company becomes

          6   highly relevant.

          7                  MS. WRIGHT:  Oh no, it is relevant.  But

          8   I'm not saying it's not relevant.  I'm saying for your

          9   financing, if you're not trying to get anything from the

         10   government, then you don't have to worry about it.  If

         11   you are -- if you're trying to become a beneficiary of

         12   any policy, it is very relevant, and I would say right

         13   here, I support that fully.

         14                  I was at the FCC; that's a real thing.  You

         15   do need to have control.  And I'm in a company right now,

         16   and we're doing big finances, and I know why you need

         17   control.  And if we didn't have control and if we didn't

         18   have equity, it would be some different situation.  Even

         19   with control and equity you have to get people on your

         20   board.  If you didn't have any, then you could be in this

         21   situation, 1 out of 9 or something.  I mean, that

         22   happens.

         23                  But I think a greater question is, what

         24   happens to the minority?  Forget about the policy now.

         25   We hope you've come to the deal, we hope you have


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          1   control, and I say, I'm going to sell to you.  I'm going

          2   to sell to you for $150 million.  Where do you get the

          3   money?  That's the question we have to address here.  Or

          4   even if it was 50 -- there's nothing cheap now -- or even

          5   if it was 10.

          6                  Why is there such great difficulty in

          7   minority companies being financed?  So this has nothing

          8   to do with their minority ownership.  It may have

          9   something to do with their structure, but it has nothing

         10   to do -- or it shouldn't -- with the fact that I elected

         11   to sell to a minority.  But I'm like any other seller

         12   now.  I'm selling it to you; I want to close.  I don't

         13   want to close a year from now.  I want to close when the

         14   FCC let's it out.  And I want you to give me some

         15   assurance that you can close, and that's where most of

         16   the deals break down.  And that's something that we'd

         17   like to focus on and address.

         18                  MS. TRIGG:  If I could just interject a

         19   little something now.

         20                  You mentioned that historically the FCC's

         21   rules and regulations were based on policies and things

         22   15-20 years ago.  Remember then, too, that we were

         23   looking at minorities owning one station, maybe one

         24   station, a couple markets, and certainly small markets.

         25                  We're looking at playing in a bigger


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          1   aquarium now.  We're looking at owning multiple stations

          2   in a market, large markets, getting the spin-offs from

          3   Clear Channel, all these divestitures, and that has

          4   raised the bar when it comes to equity.

          5                  Now I'm distinguishing the difference

          6   between economic equity and your voting stock.  And

          7   there is a need to still consider minority ownership when

          8   you only have 8 percent of the economic equity because

          9   your deal is $1.4 billion.  So if we want to play in a

         10   bigger field and a bigger arena, we have to be more

         11   flexible and creative in defining minority ownership.

         12                  I do agree that control is critical, but

         13   when economic equity is tough to find and you don't have

         14   collateral to bring to the table, and you're going around

         15   raising money, I don't mind a VC taking 50 percent of the

         16   deal as long as I have voting control and control of

         17   that.

         18                  Also, we may want to consider taking a look

         19   at another model, particularly when there's still

         20   benefits to minority ownership.  And even though there's

         21   no real race-based explicit policies at the FCC right

         22   now, we do want to keep those statistics growing when it

         23   comes to minority ownership.  We don't want to lose

         24   minority ownership on paper at least.

         25                  And if, indeed, the tax certificate goes


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          1   through or we're successful in getting an Adarand study,

          2   we still want to craft a definition that works across the

          3   board, as much as possible, something that's prospective.

          4                  The National Minorities Suppliers

          5   Development Council, as you know in January, adopted a

          6   flexible plan in considering minority ownership.  They

          7   have one of the most stringent certification processes.

          8   They've had 15,000 minority business enterprises

          9   throughout the country, and their requirements were very

         10   strict to be considered a minority.  It was 51 percent of

         11   the voting stock, day-to-day operations and a majority of

         12   seats on the board.  That's pretty tough.

         13                  They recognized that raising capital was

         14   difficult, particularly if you want a minority business,

         15   not just to be a small business, when you wanted to be a

         16   larger player.  So they looked at a case where they

         17   adopted a flexible policy, that you could invite an

         18   institutional investor, but you could own up to

         19   30 percent of the economic equity.  You still had to have

         20   control, but you could reduce your equity and still be a

         21   certified minority business.  And that may be something

         22   we need to take a look at.

         23                  MR. WINSTON:  Well, that, of course,

         24   created a great deal of controversy when it was adopted.

         25                  MS. TRIGG:  But it was approved by


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          1   76 percent of the board.

          2                  MR. WINSTON:  I'm just saying it wasn't cut

          3   and dry, and it prompted a big rift within the

          4   organization getting it adopted.  And I assume that

          5   nobody has any obligations to try to get everybody in

          6   this room to adopt the standard today.

          7                  MS. TRIGG:  Well, I recognize raising

          8   capital for big deals is tough.  Absolutely, Jim, it was

          9   highly debated and still is.  They recognized that it was

         10   difficult to raise capital for big deals.  Do you want to

         11   have a 100 percent of a small business or do you want

         12   30 percent of a multi-million dollar or billion-dollar

         13   business?

         14                  MS. WRIGHT:  Can I just suggest something

         15   to you, Jenell?  I think a lot of that is a cliche.  That

         16   depends on the deal.  An assumption you're making is that

         17   you are coming to a deal, and you have a weak deal.  That

         18   is not true when you have a strong deal.

         19                  MS. TRIGG:  When you say weak or strong,

         20   how are you defining weak or strong?

         21                  MS. WRIGHT:  Weak or strong is very clear;

         22   do you have money, do you cash flow strongly or do you

         23   not?  If you have stations that cash flow, you meet the

         24   test, you can meet the coverage test, their debt is not

         25   over-exposed, they are not looking to take all of your


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          1   equity because everybody is not interested in being in

          2   the business of running radio stations.  You are; they're

          3   in the business of financing them.

          4                  So there's a lot of assumptions here.

          5                  Lyle, you had a very good example.  That's

          6   a deal where you came in and you didn't have the equity

          7   and you're building up.  And you expect to do that.

          8   You're structuring to get that deal done, and you're

          9   happy, you want to get some equity.  You didn't come in

         10   with 100 percent of the equity anyway, so you don't

         11   expect that.

         12                  On the other hand, if you have a deal where

         13   you come in with 100 percent of the equity -- and it

         14   doesn't matter, you have the control; you have almost all of

         15   the equity -- and your deal is very strong, and you can

         16   pass all those cash flow tests, they are not coming to

         17   take all your equity.  I mean, you've got

         18   representatives, you must have lawyers and financial

         19   people with you.  You're not just giving up equity

         20   because that's what's done in a deal; you give it up

         21   because there's a reason for it.  But even that equity

         22   means nothing to them if you don't have a good deal.

         23                  So if you're in a big deal --

         24                  MS. TRIGG:  I don't disagree.  I'm just

         25   saying, I think we need to be flexible in looking at this


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          1   definition.

          2                  MS. WRIGHT:  I'm just saying, so big deals

          3   and small deals are different.  They're very different.

          4                  But I didn't think we were here trying to

          5   argue a way -- people who have a hard time getting equity

          6   as it is, I didn't think we were having a discussion to

          7   have us get less equity; I think we were trying to say

          8   what do we do in the given situation to enhance our

          9   ability to do a deal.  Equity is not even always the

         10   question in all of these deals as it isn't in that one.

         11                  MS. TRIGG:  Well, I'm distinguishing the

         12   difference between getting equity and getting financing.

         13                  MS. WRIGHT:  You're saying retaining

         14   equity.

         15                  MS. TRIGG:  Well, retaining equity and

         16   getting financing.  I mean, again, every deal is going to

         17   be different whether you proportion your equity or

         18   subordinated debt, it's going to depend on where your

         19   money is, what your market is, your cash returns, your

         20   business plans-- all those things.

         21                  My point is, we need to look at a flexible

         22   way to define minority ownership if we want to grow in

         23   this particular industry.  Look at it.  I don't know

         24   whether there's a threshold, a benchmark.  I mean, this

         25   is open for discussion.  I say, let's look at this model


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          1   as does it work, does it not work.

          2                  Voting control -- I agree, controlling

          3   day-to-day operations is critical, but if you only have

          4   8 percent, whether you're publicly traded or not, are you

          5   then considered minority ownership?

          6                  MS. WRIGHT:  If you only have 8 percent and

          7   you weren't publicly traded, you're an investor in the

          8   deal.

          9                  MS. TRIGG:  But if you are management and

         10   you have control of the station, does that count or does

         11   that not count?

         12                  MS. WRIGHT:  I couldn't think of a real

         13   world private deal where you have 8 percent and somebody

         14   gave you voting control.  Who are the other 92 percent

         15   people?  Because unless it's Santa Claus or your mother,

         16   you don't have voting control; they have the control.

         17                  But I think it's a different question

         18   because deals are so different, and it would be very

         19   difficult in the time we're given to sit here and talk

         20   about it.

         21                  You may have a bank deal.  There's not an

         22   equity question there; they're not taking equity.  So if

         23   you have a bank deal, we want to know can you get

         24   financed.  If you have a deal that's not just a bank

         25   deal, then you're bringing in other people, whether


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          1   you're bringing in equity from private people or you're

          2   bringing in structured equity or you're doing something

          3   else, you might have to give it up.

          4                  Because you hear it, and after things are

          5   said all the time long enough, they start to take on a

          6   life, and they're not necessarily true.  Every deal does

          7   not involve people taking 80 percent of your equity --

          8                  MS. TRIGG:  Oh, I agree.

          9                  MS. WRIGHT:  -- 70 percent of your equity.

         10   It depends on the deal and the structure and what you

         11   bring to it.  If you bring empty pockets and good ideas,

         12   then you expect that you're not going to have all that

         13   equity.  But we're just talking about deals, structured

         14   deals, how do you get this deal financed.

         15                  Minority ownership is not a bar to

         16   financing; structuring your deal is, and there are other

         17   things that are a bar to financing.  Minority might be a

         18   bar to financing, but the fact that you have an ownership

         19   structure, that's not necessarily a bar.

         20                  MR. CALATAYUD:  My name is Tony Calatayud.

         21   I'm the founder, president and CEO of Master Media Group.

         22   We have, as of about 10 months ago, a brand new and the

         23   only 24-hours sports radio station in Miami, which is

         24   Market 11, if I'm not mistaken.

         25                  We are made of 100 percent -- actually


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          1   81 percent because we just did a deal with a venture

          2   capital group for 19 percent, and we did that and retained

          3   a nice chunk there of Hispanic and African American owners

          4   with me being the majority owner.

          5                  And by the way, somebody else talked about

          6   knowledge and the bankers in town.  There should be a

          7   major seminar made that everybody from Bank of America on

          8   down because they have no knowledge of what is going on.

          9   But that's besides the point.

         10                  The interesting thing is we picked up a

         11   signal that was on the expanded band.  And we talked

         12   about this before, and I know Maureen talked about it

         13   before.  We picked up 1700 AM, and, yes, cars go to 1700

         14   as of 1990, and it is an incredible signal.  We're heard

         15   in Finland, by the way.  It is a clear channel because it

         16   bounces off the atmosphere.  It really is unbelievable.

         17   And we go from the Keys to Palm Beach, but I don't want

         18   to be too long.

         19                  One of the things I spoke to Dwight Ellis

         20   about at the NAB -- and I spoke in Vegas about this

         21   too -- is one way to increase minority ownership in a

         22   radio -- -and that's where I'm at -- is on the expanded

         23   band, and this is a subject that people either have

         24   looked the other way on or not known about.  But I'm here

         25   to kind of declare it.


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          1                  There are 55 radio stations from 1620 to

          2   1710 that have usually a pretty good sound and a great

          3   signal.

          4                  Speaking of Mr. Ellis, there he is right

          5   there.  These radio stations were given to decongest the

          6   normal AM band, and as it turned out, people who had

          7   radio stations -- for example, mine in South Florida

          8   owned 1210 and 1700, and they had to take one of those

          9   two in a five-year window.  As it turned out, they put

         10   1210 at 50,000 watts, and now 1700 is there.

         11                  We're looking at another radio purchase

         12   right now in South Florida, but 1700 I have to give back

         13   supposedly in the next two-and-half years.

         14                  MS. WRIGHT:  What power do you broadcast at

         15   1700?

         16                  MR. CALATAYUD:  Ten thousand watts.  All of

         17   a sudden I as a minority -- and I feel almost as a poster

         18   child.  I'm a minority, I'm a Hispanic, and I'm in the

         19   general market.  We just got the rights to the Florida

         20   Gators, we've got the Dolphin's show.  We have gone out

         21   and hit a Goliath in our market that's got all the teams,

         22   and doing a great job with the front page and Miami

         23   Herald and so forth.  I don't want to bore you with all

         24   that.

         25                  But the story is the following.  We just


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          1   got more money from a venture capital firm because they

          2   see the vision and the model of what we want to do.  Our

          3   station's called "The Fan," and we want to brand "The

          4   Fan" across the country.

          5                  More importantly, in two-and-a-half years,

          6   supposedly, we give it back to the FCC for auction as 

          7   another 58 different stations out there.  Why?

          8                  If what everybody's talking about is

          9   minority ownership -- and I'm talking for the Hispanic

         10   Americans and the African Americans -- we're going to go

         11   across the board here.  I almost feel like a family

         12   because we're here together.

         13                  Why in the world hasn't the FCC -- and they

         14   have no answers, by the way, when I've asked them.  And

         15   I've met with Commissioner Tristani personally.  They

         16   have no answers as to what they're going to do with the

         17   expanded band.

         18                  There are 55 to 60 AM radio stations -- and

         19   with digital radio, who knows where it's going to

         20   go -- that are there for the taking.  Why hasn't anybody,

         21   or why can't somebody address that issue and go, why not

         22   put that aside for minority purchases?

         23                  We don't want the thing for free.  I mean,

         24   we've put seven figures in our deal, and we'll put more.

         25   And we're going to buy another station, and we're going


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          1   to keep on going.  In my case, obviously, I want 1700 in

          2   Miami, and I think we'll keep it one way or the other.

          3   But the other thing is, how about the other stations that

          4   may be around your neck of the wood?  Why is that going

          5   to go to auction?  So Lowry Mays can pick it up?  And I'm

          6   not in that kind of game.  I want to keep it, at least

          7   one for me, and I know many, many others for the rest of

          8   you.

          9                  So the end of the story is, expanded band

         10   radio should be addressed by the FCC and should be looked

         11   at as an alternative for minority ownership.

         12                  MS. WRIGHT:  That is something the NTIA

         13   should look at.  And you want to know why they're taking it

         14   back in two-and-a-half years?

         15                  MR. CALATAYUD:  No, this is a five-year

         16   situation from '97 to late 2002, where the plan is that

         17   after the five-year window, the radio stations which got

         18   the application to also get the expanded band which most

         19   are simulcasting on.  The signal they don't want goes

         20   back to the FCC for auction.  And our question is, well,

         21   we're serving the public interest in South Florida, I know;

         22   and I know many of you could probably serve the public

         23   interest where you are with a radio station such as that.

         24   Now you're in the ball game.  And I think that has to be

         25   addressed and has to be looked into, I mean, very


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          1   seriously.

          2                  MS. LEWIS:  Can you use that for data

          3   transfer?  Do you know if you can use that band for data

          4   transfer?

          5                  MR. CALATAYUD:  I believe so.

          6                  MS. LEWIS:  I think that's something we

          7   ought to explore a little bit.

          8                  MR. CALATAYUD:  Absolutely.  I mean,

          9   expanded band is clear; there's no interference out

         10   there.  We hit Charlotte at night.

         11                  VOICE:  That's a pretty good signal.

         12                  MR. RODRIGUEZ:  I think what the gentleman

         13   just stated is another example of something I mentioned

         14   this morning.

         15                  All the wireless band really have become

         16   the prime target for big business to take control of, and

         17   I think we have to watch very carefully what Congress is

         18   doing, what the FCC is doing, what NTIA is doing and the

         19   other relevant agencies.

         20                  I think it's very interesting the answer

         21   that the assistant secretary gave this morning, in terms

         22   of they're maintaining flexibility into this band, and I

         23   think that's fine.  However, it's very important for us

         24   to express very clearly that whatever decision the

         25   commission or NTIA or the Administration takes regarding


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          1   wireless band does not go further into ignoring the gains

          2   that minorities have made in ownership of spectrum.

