INDUSTRY SUPPORT ROLLS IN FOR MCCAIN MINORITY MEDIA OWNERSHIP BILL

Bill designed to spur new women and minority entrants into telecom industries was introduced by Senate Commerce Committee Chmn. McCain (R-Ariz.), but questions about support remained. Support rolled in from several industry leaders, and FCC Chmn. Powell was quick to endorse it.

Bill (S-267) was introduced with no co-sponsors and was referred to Senate Finance Committee. Similar bills were introduced by McCain in 107th and 106th Congresses and didn’t move from Finance Committee. Sen. Burns (R-Mont.) is only other senator ever to co-sponsor bill, when he did so in 106th Congress.

NAB, NCTA and Clear Channel issued statements supporting bill and Minority Media & Telecom Council (MMTC) told us it backed efforts. However, industry observers said FCC’s tax incentive plan 1978-1995 developed reputation as being heavily abused, which might be what had caused some senators to stay away. Robert Hynes, of Coalition of Communications Equity (CCE), said in past there had been interest in bill, but support has lagged for reasons unrelated to its content. Senate Commerce Committee source said there were likely to be co-sponsors for this version. Senate and industry sources said it attempted to correct some of past abuses. Several cases where minority-owned shell companies quickly “churned” telecom holdings to other buyers gave system reputation of abuse, sources said.

Bill is targeted toward “socially and economically disadvantaged” entities, which enables it to comply with 1996 Aderand Supreme Court case, MMTC’s David Honig said. It would allow Treasury Dept. to determine definition of “socially and economically disadvantaged” entity instead of system where FCC used to make that determination, he said. Measure would put cap of $250 million on deals. “In other words, Oprah doesn’t qualify because she’s already overcome the disadvantages,” Honig said.

Measure is designed to level playing field between smaller buyers and bigger corporations, officials said. Under current system, telecom companies looking to divest holdings had advantage if they traded to another firm. Since transaction was trade, it would shield companies from capital gains taxes. However, sale to smaller company would require cash, which would open selling company to taxes and thus create disincentive to sell to smaller companies. Sources said since most minority owners were smaller firms with little or no holdings, they had to conduct transactions in cash.

McCain’s bill would offer tax deferment to companies that sold to “socially and economically disadvantaged” entities. Senate source said if property were held for 5 years, lender would get 50% reduction in capital gains tax. Minority entity would have to maintain more than 50% of voting power.

Powell said: “The time for rhetoric complaining about lack of opportunity in the communications sector has passed. It is time for action. It is time to seek positive ways to promote opportunity while avoiding some of the problems of past programs. This legislation is a clear step in the right direction.” He praised bill as “well crafted and much needed.” NAB said: “It is our belief that ownership diversity is good for localism and good for the business of broadcasting.” Clear Channel CEO Lowry Mays also said he supported bill.