          3   Because the way it looks, it's going to be another blow

          4   if it's left unchecked, another blow to minority

          5   ownership.

          6                  MS. WRIGHT:  Just identify yourself at the

          7   mike, please.

          8                  MR. JAMES:  How are you doing?  My name is

          9   Alvin James.  I'm the founder and senior managing partner

         10   for the MBC Network.  We're a new African American family

         11   channel.  And we're running into some interesting

         12   challenges as it relates to distribution.  And clearly,

         13   we've made a significant investment as an African

         14   American cable network in a very competitive industry

         15   where you're required to basically establish yourself

         16   before you're taken serious among the MSOs.

         17                  And I had a concern about a conflict of

         18   interest with the MSOs owning interest in other cable

         19   networks, and when you show up on their door step, you've

         20   got GMs and some of the corporate executives saying,

         21   well, if we owned a piece of you, then we could guarantee

         22   you distribution.  But since you're an independent in a

         23   sense, we're really not going to let you kind of skip the

         24   line.

         25                  And I think it's very important that we


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          1   look at having access to broadband distribution in terms

          2   of preserving a space for minorities as it relates to

          3   just preserving diversity.  And clearly, I don't think

          4   there's anything being done by the FCC or any of the

          5   other supporting agencies to really create a platform to

          6   really change that whole paradigm.  And I'd just like to

          7   get some feedback from someone in reference to what could

          8   be done to really investigate the conflict of interest by

          9   the MSOs in terms of the ownership conflict as well as

         10   whatever additional end roads we could pursue to increase

         11   our distribution.

         12                  MS. WRIGHT:  Well, I think you have two

         13   issues.

         14                  MS. LEWIS:  Excuse me.  Can we hold that

         15   thought for just a moment because we've been fortunate to

         16   been joined by Congresswoman Sheila Jackson-Lee of Texas.

         17   She has a very limited amount of time to spend with us,

         18   but she would like to make a few brief remarks.

         19                  REP. JACKSON-LEE:  Thank you, Lois.  I

         20   apologize to you.  In the Congress we say, would the

         21   distinguished gentlelady, Lois Wright, yield?

         22                  MS. WRIGHT:  Yes.

         23                  REP. JACKSON-LEE:  Let me just take a

         24   moment to say the reason why I ran over here, and the

         25   reason why I am tardy, and the reason why I'm running out


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          1   is because I'm in between votes.  And we're about to have

          2   a vote ring, and if you know of the somewhat more rapid

          3   pace of the House, know why all of us are clamoring to

          4   get into the United States Senate.  (Laughter).  We don't

          5   control our time, and we apologize to you.

          6                  But my delay was a pointed delay.  We just

          7   were concluding hearings in the Judiciary Committee with

          8   an array of very profound panelists, including the

          9   chairman of the FCC.  I know this is with the Commerce

         10   Department, and might I thank your department and Gregory

         11   Rohde, who has now added his own star to that very

         12   important subagency of the Department of Commerce.

         13   Gregory has been on the battlefield and is on the

         14   battlefield.  And Maureen, I want you to know that we

         15   appreciate him; that he has not let the bar down.

         16                  I am also delighted to see all of you who

         17   are giving to us the bottom line that the industry is not

         18   doing as it should.  I know that Congressman Towns has

         19   been a leader.  I serve not on Commerce but on Judiciary,

         20   which has -- don't let Congressman Towns know I said

         21   this -- the greater hammer because when you start talking

         22   about anti-competitiveness and issues of

         23   penalties -- punitive strong penalties -- it's the DOJ.

         24   And the Judiciary Committee, which always has a

         25   wonderfully, lovingly, contentious relationship with the


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          1   Commerce Committee -- and the reason is because it's

          2   overlapping jurisdictions -- I still think has a hammer.

          3                  So this hearing that we were having deals

          4   with legislation by certainly some very renowned members

          5   of Congress.  The witnesses were Tauzin and Anna Eschoo,

          6   but Boucher and Goodlatte are on my committee.  But

          7   Chairman Kennard was there.  You had representatives from

          8   Verizon, representatives from IAdvance, representatives

          9   from Prism, Maryland Public Service Commission -- that's

         10   why I couldn't leave -- the Precursor Group, the Walt

         11   Disney Company, the Earth Link, AT&T and Sanford

         12   Bernstein (sp) as a consultant, and of course, Robert

         13   Sacks represents all the cable companies.

         14                  So this member of Congress could not leave

         15   without pressing the point of minorities, women and small

         16   businesses.  We were really talking about legislation

         17   that would upset or intervene with the Telecommunications

         18   Act of 1996.  And I was on that Conference Committee, and

         19   the Judiciary Committee's perspective on that was

         20   competition, competition, competition, opening doors,

         21   opening doors, opening doors.

         22                  I am somewhat disappointed that the

         23   competition has shot upward; it has not rooted down.  And

         24   it has not rooted down to the extent that it has

         25   diversified different rungs which would include a large


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          1   number of minority start-ups and others.  And so my

          2   reason for staying for the questioning is to put into the

          3   record and pursue further one-on-one conversation with

          4   these individuals as to what they're doing.

          5                  Daryl Martin.  Let me welcome all the

          6   Texans and my good friends from all over Texas.  And

          7   Daryl Martin sitting there on the front row who is so

          8   very able in his efforts to educate all of us and to make

          9   sure that we see the heavenly gates.  And it's hard; it

         10   really is, but I'm working on it.

         11                  But I put into the record, and I said that

         12   I wanted all of these very profound individuals who were

         13   on the list, and others, to give me the answers of what

         14   they have done without this legislative initiative -- and

         15   I could give you the bills, but we'll let you get that

         16   later -- or what they think they could do with these

         17   legislative initiatives that physically challenge

         18   minorities, women, small businesses, schools, libraries

         19   and the elderly, and to give me pointed answers on

         20   whether or not the way we are presently structured, those

         21   entities can either have a piece of the pie and also have

         22   access to the pie.

         23                  Now I know you would want me to give you

         24   great and glowing answers.  Now, I will hold one-on-one

         25   sessions with these individuals, but I wanted to


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          1   get that on the record; and leave there to come here to

          2   you to say, that the answers were muddled.

          3                  And so we do have a long way to go, and I

          4   think the real issue is that the Commerce Department and

          5   NTIA has worked very hard.  Might I put an editorial and

          6   political comment, we cannot stop the flow because we

          7   have not reached it.  And even as we thought we would get

          8   some door-openers with the Telecommunications Act of

          9   1996, these companies are expanding and enjoying great

         10   profits.  And as you well know, more companies are moving

         11   into telecommunications and Internet that didn't even

         12   have any inkling or no product line in there.  And I

         13   don't want to call names, but we have several of them in

         14   my community who previously had not any interest but that

         15   was not their product line, and they're now in

         16   broadband.

         17                  Broadband is the new kid on the block.

         18   And what I would like to engage in or to say -- because I

         19   guess you would want me to come with answers -- is to say

         20   that we realize that we have not fulfilled the goals that

         21   we started out, so we do know that there are some

         22   successes that we can highlight.

         23                  Why the capital access remains a problem, I

         24   don't know.  You know we fought the battle of the CRA,

         25   and we won it to a certain extent.  And so capital


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          1   access, I should not be here discussing that.  But you're

          2   telling me, as I understand it, that that remains a

          3   problem.

          4                  Now, do you want me to push in my

          5   discussions and in these hearings for the access of

          6   capital to come from the conglomerates or are you

          7   suggesting that the financial institutions provid it?  

          8   And I'm posing a question, and then maybe it will be back 

          9   to me in writing.  Because the point that I was making in the

         10   hearing is what I want to hear from the respective

         11   gentlemen and ladies who will be visiting with me, what

         12   are they doing in collaboration as they expand to give

         13   pieces of the product line to small businesses, minorities,

         14   women and others -- and then the other group as I

         15   said -- and the disabled who are in business as well?

         16   And the others, I was talking more about access.

         17                  So that's one question that I pose, and

         18   that's what I posed to them.  And whether or not if I was

         19   to join them on this legislative initiative, which sort of

         20   upsets the Telecommunications Act, can they promise me

         21   that they'll get more competitive, and they'll bring

         22   these groups in; or if I leave it alone, can the

         23   opponents of the bill say we will fix it; we really were

         24   doing good, but we're not doing as good as we like.  So

         25   that's the one question.


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          1                  The other one is on the low power.  And I'm

          2   not sure.  Was that part of the discussion here today?

          3   So let me not throw apples and oranges together.

          4                  I believe it should be viable discussion.

          5   There are, obviously, the pros and cons of some who are

          6   in the bigger entities.  I happen to be supportive of the

          7   outreach of what low power will do, realizing that

          8   ownership that is big as it relates to our radio family

          9   falls sometimes in minority hands.  They have larger

         10   entities, and they have an opposition to the low power.

         11                  We don't have any conclusiveness as it

         12   relates to a consensus in Congress.  There are

         13   distinctions on the Commerce Committee.  I will say to

         14   you I think without being incorrect, the Congressional

         15   Black Caucus wants outreach.  If I wear my Congressional

         16   Black Caucus hat -- and I say outreach, along with the

         17   Hispanic Caucus -- we view opportunities for those who

         18   can have greater outreach as being able to do so in low

         19   power.

         20                  But our door's open to hear from you, so

         21   there are no answers.  We haven't moved legislatively on

         22   that, and there's a big debate but our angle in

         23   supporting the opportunity for outreach and expansion

         24   of opportunity.

         25                  Let me close because maybe somebody has one


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          1   question, and I've already over-talked my limit and

          2   probably will over-talk yours as well.  But in any event,

          3   I came here to show my support, and to say to you I'd

          4   like to hear the conclusions of this session.  I think

          5   it's a very important session.  Uniquely, you came on the

          6   day when we had this major hearing in the Judiciary

          7   Committee dealing with some of the components of this,

          8   not necessarily on the very point, and I took the

          9   opportunity to have these issues raised.

         10                  And so, I should hope in the next weeks and

         11   days to have answers that are solid answers as to why we

         12   find ourselves in this dilemma, now some four years

         13   later, at the passage of a bill that drew your support

         14   and lobbying, and everyone saying this will be a great

         15   day for everyone.  And if it is not the case, then I

         16   think we as legislators who have a special passion for

         17   these issues of affirmative action need to do so.

         18                  I sit down with the note that continuity is

         19   important.  And I have left the Hill, and I'm on my

         20   own time.  And therefore, if you think that continuity is

         21   important, then don't discard the elections of

         22   November 2000 of which many of the folk who are of

         23   prominence and profitability and are in business seem to

         24   think it doesn't matter to them.

         25                  Well, I can assure you that these very


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          1   issues will come to a head in 2000.  If you're on the

          2   wrong side of the political spectrum and aisle, you come

          3   tell me who is carrying that argument on the other side

          4   of the aisle.  And therefore, if you've got an answer,

          5   I'm willing to hear you, but if you want continuity, you

          6   better pay a lot of attention to the election of a

          7   Congress -- Democratic -- and to elect a president that

          8   will be held accountable on these very crucial issues.

          9   And I'm as bipartisan as the next person; I just want

         10   proof that the issues that we're all concerned about will

         11   be maintained because we have not reached the point where

         12   we can stop the struggle.

         13                  But thank you very much.

         14                  (Applause)

         15                  MS. LEWIS:  Thank you so much.

         16                  MR. GRAY:  So we can ask you a question

         17   now, correct?

         18                  REP. JACKSON-LEE:  As I go toward the door,

         19   but I'm listening.

         20                  MR. GRAY:  I'm Tony Gray of Gray

         21   Communications in Chicago.

         22                  So in the earlier session, we talked about

         23   what government can do to aid minorities in the

         24   broadcasting field.  And as you have heard from some of

         25   the panelists here, access to capital is still a problem.


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          1                  What some people may not have articulated

          2   to you directly is that capital is funneled in specific

          3   areas to specific individuals that they want to be

          4   involved in this industry.  Everyone who is minority by

          5   definition doesn't necessarily have the minority

          6   communities best interest at heart.  And I think you

          7   understand my point that I'm trying to make here.

          8                  So we want to know what you, as a member of

          9   Congress, and the rest of the Congressional Black Caucus,

         10   and the government, will do to help to fix some of the

         11   problems that do exist?  Thank you.

         12                  REP JACKSON-LEE:  Thank you very much, and

         13   thank you for your question.

         14                  First of all, I have an aversion or an

         15   opposition to isolating -- oh boy, that bell's going to

         16   ring -- but tokenism appalls me.  And that is -- and I

         17   don't know if you were getting there -- that we pick the

         18   favorites.  And then we have a few favorites, and then

         19   that ends it; we've done our job.

         20                  So the point that I would make to you is

         21   that this input is very vital.  And what I would like to

         22   do, and the questions that I pose, is to put the onus and

         23   the burden on these large entities that are most heavily

         24   regulated, whether we change our regulation structure by

         25   legislative change or that we leave it to be operated


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          1   under the Telecommunications Act.

          2                  How are they answering the questions of

          3   collaborating with smaller entities, in particular,

          4   minorities, women and small businesses?  How are they

          5   providing access to you in terms of capital because they

          6   can do it?  And then the parallel effort is to ensure

          7   that our banking institution -- financial

          8   institution -- also provide the resources.

          9                  So my approach, dealing with the Judiciary

         10   Committee and the oversight that I have over this

         11   particular aspect of the legislation, is to ask what

         12   they're doing to reach out to you, and to not accept that

         13   10 years ago they established a relationship with a very

         14   fine minority of women-owned businesses, and they still

         15   have that relationship.

         16                  I applaud that, and I applaud the growth in

         17   our minority businesses.  But what are they doing with

         18   start-ups and new kids on the blocks and people who've

         19   come about through the 1996 de-reg of the industry?  And

         20   that's the pressure that I think we need to put them.

         21   Thank you very much.

         22                  (Applause)

         23                  MS. WRIGHT:  Would you just come to the

         24   mike, please?

         25                  You know what we might do also, when you


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          1   come to the mike, anyone that has any other questions

          2   that they would like to address to Representative

          3   Jackson-Lee, you could give those questions to Maureen in

          4   the written form, and she will get them over to her.

          5                  REP JACKSON-LEE:  I appreciate it.

          6                  MS. WRIGHT:  Go ahead.

          7                  VOICE:  I was asked to remind you, there's

          8   a question pending on the floor that hasn't been

          9   answered.

         10                  MS. WRIGHT:  This is a cable question; it's

         11   two parts.  I think that as far as NTIA is concerned, I

         12   think that's a very good issue because that ties into the

         13   general consolidation battle that we've been fighting on

         14   other fronts, which is, of course, Time Warner, Cox,

         15   Comcast.  Many of them own, or have an interest in, many

         16   of the programs that they do carry over their cable

         17   systems.  That's one question.

         18                  The other question, which will be put to

         19   you is, channel capacity is what everybody is talking

         20   about.  Now, as more of the systems go up in their

         21   digital array, they can create more channels because they

         22   will say, have you gone through all the steps that you

         23   have to go through with each system to comply with their

         24   channel-capacity rules?

         25                  That's something that would also be good to


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          1   get to Maureen which we would get from here.

          2                  That's why I say it's two parts.  The first

          3   part I think is very interesting because that's a very

          4   big question and a time bomb at the FCC.  I don't know

          5   that they'd want to answer that; that they'd want to try

          6   to force AOL/Time Warner out of all those Turner networks

          7   that they own.  You're talking about big hitters, but

          8   that doesn't make it an unfair question.

          9                  The second part is, just that you went

         10   through the procedures.

         11                  MR. JAMES:  Yes, we complied with all the

         12   procedures, and we're having minimum success with the

         13   network.  We're up to about 5 million households and

         14   growing.  But I still believe that it's such a critical

         15   crossroad.  We went into cable because of the challenges

         16   in the broadcast industry, knowing that it's been

         17   30 years, and we still own less than 2 percent of all the

         18   broadcast stations in the country.

         19                  When we recognize there's 35 million

         20   African Americans representing 13 percent of this

         21   population with $550 billion in disposable income, I

         22   think it's somewhat of a slap in the face.  Even the

         23   broadcast industry has not fulfilled its commitment in

         24   terms of really being logical in their approach that,

         25   a) the banks aren't really going to become that


                                                                      186

          1   compassionate towards financing the acquisition of

          2   television stations for minorities; and b) I think we

          3   have to take a real practical approach to look at the

          4   success of some of the other ethnic acquisitions of

          5   stations in terms of markets where there are two Hispanic

          6   free-over-the-air stations, two Korean free-over-the-air

          7   stations.  We have two PBS stations in most major cities.

          8                  Something radical such as allocating one of

          9   those stations to an African American owner through the

         10   assistance of the FCC and the government I think is going

         11   to be a realistic approach to really improving our

         12   position in the free-over-the-air broadcast arena.

         13                  I think we've got to really become

         14   pragmatic in trying to cut to the chase because too

         15   often we put the problems on the table, and everybody

         16   feels good that they get a chance to vent the issues; but

         17   at the end of the day we find ourselves really back at

         18   square one.  And I think somebody has to be willing to

         19   take a little more risk and take a much more radical

         20   approach to say, do we file a class action lawsuit to

         21   force the FCC to really take action?  I mean, it has to

         22   be something that's aggressive from that

         23   perspective -- and this is just my personal

         24   opinion -- that really forces them to take a much

         25   different approach to dealing with this issue of denying


                                                                      187

          1   us the fundamental opportunity as a people to communicate

          2   on a national basis.

          3                  And today, we cannot get a news story that

          4   affects the African American community on a daily basis

          5   because there is no infrastructure, and I think that's a

          6   sin.

          7                  MS. WRIGHT:  If you would come in and talk

          8   to Maureen on that consolidation issue.

          9                  MR. PEREZ:  I'm Ben Perez from Abacus

         10   Communications Company.  Much as with the simulcast

         11   period, in the conversion to digital television, the FCC

         12   set up a process where they created an additional 1,600

         13   full-power television allocations.  And they took each

         14   full-power television licensee and they gave them a

         15   second channel.  And they said that you simulcast both in

         16   analog and digital for a five-year period, and at the end

         17   of the five-year period, we want you to give back one or

         18   the other channels, and we're going to take those 1,600

         19   vacant television allotments, and we're going to auction

         20   them to the highest bidder.

         21                  And one might ask if you're trying to

         22   improve minority ownership, well, there's 1,600 vacant

         23   allotments with stations built on them sitting there that

         24   will would go up for auction.  So it seems like a

         25   gigantic opportunity to do something about the absence of


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          1   significant numbers of minority television owners.

          2                  But there are two problems.  One problem is

          3   actually quite simple, but the other is the same problem

          4   you have with your AM band concern.

          5                  The first problem is that Congress

          6   legislated that the FCC had to do this auction, and then

          7   they did that back when we still had a budget deficit.

          8   And they were worried about raising money; and so, they

          9   told the Commission we're going to budget the proceeds

         10   from the television spectrum auction into our budget

         11   forecast, and now you have to do it.

         12                  Well, now we're in a budget surplus period,

         13   so perhaps that legislation could be undone.  I don't see

         14   it as a big problem because they were talking about 4 or

         15   5 billion dollars, and on the scale of things that is not a big

         16   problem anymore.

         17                  But the other problem -- and the problem

         18   you have -- and I would like to get somebody's proposed

         19   answer.  As it seems like in either case, you run smack

         20   into the recent Supreme Court cases that say that the

         21   government cannot do any type of program where the

         22   benefit is being distributed on the basis of race.

         23                  We're an ethnic group, and I haven't been

         24   able to come up with a screen or process that is

         25   sufficient to get past the current restrictions that


                                                                      189

          1   would be placed on the government that would allow the

          2   FCC to fashion a program, to funnel a significant number

          3   of the 1,600 vacant built stations to minorities.

          4   MR. CALATAYUD:  On the TV side -- and I wasn't fully aware

          5   of that; thank you for that information -- it incredibly

          6   parallels what we're talking about in radio.  I know when

          7   I spoke to Commissioner Tristani -- obviously, it wasn't

          8   formally on paper, but what she stated was that they

          9   would look into the opportunity whereby minorities would

         10   have certain allowances that would make it -- well, we

         11   had talked about different things.

         12                  By the Year 2002, they want to look at a

         13   variety of different options that would ease the way for

         14   minorities to really be players in that kind of expanded

         15   band format.  I hope that is the case.  I don't know

         16   where it's going to go from here, obviously.

         17                  MR. PEREZ:  What does that mean?

         18                  MS. WRIGHT:  Allowances.

         19                  MR. CALATAYUD:  Well, when we talked about

         20   it, and she stated allowances, that there could be a

         21   variety of different financing measures that would be established

         22   for assisting minorities for a particular expanded band

         23   format.

         24                  MS. LEWIS:  Did she say anything about

         25   bidding credits at auctions?


                                                                      190

          1                  MR. CALATAYUD:  She did.  They mentioned

          2   that as well.

          3                  MS. WRIGHT:  So it's something like PCS.

          4                  MS. TRIGG:  Before we do an Adarand study,

          5   you still can't do a race-based solution.

          6                  MR. CALATAYUD:  But most of what I got, by

          7   the way, at the FCC was, we're going to have to look into

          8   that; we're going to have to look into that.  I mean,

          9   that is basically what I got at the FCC.  They tried to

         10   tell me something.  I flew all the way to Washington to

         11   talk to Commissioner Tristani, but that was basically it.

         12                  MR. PEREZ:  Even with bidding credits, the

         13   output of the auctions that have been held so far have

         14   been extremely poor in terms of minority winners, and so

         15   bidding credits hasn't been enough.  And then on top of

         16   that, two years ago, the FCC decided that bidding credits

         17   were unconstitutional, and they suspended the use of

         18   bidding credits.  And there's been no Supreme cases going

         19   in the other direction.  So I don't know how they could

         20   do bidding credits when they already announced that they

         21   have repealed the ones they had because they were

         22   unconstitutional.

         23                  MR. CALATAYUD:  All I know is we're

         24   two-and-a-half years away from that window at the end of

         25   2002, and they had better find a way to do something.


                                                                      191

          1   And I can tell you right now, they've got plenty of time

          2   to do it.  But you can't look at one side of the mirror

          3   and go, "We really need to help the minorities and

          4   further them in this industry," and then on the other

          5   side go, "Yeah, we've got that expanded band situation

          6   that could be used for that, but let's think about that

          7   in about 2002."  I mean, I think it's got to be done in a

          8   timely fashion.

          9                  MS. BROWN:  I'm Tamara Brown with the law

         10   firm of Chicardi (sp) & Bacon here in Washington, D.C.,

         11   and I wanted to bring to Commerce's attention as one

         12   possible solution in terms of financing.

         13                  We have the Telecommunications Development

         14   Fund that was established under the '96 Act, and

         15   supposedly there's money sitting there that's growing

         16   with every auction.  At a certain portion of each

         17   auction, money is sitting there growing.

         18                  Why isn't that those minorities who are

         19   already existing in the telecommunications industry,

         20   whether it's broadcast, whether it's new technologies,

         21   PCS, why isn't that money not being channeled to some of

         22   those small businesses so they can continue to expand

         23   their businesses, to go into new opportunities, whether

         24   it's with broad-band?

         25                  So I'd like for Commerce to consider with


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          1   the FCC in Congress, since that pool of money is sitting

          2   there, and it's constantly growing with each new auction,

          3   that they consider broadcasters who are struggling to

          4   expand and go into new areas and go into new markets to

          5   use that fund.

          6                  I may be aware of maybe one or two deals

          7   that have been done using that fund; however, it seems to

          8   me if access to capital is a problem, then maybe we need

          9   to open up the regulations or re-look at those

         10   regulations governing TDF to open it up to existing

         11   broadcasters, existing minority or women-owned companies

         12   that are looking to expand their businesses.

         13                  MS. LEWIS:  I don't know whether the TDF

         14   fund is precluded now from investing in current

         15   broadcasters, but Ginger Lew, who is head of the fund,

         16   talked today about how the high cost of broadcast

         17   properties makes it very difficult for the fund to

         18   participate in some of the larger deals; and what they're

         19   looking to do is to try to come in at first-round

         20   financing stages to help give people an opportunity to

         21   leverage their dollars into other financing.

         22                  MS. BROWN:  Tamara Brown again.  I can

         23   clarify that it was for new technologies.  The TDF fund

         24   was for new technologies and not necessarily broadcast.

         25   But I think we need to re-look at that now because you've


                                                                      193

          1   got the fund sitting there, and there hasn't been a lot

          2   of money put out to minorities, the purpose for the fund.

          3   And so, I think Congress and the Administration needs to

          4   look at that again as to how existing licensees and those

          5   who want to expand can be able to have access to that

          6   capital if that's what it's sitting there fore.  So maybe

          7   Congress needs to look at that again and possibly bring

          8   some resolution for some of the people that are sitting

          9   in the audience here who are still struggling in that

         10   area.

         11                  MS. WRIGHT:  That's a good point you

         12   brought up about the fund because there is the other fund

         13   which does invest in broadcast properties.  The fund is

         14   called Quetzel Fund, and it's managed by Chase Capital

         15   Partners and Reggie Hollinger.  I don't know if any

         16   people here have worked with that fund yet or applied to

         17   get some funding, but that would be also something good

         18   which their office could track just to see how they're

         19   investing.  And that fund was established by the large

         20   broadcasters.

         21                  As Representative Jackson-Lee was saying,

         22   Justice does not permit them to invest, hold or take-back

         23   paper, investment of 30 percent.  So what they did is

         24   they established this fund, and the fund is third party

         25   managed, so essentially they're far away from it.  It's


                                                                      194

          1   arms length enough to pass a Justice smell test.  I know

          2   that they did a .com deal, and they've done one other

          3   broadcast.  And I know that they're doing others, but

          4   it's something that people should be encouraged to look

          5   into.

          6                  MR. WINSTON:  I think, Maureen, you all

          7   invited Reg Hollinger today.

          8                  MS. LEWIS:  I did, but he wasn't able to

          9   attend.

         10                  MR. WINSTON:  I was quoted in the trade

         11   press a week or so ago as being critical Quetzal, and I

         12   was hoping to have a dialogue with Reg to explain my

         13   concerns.  It's not my desire to talk about his fund;

         14   he's a good committed guy, but I think he's in a setting

         15   that is not the best setting for the promotion of

         16   minority ownership.

         17                  Specifically, Chase Capital Partners is a

         18   division of Chase Manhattan Bank, and the kinds of

         19   business plans -- the business models they're looking

         20   for -- is a straight Wall Street model.  They're looking

         21   for an investment that's going to be ready for an IPO in

         22   three years, so they're looking for huge growth rates,

         23   they're looking for cutting-edge kinds of deals.  And

         24   broadcasting is a mature industry, and it's hard for

         25   broadcasters to meet their model.


                                                                      195

          1                  So as was just pointed out, the impetus for

          2   Quetzal was that there was a lack of funding for minority

          3   broadcast ventures.  They've done four transactions,

          4   three of them have been Internet deals and only one

          5   broadcasting deal.  So my concern is that Quetzal is not

          6   going to hit the target that was the impetus for the

          7   fund.  And, of course, their response is -- the quote

          8   that I saw in the article was, "Quetzal is designed to

          9   invest in businesses that are going to show the kind of

         10   return we're looking for."  So they don't view its purpose 

         11   the way I thought the company was established, which was to be a

         12   broadcasting financing vehicle; their view is it's a

         13   Chase investment vehicle and Chase's money.  That's what

         14   Chase does.

         15                  So I think there needs to be some further

         16   clarification of Quetzal's role.  I think that Lowry Mays

         17   and people who were the impetus in creating Quetzal need

         18   to take another look at what it is the objective of the

         19   fund is suppose to be.

         20                  MS. WRIGHT:  Well, I think it's very

         21   important that people in this room that are able to do

         22   that go to that fund because why should Clear Channel and

         23   CBS, Viacom, why should they get credit for establishing

         24   a fund that increases minority ownership in

         25   broadcasting?  And that's what the fund was established


                                                                      196

          1   to do, and that's what they told -- we met with Joel

          2   Klein.  That was what they said they were doing; it was

          3   going to eventually be a $2 billion fund.

          4                  And then three out of the first four deals

          5   are not broadcast, and more importantly, they are not

          6   investing in the possible applicants that need it the

          7   most.  If you have the big super deals I was alluding

          8   to earlier, you don't need the fund.  But what if you

          9   just want to pick up two stations somewhere?  It

         10   shouldn't matter, radio television, whatever.  They're

         11   mezzanine funds, so you know you're going to have some

         12   equity in there, but it's not that terribly onerous.

         13   It's more important that they need to invest and need to

         14   see some growth because you're not seeing any growth on

         15   the minority side of the business.  And that's what that

         16   fund is there for, and that's what all those people are

         17   getting all the tremendous kudos for, but we haven't seen

         18   anything yet.

         19                  MR. BANKS:  There's a big need for some

         20   lower cost of equity capital because I think that's one

         21   of the biggest hurdles, especially if I'm going after

         22   deals.  Because we're going after fairly sizable deals,

         23   but if I have to produce 25 to 35 percent on an

         24   annualized basis to my venture capital partners, it's

         25   tough to justify prices when I'm running up against a


                                                                      197

          1   Raycom or a Clear Channel who's using maybe 10 percent or

          2   12 percent as their return.

          3                  So if there's ways to take like a TDF fund

          4   and expand it and have the return requirements just a

          5   little bit less aggressive, I think that you'd find more

          6   people using that with much more success.

          7                  MS. HINES:  My name is Jeanell Hines, and

          8   I've been seeking to purchase my first radio acquisition

          9   and had the opportunity to attempt to do business with the

         10   Quetzal fund, and sent a business proposal to Reginald

         11   Hollinger and Clarence Zachary; and basically the

         12   response that I got back was, in terms of my experience I

         13   could be the poster child-- their ideal candidate.

         14   However, in seeking to purchase two small stations for

         15   about $6 million -- but I need it, and I had my senior

         16   debt in line, but was too small for them to deal with.

         17   "Jeanell, we want to deal with $30-60 million plus, so

         18   when you're ready to be at that level, come back."

         19                  Well, excuse my French, I was ticked

         20   because, like you, I thought their purpose was ideally

         21   for someone such as myself who's starting, had the

         22   experience.  I'm not an inexperienced operator; I wasn't

         23   looking for anything free.  So I fired off a letter to

         24   Eddie Fritts, Mel Karmazin and Lowry Mays.  I did hear

         25   back from Eddie Fritts basically saying, that's not the


                                                                      198

          1   NAB's purpose in getting involved, et cetera, et cetera,

          2   but basically said that I understand their need to want

          3   to do big deals, be involved in the .coms, but some

          4   portions of that fund should be set aside for smaller

          5   investment partnerships, such as myself, those that are

          6   looking for monies less than $10 million.

          7                  So I haven't heard anything.  Even the

          8   owners that I've been trying to buy this station from put

          9   in a call to them to take another look at my deal.  But

         10   again, no response from them.  Needless to say, they're

         11   very slow to return phone calls and et cetera; but as far

         12   as I'm concerned, I haven't found the Quetzal Fund to be

         13   worth all the hoopla for my personal needs.

         14                  MS. LEWIS:  All right.  We have time for

         15   just two more comments.

         16                  MR. KARIM:  Hi, Talib Karim.  I'm actually

         17   a principal of the law firm of Karim & Judd, and we're

         18   actually in the process of restructuring, and our name is

         19   going to be now The Technology and Entertainment and

         20   Communications Law Group or Techlaw.com.

         21                  In that context, I wanted to mention

         22   something that seems very obvious.  We have the Supreme

         23   Court right now that is basically providing an almost

         24   impenetratable barrier to advancing affirmative action

         25   type programs, and I think clearly, as the congresswoman


                                                                      199

          1   mentioned earlier, that landscape is governed by

          2   politics.  And the thing that I've always been just

          3   amazed at is, why we have black broadcasting vehicles,

          4   such as the Radio Ones, such as the Inner City vehicles,

          5   that are not basically mobilizing blacks to get involved

          6   in a tremendous way that could, in essence, change the

          7   landscape.

          8                  I actually represent a group called the

          9   Black Entertainment and Telecommunications Association,

         10   and one of the things that we are seeking to do is to

         11   work with NABOB and to work with the other non-profit and

         12   for-profit entities -- the Radios Ones and the like -- to

         13   use their platforms to make a difference this election

         14   season with respect to the presidential and congressional

         15   elections.

         16                  Some of us were talking about should we

         17   file a class action lawsuit against the FCC.  Well, if

         18   Congress has the advocate for our community -- that is

         19   Chairman Kennard -- in kind of a head block and

         20   preventing him from doing some of the things that he

         21   would like to do, then we have a Catch 22 situation.

         22                  That's my first question.  How would you

         23   encourage or will you begin to encourage the black

         24   broadcasters that you have relationships with to really

         25   get involved politically in a way that heretofore they


                                                                      200

          1   haven't done?

          2                  And then second of all, I would like to

          3   just once again echo what our distinguished speaker who

          4   previously came up said, is that the barriers for new

          5   entrants are just tremendous.

          6                  I look at my colleague here to the left,

          7   and look at the excellent work that they're trying to do

          8   in terms of providing an alternative to BET.  And I think

          9   that BET is great -- they're one of our clients, in

         10   fact -- but what I'm trying to say is, we need

         11   alternatives.

         12                  The black community cannot be satisfied by

         13   just one platform.  So I'm wondering what we should do is

         14   to really mobilize our resources -- both our capital

         15   resources, our promotional resources, our community

         16   organizations -- and work in a much more systematic way

         17   to make sure that at the end of the day -- at the end of

         18   Chairman Kennard's tenure, in fact -- that we don't have

         19   the same people who are at the table that were at the

         20   table three years ago when he was first appointed to his

         21   position.

         22                  MS. WRIGHT:  Kalib, you've cut into our

         23   second question.

         24                  Let me just say this.  I don't know what

         25   Radio One is doing to push the political agenda this year


                                                                      201

          1   on the elections, but I would imagine that since they are 

          2   part of NABOB, and NABOB is very heavily involved in doing

          3   PSAs and trying to get out the vote, and so, I'm sure

          4   they're doing that too.

          5                  But I can speak for Inner City to say that

          6   I don't know when we've ever been accused of not being

          7   politically involved.  We're very involved in this

          8   election, and someone even mentioned one of our stations

          9   this morning -- our most involved political

         10   station -- and I think what we can do, other than pick up

         11   people and drive them out to the polls to get them to

         12   vote.

         13                  And I think that's something that everyone

         14   can do, not just your larger broadcast stations.  If you

         15   have a station and your radio market is local, those are

         16   the people that you try to influence.  So I think that

         17   there's a genuine interest there, and everybody

         18   understands, as the representative pointed out, the

         19   importance of politics, as Jim pointed out this morning.

         20   So I think that everybody is pretty committed on that.

         21                  On the issues of barriers to entry, I

         22   couldn't agree more with you, and I do encourage the

         23   gentleman from MBC -- and I am familiar with them from

         24   cable -- to make the overtures to NTIA, to NABOB, to

         25   anybody else, to go on the Hill because that's a very


                                                                      202

          1   tough issue.  That's certainly not an issue that we can

          2   resolve here since this has been allowed to go on for so

          3   long, but that does not mean that that's not a legitimate

          4   issue.  And I really hope that you do pursue that, and

          5   I'm sure there's a lot of interest around here from

          6   people who would like to work with you on that.  And

          7   especially anyone that doesn't have a lot of stations or

          8   they're just a new entrant.  So everybody's sort of in

          9   the same boat that he's in; they're just in a different

         10   form of the media.

         11                  I guess that's why we're all here to see

         12   what we can do to drop barriers to new entry, and I'm

         13   sure you'll get a lot of support from Maureen and NTIA.

         14                  MR. KALIB:  Can I just mention?  And,

         15   again, you guys are certainly to be congratulated in

         16   terms of NABOB.  But let's look at it.  The black turnout

         17   historically has been abysmal.  And I think when you say

         18   we're doing the best we can, I have to say, coming from a

         19   community in Memphis, Tennessee where WLOK -- a former

         20   and perhaps still a NABOB member, and is like really the

         21   big fish, number one or two, as an AM station in the

         22   Memphis market -- that black radio can have a tremendous

         23   impact on driving people to the polls.  And actually it

         24   does.  It takes people, it drives people to the polls, in

         25   Memphis in particular.


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          1                  MS. WRIGHT:  Can I say this because we do

          2   have to wrap up?  We're all sitting here today.  Unless

          3   you could name every one of these stations and say you

          4   did do some PSAs and you didn't, how can we indict them?

          5   We can only encourage people to say that that is what we

          6   would like people to do.  I wouldn't never say that they

          7   did or did not do something.

          8                  MR. KARIM:  Maybe we need to do more than

          9   PSAs is what I'm trying to say.

         10                  MS. WRIGHT:  And they can't say anything

         11   political at all.  So I'll carry your message to NABOB,

         12   but Maureen can't say anything.

         13                  One last short comment.

         14                  MR. EDWARDS:  Eddie Edwards, Glencairn and

         15   the Black Broadcasters Alliance.

         16                  I want to go back to what this group was

         17   about and hope that I just get a sense of what we might

         18   walk away with defining minority ownership that's crucial

         19   to the booklet -- to the report -- that NTIA is trying to

         20   publish, and I just didn't get a sense that we spent

         21   enough time on that.

         22                  So I hope that before we leave, we could at

         23   least --

         24                  MS. LEWIS:  Well, unfortunately, because we

         25   do have another panel -- but I would encourage everyone


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          1   to file written comments.  NTIA has issued a Federal

          2   Register notice soliciting comments from the public.  Our

          3   initial comment date is July 28th, and reply comments are

          4   due on August 8th.  And we will be incorporating

          5   information not only from today's session but also from

          6   the written comments.

          7                  So please, if you have further thoughts on

          8   the definition, by all means I encourage you to file

          9   comments.

         10                  Thank you.  And with that, we'd like to

         11   just shift gears and move into our second working group,

         12   which is Programs and Policies to Promote Minority

         13   Ownership.  But thank you all for your participation.

         14                  (Applause)

         15                  MS. TUCK GARFIELD:  Are we ready to

         16   reconvene again?  I'm Chanda Tuck-Garfield.  We don't

         17   have too much longer to go, but we hope that we will

         18   continue to have a fruitful and enlightening and

         19   informative dialogue.  And this truly is a workshop.  And

         20   although there are individuals that are here at the head

         21   table, we encourage you to put forth your comments to let

         22   us know what your thoughts are on this issue as we move

         23   forward to talk about issues of minority media ownership.

         24                  What I would like to do is to just tell you

         25   what our goals are for this panel, or actually this


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          1   working group.

          2                  The goals are to have a more in-depth

          3   discussion of some of the policies and programs that have

          4   helped to facilitate minority ownership, whether it be

          5   tax certificates, distress sales, SSBIC programs, et

          6   cetera.  We want to have an open dialogue on that and to

          7   get everyone in the room's perspective on the issue.  And

          8   actually, hopefully, we can leave from here with a few

          9   priorities for things that NTIA should look at as we go

         10   forward-- policies, programs, whatever it may be.

  [ Sample survey background discussed here.  Actual text deleted.]

         18                  Earlier today, Mark Lloyd from the Civil

         19   Rights Forum mentioned that perhaps NTIA should work on

         20   the Adarand study-- what role should we be playing, what

         21   role or what study should we be doing?  So we want to

         22   look at that again today.

         23                  So I'd like to start out by asking a few of

         24   the individuals who are on the dais with us here to give

         25   us their perspective on what they see as some of the top


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          1   priorities and policies and programs as we move forward.

          2                  And I'll start on my left with David Honig,

          3   and the other individuals who are on the dais with us can

          4   feel free to jump in.  But I would like to go from David

          5   to Dee Dee Ferrell of Viacom, as well as Connie Chick

          6   Smith from the Benton Foundation and Talib Karim, and

          7   then move to your comments and concerns.

          8                  MR. HONIG:  Thanks very much.  I have no

          9   answers; I do have three questions.

         10                  The reason we're all here today, basically,

         11   is because NTIA has asked for our help and guidance.  And

         12   I've been, as you know, to many of these conferences and

         13   seen very little come out of them.  The next hour is

         14   probably our opportunity to give NTIA something of value

         15   for having brought us here.  So I'd like to commend to

         16   the body three questions that might be useful to focus on

         17   because they are developing a record.  That written

         18   record will be probably cited in congressional hearings,

         19   cited in various studies and end up being issues in this

         20   or that court case.

         21                  Those three questions are this.  First, is

         22   there anything specific that NTIA can do better than

         23   other parts of the government to stimulate either

         24   government-sector or private-sector investment in

         25   minority-owned broadcasting?


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          1                  Second.  Is it a fact that what we refer to

          2   among lawyers as race-neutral means are going to be

          3   insufficient to remedy the present effects of past

          4   discrimination, including government involvement in it,

          5   government ratification and validation of it?  And if

          6   that's so, what's the route for recognition of that fact

          7   to being able constitutionally and politically and

          8   morally to do something about it?  And what is NTIA's

          9   role in getting from the recognition of that problem to

         10   its solution?

         11                  And third, should we, given the finite

         12   time, energy and resources that we have and that NTIA

         13   has -- we as constituents of NTIA -- be devoting our

         14   attention more to the rulemaking process of the FCC to

         15   develop incentives or to developing and pushing for

         16   legislation?

         17                  MS. TUCK GARFIELD:  Dee Dee, would you like

         18   to comment next?

         19                  MS. FERRELL:  I don't know that I have

         20   specific questions, but I do have two statements that I'd

         21   like to give just for food for thought for everyone here.

         22                  Dwight pointed out earlier that we've had

         23   these panels for many years now, starting in '78 and

         24   probably even starting before this, so maybe it's time

         25   for us to start thinking outside of the box and to start


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          1   thinking of new ideas and new ways.  And Toni Cook

          2   Bush said it this morning, "Stop focusing so much on just

          3   radio and television."  There is a telecommunications

          4   revolution going on out there, but we are still focused

          5   on radio and television.  And certainly, as Viacom knows,

          6   those are two essential and important parts of our

          7   business, but you will notice all of the major

          8   telecommunications companies are looking to other places.

          9   They're looking to the Internet, and they're looking to

         10   broadband.  And I'm not saying that those industries are

         11   necessarily any easier, but we've got to start thinking

         12   outside of the box.

         13                  And in terms of policy, I think one thing

         14   we have to remember -- and it's certainly something I

         15   learned when I was at NAB for about six years in their

         16   government relations department -- that there are no

         17   permanent friends or enemies in Washington, and we have

         18   got to figure that statement out and learn how to build

         19   coalitions, learn how to think of working with people

         20   outside of the minority community, learn how to trade on

         21   issues for an issue.

         22                  A lot of times, there are probably things

         23   out there that the Republicans want that they would love

         24   to have some support from the Black community, the

         25   Hispanic community or the Latino community.  There are


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          1   issues that we probably want too.

          2                  The one thing that I've noticed in Congress

          3   is that you have the rural members of Congress and the

          4   urban members of Congress coming together because they're

          5   realizing that neither of those communities are being

          6   served.

          7                  So we've got to find where our coalitions

          8   are, where are people are.  You never know, in working at

          9   NAB and working at Viacom, the statement is true;

         10   "Politics make very strange bedfellows," and we need to

         11   find those other bedfellows and stop just looking to each

         12   other and start reaching out to some of these other

         13   constituencies to see if there are places where we can

         14   form coalitions.

         15                  So I just offer those as to thoughts that

         16   maybe we need to consider and start thinking broader than

         17   we have been thinking up to this point.

         18                  MS. SMITH:  Chick Smith from the Benton

         19   Foundation.  I'm kind of like David Honig in that I don't

         20   have an answer per se, but I do have a question that I'd

         21   like us to think about as well.

         22                  Because the telecommunications industry is

         23   so quick to change -- every week, whether we want to

         24   admit it or not, there's something new coming down the

         25   pike that we have to adjust to -- we need to think about


                                                                      210

          1   how we can set up an infrastructure that policy can be

          2   changed, not as quickly but quicker, so it's not by the

          3   time the policy comes down the pike the infrastructure

          4   has changed that we were making the policy from.

          5                  So we need to think about ways that we can

          6   put a mechanism in place for rapid change.

          7                  MR. KARIM:  This is Talib Karim for the

          8   record, and I'd like to commend both Maureen and Chanda

          9   for their leadership in putting this together.  And I'd

         10   just ask us all to just give a round of applause for

         11   their excellent work.

         12                  Second, both David and Chick had mentioned

         13   that they didn't have answers, and they had some

         14   questions.  Well, I have actually three answers.

         15                  First of all, I think that when you look at

         16   NTIA, I mean, NTIA is essentially the President's bully

         17   pulpit for telecom and broadcast-related matters,

         18   right?  So we're asking what can the President do to

         19   stimulate increases of media ownership by blacks and

         20   other disenfranchised ethnic groups.

         21                  First of all, I think we can increase the

         22   funding for technology centers and incubators and the

         23   so-called developing nations within our borders.  Again,

         24   I mentioned that my father was a city councilman in

         25   Memphis, Tennessee, and Memphis has probably an Internet


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          1   density close to 20 percent, if that.  And I think that

          2   we can do much more in terms of making available funding

          3   for non-profit organizations in Memphis and other places

          4   across country in both rural and urban communities for

          5   programs designed to train young people, who are right

          6   now not possessing the skill sets necessary to compete in

          7   this .com economy.  Train them, and then place them.

          8                  And then require these companies that are

          9   spending millions of dollars and recruiting people from

         10   India, Pakistan, Bangladesh and other places across the

         11   world to, again, limit their international outreach and

         12   focus on some of the excellent people that we have home

         13   grown.  So that's the first suggestion.

         14                  The second suggestion is, I think that NTIA

         15   has done a great job with tracking media ownership

         16   amongst Blacks, Latinos and other ethnic groups, but I

         17   think that we need to expand outside of just media or

         18   broadcasting to also look at the numbers of portals that

         19   are owned by blacks, look at the numbers of DSL companies

         20   that are owned by blacks, look at the numbers of ISPs and

         21   look at the numbers of backbone providers, if you will.

         22   So I think that NTIA can definitely do that as well.

         23                  And thirdly, thinking about how well

         24   President Clinton used his bully pulpit to legislate

         25   almost.  I think that the President and NTIA can have a


                                                                      212

          1   focus on divestitures and focus on rewarding companies

          2   through, again, public relations types of mechanisms or

          3   policy mechanisms, if that's possible.  Reward companies

          4   that divest their resources in the hands of black people

          5   and other ethnic groups.

          6                  I think that if that were to happen, you

          7   could literally see a changing of the landscape

          8   overnight.  Again, Viacom is an excellent example of the

          9   type of merging and consolidation and divestitures that

         10   had to occur.

         11                  I mean, what if there was, again, a Black

         12   or Latino or a Native American group that were able to

         13   come to the table and say, hey, we're in the position.

         14   And not just, hey, we're in the position, but if CBS and

         15   Viacom were to say, well, we're going to actively look

         16   and find these groups, and we're going to work with the

         17   David Honigs and we're going to work with the Benton

         18   Foundations, and we're going to work with the NABs to

         19   make this type of synergy happen.

         20                  Perhaps, those three are just some simple

         21   ideas that I have, but I'm sure there are many others

         22   that could perhaps be utilized by NTIA.  And, again, I

         23   just want to congratulate Chanda and Maureen on their

         24   excellent work in putting together this panel.

         25                  MS. LEWIS:  And we didn't pay him to say that.


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          1                  MS. TUCK GARFIELD:  Thank you, Talib.

          2                  And the interesting thing is, I know this

          3   morning -- and I'm sure there are some of you who are

          4   sitting in the audience saying, we've done this time and

          5   time again.  We did this in '78, we did it in '79, and we

          6   did it in the '80s, we did it '95 when there was a tax

          7   certificate.  And here we are again doing it in 2000.

          8   What is so different about 2000 that we need to do this

          9   again?

         10                  But as you can see, our landscape is

         11   changing.  The challenges of the past, although they may

         12   be similar to some of the challenges in the future, they

         13   are different for us.  So it is vital -- it is

         14   critical -- that we once again have this dialogue.

         15                  As you heard this morning, satellite radio

         16   is here as a new medium.  We have AOL, Mr. Jim Moore,

         17   with us on our panel, another new media or new venture

         18   that's out there.

         19                  What does that mean?  What type of

         20   coalition building do we need to do now to move forward

         21   in the future?  Should we solely focus on legislative

         22   means, is that enough for us?  Or should we move into a

         23   parallel track where we do the legislative on one hand, and on

         24   the other hand, we focus on the venture capital and the

         25   funding for initiatives such as Lyle Banks and Eddie


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          1   Edwards and others who are out there in the audience,

          2   other owners?

          3                  So it is important for us to talk about

          4   that.  And as you are raising these questions, we are

          5   truly serious about coming up with -- and that's why

          6   we're putting in a number.  We want to come out of here

          7   with at least three things, the top three things, that

          8   this working group can come to some sort of consensus on

          9   today, and perhaps, even in our comments that you submit

         10   before August 8th, that we can begin to move forward;

         11   that we can go to Assistant Secretary Rohde and say, this

         12   is what the community has said.  And thus, he can then go

         13   to the President and say, this is what the community has

         14   said, and that there is a force who is agreeing on this

         15   issue, and we can move forward.  I can tell you we are

         16   serious about this issue, and we do want to hear what

         17   your concerns and your comments are.

         18                  So along those lines, I'll move to

         19   Mr. Moore and ask him as a new media company and here on

         20   behalf of AOL to talk about what he sees happening in the

         21   telecommunications landscape, and how companies such as

         22   AOL can participate in this type of coalition building.

         23   And do you see any policies or programs or priorities

         24   coming forth?

         25                  MR. MOORE:  Well, now that I've been outed.


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          1   A couple of things I've heard AOL/Time Warner mention

          2   several times today.  And, obviously, clearly there are

          3   very few things I can say about the AOL/Time Warner

          4   merger.  I can sort of restate a lot of what has been

          5   said so that there's some clarity.

          6                  Our intent certainly isn't to -- and we

          7   don't even know that it would be possible to if we wanted

          8   to -- sort of consolidate the distribution of content.

          9   Time Warner is an amalgamation of a lot of varied content

         10   from Nickelodeon to CNN to some magazine properties, and

         11   just announced a deal with Essence magazine, so it's the

         12   amalgamation of all kinds of content.

         13                  How many AOL members in the room?  Does

         14   anybody use the service?  Well, if you use the service,

         15   you'll notice, real quickly, that we produce very little

         16   of that content.  We aggregate that content, and we try

         17   to make it as easy to use as we possibly can because we

         18   want to attract the mass audience.

         19                  So the merger -- what I can say about

         20   it -- is that for us it's about survival in this space.

         21   Broadband is coming fast and furiously.  We looked

         22   around at what we had, and we didn't have the broadband

         23   assets that some of our competitors and some of the folks

         24   that were coming in have.

         25                  We operate on a subscriber model at $22 a


                                                                      216

          1   month.  We're looking at free Internet service.  We're

          2   looking at people doing broadband distribution at $50 a

          3   month, so we've got on the high end and we've got it on

          4   the low end.  So we looked at an opportunity to get some

          5   scale which we need to drive this industry -- well, we

          6   don't even know where it's going, but to be a player

          7   whenever it gets there.  We needed some scale which is

          8   our subscribers matched with some of the TW subscribers.

          9   We looked at getting broadband assets, content -- and we

         10   talked about that content -- and talent.  We look at all

         11   the talent that's out there.

         12                  The way we invest at AOL, and the way we

         13   look at partnering up with folks -- and we have a number

         14   of partners.  Net Noir.  Herb mentioned Net Noir earlier

         15   today.  We were an early investor in Net Noir, and we've

         16   stayed with Net Noir through the last four years.  Black

         17   Voices.  Through our relationship with Tribune and

         18   Tribune Interactive, we have a significant relationship

         19   with Black Voices.  I can't talk about the future because

         20   those deals are in the works, but we're talking to a

         21   number of other folks.

         22                  This week, we launched AOL Mexico as part

         23   of our whole AOL Latin American strategy, and that's

         24   going to kind of reverberate back into the U.S., come

         25   back north of the border.


                                                                      217

          1                  So we do partnerships in a number of ways.

          2   One, we look at our distribution.  We've got 23 million

          3   households, so we're willing to share that distribution

          4   if the partner and the content is compelling enough and

          5   makes sense.

          6                  We also invest real money -- cash -- in

          7   things that make our service better, that sort of make

          8   the member experience better, technologies that help us.

          9   As example, we cache websites so that if you go to a

         10   website frequently, and you're an AOL member, and you

         11   want to come back to that website, then we'll invest in

         12   technology.  If somebody has some technology that will

         13   make that better; we'll invest in that.

         14                  So those are the kinds of things that we

         15   invest in.  We don't do early stage, unfortunately.  I've

         16   talked to a lot of folks.  My job, by the way, at AOL is

         17   to sort of ensure that where our outreach and business

         18   opportunity intersect, we're prepared to make an

         19   investment.  So I look at outreach in the Black, Hispanic

         20   and the Asian communities.  So I am looking at business

         21   opportunities all the time.

         22                  I will say this.  We're not looking for the

         23   next mydog.com.  We're not looking to invest in just the

         24   Internet website.  We are looking at technology, we are

         25   looking at compelling content, and we are looking at


                                                                      218

          1   anyone who can advance our subscriber base.

          2                  MS. TUCK GARFIELD:  Well, before we go to

          3   Jenell, Dwight and David have comments -- or actually,

          4   hopefully proposals -- of how we can move forward, and

          5   then we'll move to you, Jenell.

          6                  And also in the audience, if you all have

          7   proposals, comments, please feel free to jump in at any

          8   time.

          9                  MR. ELLIS:  This is different this time.

         10   Dwight Ellis, NAB, National Association of Broadcasters.

         11                  Things were changing too 22 years ago.  We

         12   as minorities -- basically meaning African

         13   Americans -- were poised to get a better footing in the

         14   traditional broadcast arena.  Twenty-two years ago, there

         15   was not as great a concern about Latino Americans or

         16   Asian Americans or Native Americans even being involved

         17   in this business.  It was mentioned, but everybody knows

         18   that when you said minority, you were talking about black

         19   folk because it followed the riots.  And basically, white

         20   America -- or the general population of this

         21   country -- reacted in a way to protect their business

         22   interest and general interest from being burned down by

         23   black people.

         24                  So it's different now.  It's much more

         25   competitive in the arena.  You heard from our


                                                                      219

          1   representative from AOL.  I've been a strong subscriber

          2   for years, ever since the beginning, and I have a lot of

          3   respect for that.

          4                  I found out when a few weeks ago I was a

          5   guest on the Essence music festival and cruise, and

          6   Clarence Smith, who's the president of Essence is a good

          7   friend of mine, had dinner talking about the Essence/Time

          8   Warner deal, and I thought that was very interesting.  I

          9   don't know how many of you know about it or how many of

         10   you missed what the good brother said.  That was very

         11   significant.

         12                  And correct me if I'm wrong, I believe that

         13   Time Warner now owns -- the deal has been cut -- I think

         14   49 percent.

         15                  MR. MOORE:  I don't want to misquote.  But

         16   there's a joint venture, and Essence's assets are in the

         17   joint venture, and I think they control it.  I don't know

         18   if it's 49.

         19                  MR. ELLIS:  Yes.  Essence has, according to

         20   my intelligence -- I don't mean my personal but what I've

         21   learned -- 51 percent is retained by Essence, a black

         22   corporation, and 49 percent is Time Warner.

         23                  Now, nothing negative about that, I can

         24   recall -- those of you who are Latino in the

         25   audience -- some years ago that Clarence and I used to


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          1   talk about the expansion of Essence.  That was before

          2   Essence went into the business of selling women's

          3   apparel, the catalog.  But like any other business, they

          4   were looking for ways of growing the company.

          5                  And I said to Clarence -- this is about

          6   1983 -- "One of the great markets that's growing,

          7   especially in New York and other urban areas, is the

          8   Latino market."  In New York City alone where you have

          9   large populations, Puerto Rico women are being joined by

         10   Dominican women, and even Mexican-American women are now

         11   coming, and I said, "And there is no publication; you

         12   should have a publication."

         13                  Clarence said, "Dwight, trust me.  I know

         14   what you're saying is probably true, but our market is

         15   black women, and particular types of black women."  He

         16   said, "We have to be so careful in marketing our

         17   magazine, that if we put a light-skinned, light-eyed

         18   black woman on the cover of Essence, we get letters you

         19   wouldn't believe from our readership."

         20                  So for the most part, back in the late '70s

         21   and early '80s, the black women that you saw on the cover

         22   of Essence magazine -- and those of you who subscribe

         23   know it -- were of the stereotypically dark-complected,

         24   African-looking black women.  And as time went on,

         25   Clarence called me one day and he said, "Guess what?


                                                                      221

          1   That was a great idea about 10 or 12 years ago.  We're

          2   cutting a deal with a Hispanice group," and they're

          3   starting a magazine called Latino magazine.  The rest is

          4   history.

          5                  Their headquarters are right next-door,

          6   right in the same building with Essence.

          7                  MS. FERRELL:  Dwight, did you ask for any

          8   money for giving him that idea?

          9                  (Laughter)

         10                  MR. ELLIS:  So many people get rich off of

         11   these ideas.

         12                  But the point I want to make is, it is

         13   different now, and it's different and it's dangerous both

         14   at the same time.  And it's interesting.  I listen with

         15   great interest to the gentleman from AOL here because

         16   what he's saying is, he is here to do business with you.

         17   And he is an African American -- happens to be -- who

         18   understands a mode of business and industry that many of

         19   you don't understand.  And he's probably of another

         20   generation, probably younger than I, which goes to the

         21   issue that I brought up early on about not only digital

         22   divide but the generation divide that we're dealing with,

         23   those of us who have been beating this drum for 22 years.

         24   This is the guy you've got to know, and this is the guy

         25   that you have to work with.


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          1                  And understand that whether it's a Latino

          2   market or the African American market or anything else,

          3   John Johnson may be next for content.  This isn't

          4   personal; this is about, if we have really convinced the

          5   open market -- the financial market -- that finally we

          6   can make bucks for a major corporation, they will

          7   eventually purchase us or we will go into a partnership

          8   arrangement.

          9                  Now, this is not anti-black or

         10   anti-Hispanic; this is about doing business.

         11                  Omar Wasseau, those of you who should know

         12   him, would have never gotten Black Planet.com off the

         13   ground were it not for his Asian partners.  And I don't

         14   know if you knew that.  So this black portal that we rave

         15   about could not have occurred were it not for a

         16   relationship that existed between a 27-year-old black man

         17   and a 20-something Asian.

         18                  MS. KONG:  In fact, it was an off shoot of

         19   a .com company called Community Connect, which is also

         20   launching another Latino website some time this year.

         21   Black Planet was launched just in October of last year,

         22   and now has over 1 million members, growing simply

         23   because the disc jockeys in New York were using the Black

         24   Planet.com e-mails, and using that on the air.  So

         25   everyone was running to jump on the bandwagon.


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          1                  I think that what Dwight says is absolutely

          2   important.  And what's exciting about this panel -- and

          3   I'm hoping we can get to these solutions -- that we can

          4   present, is that we have to get to the solutions.  We

          5   have to talk about what NTIA can actually do and present.

          6                  I'd like to actually bring those up.

          7                  MR. ELLIS:  Sure.

          8                  MS. TUCK GARFIELD:  Hold that thought.  We

          9   don't want you to forget it.

         10                  MR. HONIG:  I've got something NTIA can do.

         11   First, I want to thank Talib for having the graciousness

         12   and class to recognize to queens in our presence who will

         13   make things happen for all of us.

         14                  I didn't want the moment to pass without

         15   recognizing to elephants in our presence, two that will

         16   keep us from achieving these objectives.  They're called

         17   Richmond v. Croson and Adarand v. Pena.

         18                  What do those cases say, in a nutshell?

         19   First that, any program that is not considered race

         20   neutral -- and they must almost be race unconscious -- has to be

         21   justified as a compelling government interest.  There's

         22   only one that's ever been thought to be a compelling

         23   government interest, and that is preventing and remedying

         24   discrimination where the government ratified and

         25   validated past discrimination, and it has present


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          1   effects.  Diversity doesn't have five votes in the

          2   Supreme Court and may not have three.

          3                  Second, before the courts will consider

          4   whether to adopt the kinds of stronger initiatives that

          5   we've been talking about all day that are, candidly,

          6   race-conscious initiatives, first a tribunal, such as the

          7   FCC, must determine that race-neutral alternatives have

          8   been tried and failed.  That is, every effort has been

          9   made to solve the problem through what are called

         10   race-neutral means, but those means proved insufficient.

         11                  Consequently, even if NTIA is instrumental

         12   in getting the Adarand study or studies done, that won't

         13   by itself solve the second half of that Adarand-Croson

         14   problem because no one can certify that all reasonably

         15   possible race-neutral steps have been tried.

         16                  I want to share with you what MMTC has been

         17   doing to try to solve that problem, anticipate it and

         18   resolve it in advance, and propose a way that NTIA can

         19   help.

         20                  One thing certainly the government can

         21   do -- and it's basic, it's fundamental -- is recognize

         22   that especially if you have exclusive use of a valuable

         23   public resource -- be it the spectrum or rights-of-way of

         24   streets, if you are a telecommunications carrier, cable

         25   company or broadcaster -- there certain things that you


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          1   really shouldn't do, not just as a matter of morality but

          2   as a matter of your character to hold a broadcast

          3   license.

          4                  You shouldn't be selling your station word

          5   of mouth to your friends on the golf course; that's

          6   nasty.  You shouldn't do that.  Ben Hooks recognized that

          7   when he proposed this 45-day open period for station

          8   sales in 1978.  That was the proposal the commission

          9   didn't adopt; it thought it would be too disruptive.

         10                  You shouldn't be marketing your station on

         11   the basis of prospects not suspects.  That's nasty.  If

         12   you're a broadcaster, you shouldn't do that.  If you're

         13   going to do that, someone else can occupy your spectrum.

         14                  You shouldn't be handing out your contracts

         15   for business to build your facility, to buy your

         16   gasoline, to buy your equipment based on who was in your

         17   social circle of those who you work with and their social

         18   circles.  You shouldn't be hiring on that basis.  And the

         19   FCC has just recognized that, and that issue is important

         20   now.

         21                  And if you're a telecom company or a cable

         22   company, you certainly shouldn't be deploying service in

         23   a manner that doesn't reach everyone equally.  You

         24   shouldn't be engaged in redlining.

         25                  That's basic.  We're preparing a petition


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          1   for rulemaking to the FCC to ask them to adopt those as

          2   rules.  The authority for it, of course, is Section 151

          3   of the Communications Act, which I spoke about this

          4   morning, where Congress told the FCC, you're in business

          5   to make sure that service is provided equally to all

          6   Americans irrespective of race and so forth.  That's not

          7   self-executing; no one has ever implemented that.

          8                  Now, here's where NTIA comes in.  Henry

          9   Geller, when he was the administrator of NTIA in 1977-78,

         10   filed the petition for rulemaking -- this is a government

         11   agency filing a proposal with another government

         12   agency -- which created the tax certificate policy.

         13                  NAB, bless their hearts, filed the proposal

         14   for distress sales, worked on the tax certificate

         15   proposal, and got NTIA to file comments on their

         16   petition.  Both of them were adopted.

         17                  We represent the NAACP, LULAC and Rainbow

         18   PUSH.  We filed a minority ownership proposal as a

         19   petition for rulemaking in 1990 and are still waiting on

         20   action on it.  We're just representing civil rights

         21   groups.  They don't rule if it's just us.  If it's

         22   another government agency, they have to respect it, and

         23   they certainly respect NTIA.  It has the power, it has

         24   the moral authority.  It only requires the political

         25   will, and that's present in this room if we make it


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          1   happen.

          2                  MS. TUCK GARFIELD:  Jenell.

          3                  MS. TRIGG:  Thank you, Chanda.

          4                  I'd like to piggyback on particularly the

          5   Adarand issue.  I'm going to put my lawyer's hat on.

          6                  Having worked at the FCC when Adarand first

          7   passed, we were looking at the impact of Adarand on many

          8   of the FCC's programs.  In fact, if you remember the

          9   personal communications services auction was just about

         10   to start.  The filing period for the short forms was due

         11   probably days after the Adarand study was issued.  And

         12   the Commission had to halt that auction.  That auction,

         13   if you remember, had special provisions -- bidding

         14   credits, installment payments -- for minority-owned

         15   businesses, small businesses, entrepreneurs.  We had

         16   specific programs in place to address the access to

         17   capital and the disparities in minority ownership.

         18                  But the commission's hands are tied because

         19   of the two cases, and I would proffer there's a third

         20   case with just as great of impact in Washington, D.C. as

         21   Adarand and Croson did nationally, and that's Lutheran

         22   Church.

         23                  Specifically in terms of timing, which is

         24   where I think we are, we needed solutions yesterday to

         25   resolve some of these.  This technology and this industry


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          1   and licensing is moving so fast, we will blink, and there

          2   won't be anything left for minority ownership, at least

          3   premier properties.

          4                  So the Commission right now has multiple

          5   mechanisms in place to promote race neutral which, again,

          6   as David said, is critical to promote first to

          7   demonstrate that it's failed, and then you can justify

          8   doing race conscious remedies are specific minority programs.

          9                  Section 257 of the Communications Act was

         10   put in the Telecom Act by Congressman Bobby Rush

         11   specifically to address small business market entry

         12   barriers.  Remember Adarand had already been decided, the

         13   1996 Act could not specifically address minorities, so we

         14   had to couch some of those broad minority issues in a

         15   small business context which is race neutral.

         16                  I had the pleasure of co-authoring the

         17   notice of inquiry at the FCC to first implement that

         18   provision, but I can assure you that the Federal

         19   Communications Bar, the trade associations and the

         20   industries have not fully supported what that measure can

         21   do on a case-by-case and rulemaking basis.  There isn't a

         22   decision that should come out of the FCC in the Year 2000

         23   that doesn't address a market entry barrier.

         24                  The gentleman who talked about the

         25   difficulty of getting cable carriage on MSOs because of a


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          1   conflict, that's a market entry barrier that can be

          2   specifically dealt with at the FCC under rulemaking

          3   authority and under the authority of Section 257, but

          4   I'm sure that no one has filed it in that context.

          5                  So at the same time we are doing Adarand

          6   studies -- and I want to address that quickly -- that

          7   those studies, trust me, will take some time.

          8                  At the Commission I analyzed four to six

          9   different Croson studies.  Remember, they're call Croson

         10   studies because Adarand didn't address what you need to

         11   prove anecdotes and statistical evidence of past

         12   discrimination; you need a combination of both.

         13                  We've got tons of anecdotal information on

         14   the record.  Every PCS, every wireless hearing, ever

         15   comparative hearing, we can tell stories about

         16   discriminatory practice.  We don't have hardcore,

         17   statistical evidence to show what wasn't available to

         18   minorities, who was qualified at the time, and would they

         19   not have gotten that license or access but for race.

         20                  Congress may not have the authority to pass

         21   a race-conscious measure because it's still undetermined,

         22   due to Adarand, whether the Supreme Court will give

         23   congressional deference.  So while we don't have a record

         24   across the board for broadcasting, wireless -- it makes

         25   no difference -- we need to promote small business, now.


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          1   Currently, we've got the authority to do that.

          2   The Adarand studies may take a year, so we've got a year

          3   to at least put forth the best effort we can for the

          4   small business -- new entrant or small business, either

          5   one will work.

          6                  And then for the Adarand studies, NTIA has

          7   tremendous resources in gathering statistical information

          8   through its Commerce Department.  They've got better

          9   resources than the Commission ever would want.

         10                  I submit NTIA act as a clearinghouse for a

         11   lot of these statistical studies, foundations, and maybe

         12   even talk to the Benton Foundation or whatever to start

         13   to put together a statistical collection of data for use

         14   not just by the FCC or the SBA but for the tax

         15   certificate.

         16                  The tax certificate, it will take some

         17   time to get it passed.  It's not going to happen

         18   overnight, regardless of whether we have a change in

         19   presidential or congressional party come November.  But

         20   if we start to work on the record to educate congressmen

         21   on both sides of the aisle, what the tax certificate is,

         22   how it helps economically -- not how it helps culturally,

         23   I don't think we can talk that, even though we know it's

         24   important.  Let's talk how it benefits the country.

         25                  NTIA can start to put together some of


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          1   those studies, maybe even look at the origins on

          2   communications, or for that matter, minority-owned

          3   communications and the economic impact it has on

          4   communities, so we have some real hardcore evidence that

          5   will help support, whether it's congressional action,

          6   whether it's FCC action, SBA or down the line.

          7                  The other thing that I think will be very

          8   helpful is to take this conversation outside of the

          9   Beltway.

         10                  When the tax certificate disappeared, very

         11   few people outside of the Beltway knew what the impact

         12   was or cared.  And when you talk about promoting minority

         13   ownership to the people that are not involved in telecom,

         14   their question is, "Why should I help a black millionaire

         15   get richer?"

         16                  They don't see the benefit for minority

         17   ownership from a real economic point of view in their

         18   community, globally for that matter.  And maybe NTIA can

         19   take this conversation outside of the Beltway, and that's

         20   part of our coalition building.  And then we've got some

         21   grassroots support regardless of whether we win in

         22   November or not.

         23                  MS. TUCK GARFIELD:  Those are great

         24   comments.  And before we move on to Jacqueline -- and

         25   then we'll move on to Ben for his comments -- actually


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          1   coalition building made me think of one thing which

          2   seemed to work very well for the Benton Foundation.  And

          3   they seem to have a list serve where a lot of the

          4   advocates in telecom come and talk daily about issues.

          5                  You all are suppose to be giving us advice,

          6   but maybe something that we could also think about is

          7   whether or not there needs to be a list serve or

          8   something for minority media ownership whether it's done

          9   by NTIA or some other organization in this room.

         10                  But just to put that out there before we

         11   move on to Jacqueline because if NTIA is going to tackle

         12   these issues, we cannot do it alone, and we should not

         13   have to do it alone because it is in all of our best

         14   interest, and we hope that everyone will be able to

         15   participate.  And part of that is communication, and what

         16   better way to keep in touch than through the Internet.

         17                  MS. TRIGG:  And if I may just add, the last

         18   case that upheld FCC policies and promoting specifically

         19   minority broadcasting was Metro Broadcasting.  And if you

         20   read the decision again -- and I have for the umpteenth

         21   time just recently -- note all of the studies and the

         22   evidence that was cited by the Supreme Court to justify

         23   the FCC's policies.

         24                  Those studies are so old, and we need

         25   studies that are post-1996 Act.  And we need economic


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          1   studies.  And even some of the FCC's records including the

          2   interim report of the Small Business Interim Advisory Council--

          3   really 1989 data is what we're talking about.  That's irrelevant

          4   right now.  We need current, up-to-date statistical

          5   evidence that supports discriminatory practices in the

          6   industry.  And maybe NTIA could help look at the

          7   relationship between incumbents being able to venture

          8   into new media.

          9                  We talked about portals on the Internet,

         10   that most of the news portals are run by the broadcast

         11   organizations.  This is why everyone's chasing broadcast

         12   licenses because with a broadcast license -- which is

         13   still, despite I love the Internet; it's part of my law

         14   practice.  Broadcasters still reach more people than

         15   anybody in terms of a mass media distribution, and you

         16   don't have to pay to get it.  And that still is a very

         17   powerful economic incentive, but broadcasters are now

         18   into the Internet.  And that's why AOL is buying

         19   traditional media services because, again, they still do

         20   just distribution.

         21                  So maybe we look at if you owned a radio

         22   station or TV station, how are you able to maximize that

         23   into a group, to an Internet portal?  Or even if you

         24   started as entry level AT&T manager, where there were no

         25   African Americans up until the '70s, where are those AT&T


                                                                      234

          1   managers now?  They're running maybe half the .coms in

          2   the country.

          3                  Again, we need to show what happened in the

          4   '60s, '50s -- David, you know this history better -- and

          5   how statistically how it took us through today.  And I

          6   don't think anyone can do that better than NTIA.  Thank

          7   you.

          8                  MS. TUCK GARFIELD:  Thank you, Jenell.

          9                  And now, Jacqueline, I hope you have your

         10   thoughts in mind.

         11                  MS. KONG:  Well, this is the first time

         12   I've actually come to the meeting, and I want to say that

         13   I want to acknowledge the hard work in the last 40 to

         14   50 years the African American community has made and

         15   paved the way for opportunity.  But I also have to say is

         16   that what I hear here is a tremendous amount of

         17   frustration.  I hear that funds are set up that no one

         18   can get their hands on; that mergers are taking place

         19   that are leaving us in the cold.

         20                  And the reason why I bring that up is

         21   because I look at the African American model and

         22   community as the groundbreakers for other ethnic

         23   groups -- the Latino American groups and the Asian

         24   American groups who are leading up the back end -- and I

         25   see frustration.


                                                                      235

          1                  And when I hear, especially from Jenell,

          2   that it will take a year to get some of these studies put

          3   together, I want to just let you know, a year -- even six

          4   months on the Internet -- is an eternity.  Do you know

          5   how many start-ups will have started up and already taken

          6   off without you within six months?

          7                  When I heard broadcasters in Los Angeles

          8   that are catering to the Asian American community, and

          9   they say, well, we'll have a site up in eight months,

         10   that's an eternity.

         11                  So though I applaud what you're doing, and

         12   I believe that you need to continue with these studies

         13   and to get lawmakers to support this, what I begin to

         14   realize as a new player is that we get a lot of lip

         15   service.  And I can tell you that because I meet in

         16   Hollywood with the studios.  I've had ABC and Disney take

         17   me to lunch and tell me they're going to do more for

         18   diversity push then do nothing.

         19                  I really want to emphasize that when you go

         20   there and it looks great and it sounds wonderful, but

         21   then there's no real results.  And then they want you to

         22   prove and prove and prove that, in fact, you are

         23   qualified to be a player.  And by that time, you're so

         24   far back behind the back end, you can't even catch up.

         25                  And one of the things I try to do is come


                                                                      236

          1   up with solutions so that we can actually be at the

          2   forefront and team up.  The technology is there, and we

          3   have our hands on it, but the idea is to

          4   create -- unfortunately, it sounds like these loans may

          5   take a long time to get.  They're not readily available.

          6                  I had lunch with the vice president of

          7   Paramount pictures, who told me there was a new fund set

          8   up because Paramount was bought out by Viacom, and

          9   members of Star Trek Voyager had to go there to say how

         10   much Paramount is doing for diversity and their

         11   programming because that's one of the few diverse shows

         12   they have with multi-ethnic faces and role models.

         13                  But, in fact, where is that fund?  How do

         14   you get your hands on it?  Who gets that fund?  That part

         15   disappears, but what happens, it makes great headlines in

         16   Variety and in Hollywood Reporter, and it helps them get

         17   their merger going, and in the meantime we don't get

         18   anything.

         19                  So the question is solutions.  I guess what

         20   I'm trying to say is I want us to be not the ones

         21   complaining on the back side that we got left behind; I

         22   want us to be participating in the creation of these

         23   sites and these companies, and merge together to form a

         24   coalition.

         25                  Because, really, if you look at all ethnic


                                                                      237

          1   minorities -- the numbers that Secretary Rohde

          2   presented -- we're talking about cumulatively 28 percent

          3   of the population.  That's pretty big and growing, and we

          4   can work together.

          5                  Now, one of the models that's happening in

          6   the Internet world is we're seeing communities working

          7   together with Community Connect, with Black Planet, with

          8   Asian Avenue.  The infrastructure is the same if you can

          9   actually get everyone working together.

         10                  So I guess what I propose for

         11   solutions -- because I think that NTIA addresses

         12   broadcast issues.  I'm going back, and I guess what I'm

         13   trying to do is talk about Internet which is somewhat

         14   different than traditional broadcast media is.

         15                  But going back to traditional broadcast

         16   media, isn't there any way we can set up an incentive

         17   fund?  Forget at that this point waiting for Congress.

         18   Isn't there any way they can help push an initiative for

         19   a tax break much like they had when they were trying to

         20   increase production in Hollywood back in the '70s, where

         21   there was 2 to 1 tax break for investors?  And I'm not

         22   talking about a fund from the government, but in fact, a

         23   fund for investors where they would get a 2 to 1 tax

         24   break for any investment in a minority-owed broadcast

         25   venture?


                                                                      238

          1                  MS. TRIGG:  Again, any time you do race

          2   consciousness, the restrictions on judicial challenges

          3   come into play, and that's the big issue.  So that's why

          4   Congress has not wanted to touch the tax certificate with

          5   a 10-foot pole.  I mean, it is has taken us four years to

          6   get them to even propose legislation.  For three years,

          7   they didn't want to talk about it.  After they repealed

          8   it, it was a hot potato.

          9                  So any race conscious, even though we have

         10   plenty of justification, and even if the industries say

         11   they will support it, you will get, you bet -- this is

         12   one of the most litigious industries, and it helps

         13   support my job, no less, but again, you're dealing with a

         14   potential lawsuit which could tie it up for years which

         15   is why you need to frame it right now.

         16                  Because I agree; in Internet time, a year

         17   is forever.  We can't wait for a year, but we can't stop

         18   working on the study either.  But right now we have to

         19   frame it in a small business context or new entrant

         20   context that's race neutral, and maybe put

         21   parameters -- unfortunately we're going to restrict, just

         22   by the nature of defining it, some minority businesses

         23   that may be bigger.  Again, we may not be able to help

         24   large, successful minority businesses, but whatever way

         25   we can frame this to help the majority of minority and


                                                                      239

          1   women-owned businesses is what we may have to do.

          2                  And that's the debate right now with the

          3   tax certificate.  Do we frame it in a small business

          4   context, do we frame it in a small business minority

          5   context?  And I submit that even Congress will get

          6   questions.  Again, there's no set way that, even if

          7   Congress passes this, they won't be challenged just like

          8   the FCC would.

          9                  That's an issue that's pending before the

         10   Court.  The Supreme Court gave high deference to

         11   congressional findings in Metro Broadcasting.  This

         12   Supreme Court is not the same.  The political climate is

         13   not the same.  And I do agree that we could do some small

         14   business issues and tax issues, but that has to also work

         15   through the political process.

         16                  MS. KONG:  I think this is a great forum

         17   and a great way to network with the community.  And I

         18   think that NTIA could be instrumental in making sure we

         19   meet more than every two years or one year, getting

         20   together on a regular basis and really pulling together

         21   the coalition needed to actually create a consensus?

         22                  I spoke in New Orleans, and I have to tell

         23   you, the representative from New Orleans was adamant.

         24   When Kwasi Mfume brought up the idea of possible

         25   regulation for more ethnic involvement in television, he


                                                                      240

          1   said that he would fight it tooth and nail, and he said

          2   that he would not support that and would make sure that

          3   that would never pass.

          4                  Now, with that in mind, I don't really look

          5   towards Congress sometimes to sort of say they're going

          6   to move this thing along because you've got some hard

          7   line people there that don't want to see that happen.

          8                  And so, I submit possibly a way for us to

          9   meet on a regular basis to talk about a workshop with

         10   venture capitalists to get those business plans in a form

         11   because sometimes all the elements aren't there.  You may

         12   have an idea, you may have an idea, but singularly those

         13   ideas are not going to fly, but combined there can be a

         14   restructuring of some of those plans that can make it

         15   viable from a business standpoint.  I guess really work a

         16   little outside that box; I think that's one of the big

         17   messages from today.

         18                  MR. KARIM:  And I want to congratulate my

         19   sister from the Asian American community for bringing up

         20   the whole idea of thinking out the box because what I

         21   think Jenell has articulated and what David has

         22   articulated in terms of the regulatory infrastructural

         23   impediments cannot and should not impair us from acting.

         24                  And I think that some of the things that

         25   have been suggested, such as those things that we've


                                                                      241

          1   talked about as this sister has mentioned, should be

          2   acted upon.  Just getting together alone is a way in

          3   which we can create some change.

          4                  And so, again, I don't want to keep on

          5   harping on it, but this type of activity should

          6   definitely be congratulated.  And I think coupled with

          7   that -- and I'd have to say that sometimes we've reached

          8   out to even people on this panel for ideas and

          9   suggestions and have not been able to, again, get the

         10   type of support that I think is important.

         11                  So maybe what we should do at minimum is

         12   begin to open up our direct lines of communications to

         13   each other and track our progress.  And so the next time

         14   we get together -- if it the Congressional Black Caucus

         15   Telecom or if it's the NTIA's program that they might

         16   have next spring or whatever, or whenever -- let's have

         17   some type of tracking to say, okay, we got together back

         18   in July, and what's happened since that time?  Have we

         19   created a list serve?  Have we returned each other's

         20   phone calls even?

         21                  I mean, maybe just that type of coalescing

         22   is what will be necessary in order to do some of these

         23   types of things that would not be impeded by the court.

         24                  MS. TRIGG:  For example, there's a very

         25   strong small business lobby that got the capital gains


                                                                      242

          1   tax changed, big time changes, lowered the capital 

          2   gains for small businesses, and I believe it

          3   was 14 percent.  That was done through the White House

          4   Conference on Small Business.  It started a couple of

          5   years ago when they met for their bi-annual meetings, and

          6   they worked through a network of grassroots,

          7   congressional appointees, presidential

          8   appointees -- worked through their Congress people -- to

          9   get major legislation pushed through the Hill at a time

         10   in an economic recession to give small business a break

         11   for capital gains.

         12                  Grant it, we cannot frame this in a

         13   minority context, but there's no reason why we can't

         14   build coalitions with some very experienced, very savvy

         15   small business lobbyists and talk to them about the

         16   economic impact that increased tax benefits -- again, big

         17   businesses have all kinds of tax benefits.  They can do

         18   transfers and license acquisitions without spending any

         19   cash at all; therefore, they're not paying taxes.  They

         20   can do stock swaps.

         21                  Some of the biggest tax incentives, more so

         22   than the "minority tax certificate" are already written

         23   in our tax laws, but that's because they have the

         24   lobbying group to do so.

         25                  So today, why not frame this tax


                                                                      243

          1   certificate issue -- and I say tax certificate issue only

          2   because big business needs some incentive, besides just

          3   being the right thing to do, to support minority

          4   ownership.  If you give them an economic incentive,

          5   they'll be there.  And we don't have an economic

          6   incentive that's regulated at this point, so there's got

          7   to be another way to get there.

          8                  MS. KONG:  I agree.  We can pull together

          9   the team that we need to actually affect some change and

         10   meet on a regular basis to check on that, and to share

         11   ideas.  I mean, that's power.  There's power in numbers,

         12   and we need to keep the numbers together to be heard.

         13                  Another thing I wanted to mention is, that

         14   we do have successes, and those successes are then bought

         15   out.  That's the way it works.  The way it works is, if

         16   you haven't proven yourself here in this room, you're

         17   going to have a very difficult time getting the money.

         18   But once you do prove yourself, somebody's going to want

         19   to buy you out for a lot of money; it's very attractive.

         20                  So what's the incentive to stay in?  So we

         21   want to have representation, but at the same time

         22   temptation is right there.  And I'm wondering if there's

         23   any way NTIA can somehow affect some kind of language

         24   that would talk about incentives to maintain management

         25   in those buy-outs, at least some kind of motivation that


                                                                      244

          1   has meaning?

          2                  We ask for representation for minority

          3   officers at the different networks, for example, but I

          4   don't really believe those have any effect whatsoever.

          5   In fact, I said so at NATPE.  It's very interesting

          6   because no one below the person who signed it knows what

          7   it is as far an initiative or desire for ethnic minority

          8   participation, so it never gets implemented.

          9                  So the idea to me is to have some kind of

         10   language that creates an incentive for these large

         11   companies that gobble up the successful ones to maintain

         12   some management and participation from ethnic minorities.

         13                  MS. LEWIS:  Before we move on to Ben, I do

         14   want to say that we are taking your comments, and we're

         15   moving forward from this day, looking at ideas and

         16   thoughts that we can go with and what NTIA can do within

         17   our parameters and what we cannot do.  But we want to

         18   continue our coalition building.  And as Greg mentioned

         19   earlier, we will be putting out a summary of what was put

         20   forth here, so we will have a written record of the ideas

         21   and recommendations that were put forth today.

         22                  So with that, then we will move on to your

         23   comments.

         24                  MR. PEREZ:  In terms of thinking outside

         25   the box and thinking inside the box, my broadcast


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          1   perspective makes me feel a little bit like a dinosaur,

          2   but I don't want to hesitate because of that in terms of

          3   giving a couple of suggestions.

          4                  I would like to talk about low-power TV for

          5   a minute just to give some perspective to set up the

          6   first suggestion.  The low-power TV industry started in

          7   1982 when the commission created the service, and during

          8   the two years about 12,000 applications trickled in; and

          9   then they had a massive B list for anybody who was going

         10   to be mutually exclusive.  Well, the first 12,000

         11   applications had a window to file, and they got 25,000

         12   additional applications.

         13                  About 14,000 of those got dismissed, but

         14   the rest went to lotteries, except for the few that were

         15   single that tend to be in the small towns, but the

         16   big city, low-power TV applications went through lottery.

         17   And the low-power service was the first service to have

         18   lotteries, and it was the only significant broadcast

         19   service that had lotteries.  ITFS had lotteries, but they

         20   had been manipulated to take the benefit out of them for

         21   minorities.

         22                  The way the lotteries were structured is

         23   that they said that one of the objectives of the outcome

         24   of the licensing selection was that 40 percent of the

         25   lottery winners should be applicants that had a


                                                                      246

          1   diversification preference.  And what a diversification

          2   preference was defined as, is having no other media

          3   ownership or being minority-owned and controlled.

          4                  And what they did, is they adjusted the

          5   profitability field in the lotteries so that 40 percent

          6   of the winning numbers would be somebody with a

          7   diversification preference, and then they held hundreds

          8   and hundreds of these lotteries, and lo and behold, the law

          9   of large numbers operated perfectly, and 20 percent of the

         10   tentative selectees out of these lotteries were people

         11   with diversification preference, people that owned no

         12   other broadcast property.  And 25 percent of the

         13   tentative selectees were minorities.

         14                  So it was by far in a way the most

         15   successful minority ownership program the Commission ever

         16   launched, but what happened after that was all downhill

         17   in the following respects.

         18                  First, there was no mechanism inside or

         19   outside government to either count, identify, track,

         20   support educate or nurture these hundreds and hundreds

         21   and hundreds of minority applicants or grantees.  They

         22   got their FCC construction permit for broadcast

         23   facilities, and then they were just sort of left as

         24   newcomers to the industry with no knowledge, and

         25   therefore no business acumen.  They were left on their


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          1   own, and there was no funding, no Syncom, Broadcap-- none

          2   of the venture funds would fund them.

          3                  And so the attrition rate among the

          4   minority tentative selectees was much higher, and the

          5   attrition rate among the majority tentative

          6   selectees -- in other words, far fewer of the minorities

          7   that got the authorizations ever got to the point of

          8   constructing their station and getting it licensed.

          9                  And then, further down the line the

         10   Commission got involved the push for the creation for

         11   digital television; and out of the need for spectrum for

         12   the full-power digital television simulcast allotments,

         13   they decided to do some tightening up on the broadcast

         14   rules.

         15                  One of the things they said is no more

         16   extensions of construction permits.  Second, they said

         17   that Congress passed this little statute that said that

         18   any station that would start for one year, that that

         19   license would automatically cancel.

         20                  Well, what happened, again, is that the

         21   termination of construction permits for non-timely

         22   construction and the dark license provision both had a

         23   disproportionate effect on the minority licensees.  As

         24   the least prepared and, of course, the smallest of the

         25   grantees, more of them went down the tubes because of


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          1   these policies.

          2                  Notwithstanding all of that, five years

          3   ago -- which is the only time that I know of that the

          4   minority participation in industry was counted -- the

          5   low-power licensees made up about 10 percent.  The survey

          6   said 10 to 12 percent -- there was a window for

          7   error -- of the licensees were minorities which is

          8   basically about 10 times better than full-power

          9   television.  In other words, there were 256 licensed,

         10   low-power television stations owned and controlled by

         11   minorities.

         12                  Now we're going through another process

         13   where we're trying to move all of the low-power stations

         14   around to make room for digital television stations; they

         15   call it displacement.  And once that is completed,

         16   they're going through a process of trying to allow

         17   low-power stations to digitize and become digital

         18   television stations as well.

         19                  Two other things are happening.  One, they

         20   dramatically raised the power limits for low-power

         21   stations so that low-power stations in the UHF band will

         22   be able to go up to 150 kilowatts.  What that translates

         23   into a 30-mile service area instead of a 10 to 12-mile

         24   service area.  In other words, a lot of them will become

         25   economically more valuable and will be better


                                                                      249

          1   competitors.

          2                  Second, the Congress passed legislation

          3   that would allow low-power stations to apply for primary

          4   status to that they couldn't get displaced anymore.

          5   Assuming that the percentage of minorities applying for

          6   Class A status is the same as the percentage of all

          7   minority LPTV licensees, I would say that about 100 of

          8   the 1,000 Class A licensees will be minority-owned and

          9   controlled stations which will be a 10-time increase in

         10   the number of primary television stations owned and

         11   controlled in this country.  So it's a big step forward

         12   if it happens.

         13                  But nobody is out there counting, nobody is

         14   out there helping.  There's no television organization

         15   specifically for the television stations that are

         16   minority controlled, a counterpart to NABOB, which I see

         17   as a radio group.  There's no television group to help

         18   people along, and so they're out there by themselves.

         19   And so, I don't know whether they applied for Class A.

         20                  What's all that sad story about?  I think

         21   what's happening in low power is an example of what has

         22   happened with some of the 80-90 stations, and what is

         23   happening with some of the expanded band stations, in

         24   that even when we have had successes -- small ones though

         25   they might have been -- there is on follow-up, and


                                                                      250

          1   neither NTIA nor FCC has thought about how do we protect

          2   the weak newcomers that we do get in the door.

          3                  There hasn't been a lot of focus on

          4   protecting your infant, so to speak; and I think that

          5   there has to be a better balance between helping people

          6   get in the door and making sure that they survive the

          7   delicate first few years until they're strong enough to

          8   take care of themselves because I think in the long term

          9   you'll get a better yield, and you'll get more growth in

         10   minority ownership if you balance more between getting us

         11   in there and helping us.

         12                  I mean, it goes so far as NTIA -- and I

         13   don't mean to be critical, but when they count minority

         14   ownership every year in their report, they don't count

         15   how many low-power stations there are, and yet there's

         16   more low-power television licensees by far than any other

         17   service, but they ignore it.

         18                  MS. TUCK GARFIELD:  I can comment on that

         19   point and say that is an issue that we are looking into

         20   now as far as an agency, so that is something that's on

         21   the table.

         22                  MR. PEREZ:  That's one.  Let me pause, and

         23   then I'll get my other point.

         24                  MR. MOORE:  I just want to comment real

         25   quickly.


                                                                      251

          1                  MS. TUCK GARFIELD:  Before you go, Jim,

          2   there's Jim and Dwight, Jenell and David.  

  [ Sample survey background discussed here.  Actual text deleted.]

          7                  So if you all could make your comments

          8   brief, and then we could move into the survey and

          9   hopefully not go over time.  But just keeping that in

         10   mind as we move forward, we would like to talk about our

         11   survey or at least have Maureen and myself introduce what

         12   we are trying to do this year and get your input and a

         13   few of your insights.

         14                  MR. MOORE:  Mine is a question, so it will

         15   be brief.

         16                  Is it within the scope of NTIA's

         17   responsibility or capability to host or to sponsor

         18   venture fairs which would bring VCs together with folks

         19   who have business plans and give them an opportunity to

         20   present?  Is that something that you can do?

         21                  MS. LEWIS:  Well, it's something that we

         22   are considering and hearing today, the difficulty that,

         23   first of all, many lenders have in understanding how to

         24   value broadcast properties.  This was an issue that we

         25   think that we need to try to address immediately and to


                                                                      252

          1   bring people together and try to inform of them of how

          2   that's done.

          3                  But, yes, we can bring people together, and

          4   of course, our issue always revolves around funding and

          5   limits we have within our program.  But we are looking

          6   for partners, and so there are opportunities for us to

          7   partner with other organizations to try to bring together

          8   people.  So we ought to talk very seriously about how we

          9   might do that.

         10                  MS. TUCK GARFIELD:  Dwight, I know that you

         11   had some comments.

         12                  MR. ELLIS:  I was simply going to

         13   say -- Ben was decrying the problem we've had for years

         14   in the real consistent representation.  I would suggest

         15   to you that as the competition becomes keener out there

         16   in the business world, and it is global, that I think we

         17   will be able to look less and less to the federal

         18   government to protect so-called minorities and

         19   multiculturals; that we had better and very quickly

         20   develop communities of interest.

         21                  The whole minority thing is going to go out

         22   the window along with affirmative action, and I believe

         23   that it will develop into something called communities of

         24   interest.  Under such a concept, you can develop and

         25   maintain partnerships among races, among cultures, among


                                                                      253

          1   genders, you know, the whole thing.

          2                  It's going to be a lot easier, but I think,

          3   unfortunately, because the world that you and I came

          4   from, especially, we've been reared on this whole

          5   minority thing, that grew from the whole black revolution

          6   to the current; that is rapidly becoming passe.

          7                  And I think we need to re-tool and to

          8   re-think the directions that we are to take if we are to

          9   survive.  And I think communities of interest will be the

         10   concept that we will have to go to, and we will have to

         11   at some point in time develop, support financially -- or

         12   whatever -- a true trade association that addresses the

         13   concerns of multiculturals in this new media and old

         14   media.  We can't do it like we did it the last time; it

         15   has to be somebody else, somebody who is on the case,

         16   somebody has to be there, somebody has to be our true

         17   advocate all the time.  And that's why the NAB is what it

         18   is today and why NCTA is that way.  So we can't continue

         19   as we did in the past.

         20                  MS. KONG:  And the boundaries are now the

         21   world.  There are no boundaries.  We're not talking about

         22   just the U.S., we're talking about the world.  And the

         23   boundaries on the Internet -- there are no boundaries.

         24   That really is the main thing.  You can think in a global

         25   sphere.


                                                                      254

          1                  MR. ELLIS:  One more thing, and I promise

          2   I'll stop here.

          3                  What NTIA could do I think for the next

          4   meeting -- and I'm encouraged to see the diversity on the

          5   panel, to see two Asian Americans is really

          6   revolutionary.  Usually, you would see an Hispanic and an

          7   African American, but it is very good to see two Asian

          8   Americans because those communities -- and they are

          9   communities -- there is not one Asian American

         10   community -- there are many communities, but in many ways

         11   they're on the cutting edge not only in technology but in

         12   global finance.

         13                  And I think we need to begin to develop and

         14   maintain relationships there, but I would suggest that

         15   the next when we have a congressional representation that

         16   we have that some diversity in the congressional

         17   delegation.  And that is not taking anything away from

         18   the African Americans, but somebody ought to be made to

         19   say, look, I don't care if they're not on the committee;

         20   we need you here.

         21                  MS. TUCK-GARFIELD:  And I can tell you,

         22   Dwight, that Secretary Rohde and the rest of NTIA's

         23   staff, we did due diligence efforts to reach out to all

         24   the members of the Congressional Black Caucus, the

         25   Hispanic Caucus, the Asian members, and even the body at


                                                                      255

          1   large as far as members of Congress.

          2                  MR. ELLIS:  But you see, if you have

          3   failure, some of us on this panel have relationships with

          4   some of those people, and this is where you pick up the

          5   phone and call somebody at AOL or whomever and say, look,

          6   do you know congressman or senator so and so?  They will

          7   deliver.

          8                  MS. TUCK GARFIELD:  We will take you up on

          9   that, Dwight.  We'll remember that you said that.

         10                  But also going to your comment -- and I

         11   know we are running out of time -- about being inclusive

         12   and including all groups, we did reach out to Arthur Liu

         13   of Multicultural Broadcasting in New York, and

         14   unfortunately because of a schedule conflict, he, as one

         15   of two Asian American broadcast owners, was unable to

         16   attend, but he is very interested in this issue.  So

         17   hopefully, we will continue to try to develop relations

         18   with him and other diverse communities.

         19                  So next, we will move on to David and then

         20   Jenell, if you have any comments; and then move into our

         21   survey.

         22                  MS. TRIGG:  David's given me the go ahead.

         23                  Just to follow up on the recommendation

         24   with the bankers, the Small Business Administration's

         25   Office of Advocacy does at least an annual study on the


                                                                      256

          1   best banks for small business, and they actually have a

          2   rating process on loan terms and availability and all

          3   that; it's on their web page.

          4                  I would recommend that we start with that

          5   group and give them some telecom training and a little

          6   how to.  And Advocacy could certainly work with NTIA in

          7   that regard.

          8                  As to Ben's recommendation in terms of

          9   training, I think that is absolutely critical.  And I

         10   would submit to the FCC that its Office of Communications

         11   Business Opportunities could help undertake that with

         12   your shop, Maureen.  And if the Commission or someone has

         13   a problem with that, I would also submit that it would be

         14   less expensive to provide some training -- whether it's

         15   operational management or whatever, and the enormous

         16   administrative burdens to re-auction spectrum, the cost

         17   of administering, just keeping up with payments for the

         18   auction process, and certainly the inefficient cost of

         19   spectrum inefficiency.  Remember, every time we license

         20   someone that doesn't use the spectrum, it goes to waste.

         21                  And so, not only can we I think save some

         22   money for the federal government on the administrative

         23   and spectrum cost by promoting and training new entrants,

         24   that's a way we can do another joint program with

         25   interagency help as well.


                                                                      257

          1                  MS. TUCK GARFIELD:  Connie had one last

          2   question, and then we'll move to Maureen for the survey.

          3                  MS. SMITH:  I wanted to piggyback on

          4   something Jenell said earlier about studies, and I wanted

          5   to suggest to the NTIA to use the resources right here

          6   and abroad as far as schools.  I have to put on my

          7   academic hat because I've just completed a masters

          8   program at Georgetown, and we are conducting

          9   studies -- when I say we, students -- in these issues

         10   across the board.  And a lot of times they get filed in

         11   the library, but this is the information that you want.

         12                  I'm even sitting here because you knew that

         13   I was studying the Telecommunications Act of '96 and the

         14   impact of radio.  So there are other academics out there

         15   doing the same kind of studies to develop relationships.

         16                  MS. TRIGG:  Like I said, a clearinghouse.

         17   Submit those studies or a library file, organize file by

         18   topic, cross-section, cross-categories, so that way when

         19   there is a congressional hearing -- and they do come up

         20   quickly -- that we've got a ream of statistical and

         21   anecdotal data that can support our issues.  As opposed

         22   to bemoaning about the lack of minority ownership, we can

         23   show how important it is.  We need to be ready with

         24   ammunition.

         25                  MS. SMITH:  Or reinventing the wheel


                                                                      258

          1   because it's already there.

          2                  MS. FERRELL:  I can tell you, having been

          3   at NAB when the tax certificate went down, we received

          4   calls from people on the Hill who wanted to help, but no

          5   one had up-to-date information.  It was the most

          6   frustrating process because, quite frankly, as NAB, it

          7   was not their job to keep information like this; it was

          8   the job of the people who were benefitting from this, and

          9   no one had the information.

         10                  This was in '94.  I was going back to

         11   information from the '70s, and that just did not cut it.

         12   Regardless as to whether the Congress was Republican or

         13   Democratic, it just didn't cut it for me to have to go

         14   back to, say, well, in 1975 a study was done-- it doesn't

         15   work.

         16                  So you're absolutely right.  You need

         17   up-to-date studies because when we things happen, they

         18   happen very quickly, and you don't have time to go and

         19   try to invent something.  And that is one of the reasons

         20   why organizations like NAB and NCTA are successful, is

         21   because they stay as current as possible.

         22                  MS. TUCK GARFIELD:  David, you had one

         23   quick comment.

         24                  MR. HONIG:  I was spellbound by the history

         25   Ben Perez gave about what the FCC did to these minority


                                                                      259

          1   entrepreneurs who cared enough, mortgaged their houses to

          2   get in, and then basically said to them, we don't care;

          3   they just recklessly disregarded the dreams of those

          4   human beings.

          5                  Let's think about for just a second.  I

          6   want to follow up on what Jenell was saying earlier.

          7                  It's not just whether there's

          8   discrimination now.  If we ended all discrimination

          9   now -- the economic and political and social and cultural

         10   condition that people of color found themselves in, in

         11   this country -- it would still be basically the same as

         12   it was because discrimination has generational effects,

         13   and especially in a close-knit industry where the best

         14   way to get into this industry is to inherit it from a

         15   relative.  And if you didn't have relatives who had that

         16   opportunity, that is precluded from you.

         17                  That's why Adarand and Croson studies have

         18   to look at not only the very rare example that Ben was

         19   able to document of discrimination by the FCC back as

         20   late as 1993, but what happened in 1973, '63, '53.

         21   That's generational effects.

         22                  This industry has been around since 1909

         23   and some people pass down to families.  All that time,

         24   that was precluded.  Agencies don't like to admit that

         25   they ever institutionally ratified or validated


                                                                      260

          1   discrimination.

          2                  Bill Kennard, obviously, didn't do those

          3   things, but the institution of the FCC, again and again,

          4   did these sorts of things that Ben pointed out.  If

          5   you've done Croson studies, you know it's true in city

          6   councils; they don't want to admit.

          7                  NTIA, unfortunately, doesn't have that

          8   deficiency.  It didn't hand out the licensees.  It didn't

          9   decide who got jobs indirectly by giving licenses to

         10   segregationists, so it is free of that difficult burden

         11   of having to see in the FCC meeting room and look at the

         12   pictures of the commissioners on the wall and the mentors

         13   who preceded you and basically spit in their face.  That

         14   is hard to do for human beings.

         15                  Now, the other thing to keep in mind -- and

         16   this is critical in terms of the timeliness and urgency

         17   of this.  You know what happens to people when they get

         18   to die.  They 'fess up.  They make their peace with God.

         19   Do you remember George Wallace right before he died what

         20   did he do?  He must have realized when he was starting to

         21   dream and starting to get a little warm, and he 'fessed

         22   up and told the truth.

         23                  The people in government, not just at the

         24   FCC, who did these things to people of color in the '50s,

         25   '60s, '70s and '90s and so forth, some of them are fixin'


                                                                      261

          1   to die, and no one is getting their oral histories and

          2   interviewing them while they're in the mood.  The time is

          3   now.  Can I get an amen, please?

          4                  (Laughter)

          5                  MS. TUCK GARFIELD:  Well, thank you very

          6   much, David.  That's a good note to transition into our

          7   survey which Maureen will talk a little bit more about.

          8   But as far as what you all have mentioned thus far as far

          9   as getting concrete data, that is our part of our goal

         10   and this is the first step in doing that.

         11                  Although NTIA has for a number of years

         12   done a survey, our hope is to somewhat expand this year,

         13   and Maureen will talk more about that now.

         14                  MS. LEWIS:  We don't have a lot of time to

  [ Sample survey background discussed here.  Actual text deleted.]

         25                  One thing that is different is, we will be


                                                                      262

          1   doing a written survey, and the past surveys have been

          2   done by telephone, and what we are trying to do is to

          3   develop a rigorous survey instrument.  So going forward

          4   we will be able to track minority broadcast ownership in

          5   a way that will enable us to do trend analysis and to

          6   look at a number of different issues as they arise.  So

          7   that in coming years when we do have opportunities for

          8   legislative and regulatory change we have some data that

          9   we can refer to.

         10                  MS. TRIGG:  May I also note that in the

         11   Croson and Adarand cases that the district courts and

         12   circuit courts look not just at the statistical data but

         13   the methodology in collecting them.  So the methodology

         14   is the very basis for making sure the record is adequate.

         15   So I commend you for doing a more improved methodology

         16   because if we need that data, you don't want the

         17   methodology to be challenged.

         18                  MS. LEWIS:  And in fact, Chanda has been

         19   very helpful in getting us some assistance from the

         20   Census Bureau.  So we will be working in conjunction with

         21   the Census Bureau to gather the data.

         22                  Now recognize this is our first effort, and

         23   I what I want to just do is tell you briefly about the

         24   categories of information we will be requesting.

         25                  We will be asking about ownership.  We'll


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          1   be asking about race and ethnicity.  We'll be asking

          2   about acquisitions and mergers as well as broadcast

          3   industry employment, again, trying to get some sense of

          4   whether or not we've got people in the pipeline who were

          5   in the business, and then ultimately became owners.

          6                  We will be looking at advertising revenue,

          7   the kinds of business difficulties people have confronted

          8   as they owned their stations.  We will be asking

          9   about station sales and acquisitions and also about new

         10   media and station plans to move into Internet

         11   broadcasting as examples.

         12                  We estimate that it will take just about an

         13   hour -- maybe less -- to complete the survey; but again,

         14   this is our first step, and we will in future efforts try

  [ Sample survey background discussed here.  Actual text deleted.]

         17   approved yet for our use.  It will be refined some, but

         18   we don't have the opportunity in this report to get

         19   wholesale comments for this year's survey.  But we really

         20   encourage you to take a look at this survey and give us

         21   your comments, and let us know whether or not we're

         22   covering all of the areas that you believe need to be

         23   covered so that, again, we can do the kind of rigorous

         24   analysis we hoped to do in the past.

         25                  VOICE:  I just have one quick question.  To


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          1   whom do we mail the survey?

          2                  MS. LEWIS:  The survey will be mailed to

          3   minority broadcasters of whom we have some record of

          4   their minority ownership status.  So we will be looking

          5   at mailing to those businesses that have been included on

          6   our previous reports; but also, what we will be doing is

          7   looking at the community of broadcasters to give us

          8   information about who needs to be receiving the survey.

          9                  We recognize we are starting with a list

         10   that is incomplete.  We will also be supplementing this

         11   survey with information from a commercial database

         12   through BIA which, as many of you know, tracks all

         13   the commercial television and radio stations in the

         14   country.

         15                  One of the things that we hope to do is to

         16   provide additional information that is not from the

         17   survey.  And let me make clear that the responses to the

         18   survey are confidential.  Any information that we use

         19   from the surveys will be aggregated and will not be

         20   attributed to any individual owner.

         21                  However, what we would like to do is to

         22   supplement the survey trends and the analysis that we

         23   will undertake through the survey with information from

         24   the BIA database.  And one of the things that we thought

         25   would be helpful to people as we publish a report is to


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          1   more than just list owner names and stations that they're

          2   associated with, but to provide some profile of the

          3   stations.  That gives people some understanding of the

          4   kinds of stations we're talking about, where they are in

          5   the marketplace and how competitive are they.  But that

          6   information will come from the BIA database, because

          7   we're not asking for any sales figures, we're just asking

          8   for people's experiences as reflected in this survey.

          9                  So again, we're encouraging you to get back

         10   to us with comments, and when the surveys are mailed, we

         11   really encourage you to complete them and return them to

         12   us.  When we call you for follow up because we have

         13   questions about the answers that you've given, please

         14   take our calls because we really do need this

         15   information, and we will be relying on you to help us get

         16   the word out about the importance of this survey, our

         17   need for the information and how important it is for us

         18   to work together on this effort.

         19                  MS. TUCK GARFIELD:  And I also to add to

         20   what Maureen is saying, we have worked with a number of

         21   organizations, and going to your question about who are

         22   we sending it to and how do we create our list, as

         23   Maureen mentioned, we did use the 1998 report as a basis

         24   for that, but we also got a lot of help from groups such

         25   as the Minority Media Telecommunications Council, the


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          1   National Association of Black-Owned Broadcasters, the

          2   Black Broadcasters Alliance and a number of other

          3   advocacy groups, even NAB as well.

          4                  We reached out because we want to make sure

          5   that we're not being repetitive and that we did have what

          6   we thought might be as close as possible to being a

          7   complete list of owners.  However, we do realize we may

          8   have missed some of the owners, and that you all may

          9   actually know of people who are currently minority owners

         10   that we do not have on our list.

         11                  So that we hope you will look at the

         12   survey, but also help us to identify other minority

         13   owners.  In the past, as you may know, the categories in

         14   the NTIA report have been African American, Native

         15   American, Hispanic American and Asian American, and those

         16   are the categories that we're trying to make sure that we

         17   can quantify this year.

         18                  MR. PEREZ:  Is the list available somewhere

         19   where we could see if we know of someone that you're

         20   missing?

         21                  MS. LEWIS:  Yes, it is.  Our 1998 report is

         22   on our website at NTIA.doc.  That is the list from the

         23   previous report, but we can share the list that we will

         24   be using currently.

         25                  MR. PEREZ:  It would be easier for me to


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          1   look at it.

          2                  MS. TUCK GARFIELD:  We can share that list

          3   that we have developed.

          4                  MR. PEREZ:  I have another observation even

          5   without seeing it.

          6                  The FCC's been very good about thinking

          7   Internet, and I really encourage you to think about

          8   putting the survey on the Internet in a machine, editable

          9   form from the get go so that year after year as you

         10   compile this, we can manipulate it on a computer.

         11                  MS. LEWIS:  Well, thank you for raising

         12   that point because that is something that we do intend to

         13   do, is to make the survey available on-line.

         14                  MS. TUCK-GARFIELD:  Yes, sir?  You wanted

         15   to comment?

         16                  VOICE:  This conference is mainly focused

         17   on the commercial side of things; however, I'm curious

         18   why the non-commercial sector has been ignored,

         19   especially when there's a lot of opportunities to develop

         20   manager and get training.  There hasn't been too much

         21   spoken about the non-commercial sector.  And

         22   particularly, NTIA plays a very important role in

         23   promoting and even funding the construction of

         24   facilities.  I'm curious why that has not been part of

         25   the discussion.


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          1                  I suggest that when we look at ownership in

          2   the commercial as well -- there is a very important known

          3   fact that many people are not aware of.  In 1934, when

          4   the Communications Act was being discussed, one of the

          5   means to finance public television was to give them

          6   enough frequency so that they can lease excess capacity

          7   and therefore generate revenue.

          8                  My organization is benefitting from that

          9   because the FCC decided in 1983 to bring that concept to

         10   ITFS.  We were able to lease up to 70 percent of our

         11   capacity; now they've been allowing us to lease up to

         12   94 percent of our capacity.  And we find large companies

         13   like Sprint and MCI now wanting to have our spectrum, and

         14   we hope that they will pay the right amount for it.

         15                  Unfortunately, there has not been a lot of

         16   minority participation in this area because we have not

         17   encouraged us to look at that.  Well, there's more than

         18   that; there was discouragement as well.

         19                  I remember when the Bedford Stuyvesant

         20   Corporation applied for frequencies-- 100 black men from

         21   Suffolk.  They applied in about 70 markets throughout

         22   this country, and they were discouraged very quickly by

         23   actions from the Commission on their applications.

         24   Right now those frequencies are very valuable.  There was

         25   a tremendous opportunity.  It's almost like a parallel


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          1   history from what Ben has mentioned with low power that

          2   has happened here also.

          3                  But I think we have to, again, address the

          4   non-commercial sector in this report some way so that we

          5   can see some policy changes in this area also.  Thank

          6   you.

          7                  MS. TUCK GARFIELD:  Yes, and I can tell you

          8   that Assistant Secretary Rohde is also concerned about

          9   the non-commercial sector as well as the commercial

         10   sector; and although it may not have been a large part of

         11   the dialogue, it is on the radar screen of NTIA.  And we

         12   do hope to take your comments, and those of others, such

         13   as Kade Twist and Jim Casey this morning, in talking

         14   about the important of non-commercial broadcasting.

         15                  Do we have any other comments from the

         16   audience?  Okay.  Well, it seems like we had a great day.

         17   We've had an informative dialogue.  Give ourselves a

         18   round of applause for participating in this, and we

         19   certainly thank you for coming out and giving your time

         20   and your energy.  And we'd also like to thank a number of

         21   organizations who are very helpful to us, such as the

         22   Black Broadcasters Alliance, NAB, NABOB, NMTC, the

         23   Rainbow PUSH Coalition, and a number of individual

         24   practitioners who are in the room; we'd like to thank you

         25   very much.


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          1                  And please, comment.  August 8th is our

          2   comment filing deadline.  We'd appreciate it if you

          3   would, even if it's short -- if it's a page -- please do

          4   submit it to us.  Thank you.  And we will be getting back

          5   to you with summaries on the Internet.  Thank you.

          6                  (The meeting was adjourned at 5:15 p.m.)

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