McDowell Slams Congress for Failure to Revive Tax Certificates
Congress has been laggardly in not bringing back tax certificates that once were used by companies selling media assets to minorities, FCC Commissioner Robert McDowell said Monday. “I do not understand why the 111th Congress has not passed legislation to reinstate” a revamped and improved certificate, he told a Minority Media and Telecommunications Council (MMTC) conference. “This seems like a no-brainer.” McDowell and colleagues Meredith Baker and Mignon Baker agreed on the panel that access to capital is the biggest hurdle faced by minorities desiring to enter the media business.
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"There are legislative fixes” to deal with “gaming” of certificates, McDowell said. “That program alone could make all the difference” for new entrants in media, he added. Congress did away with the credits in 1995 out of fear they were being abused. McDowell has stumped a number of times for their return, including at past MMTC conferences (CD July 17/07 p1) and for expansion to assets sold to small companies.
Baker wants to avoid “gamesmanship” of the credits, “but I think [reviving credits is] a very good idea,” she said in response to our question. “I think it’s a good idea to support minority investment in a market-based manner.” Clyburn, who termed herself a tax credit supporter, noted “it’s been a busy year on other fronts” on Capitol Hill, including with healthcare legislation. “Whatever can pass judicial scrutiny is something I will endorse.” The Supreme Court’s Adarand ruling limits government set-asides for minorities. Aides to Rep. Bobby Rush, D-Ill., a supporter of the tax credits, had no comment about the panelists’ remarks.
Following difficulty getting investment money, media consolidation is a hurdle to minority entry into media, Clyburn said. She spoke by video from the National Association of Regulatory Utilities Commissioners summer meeting in Sacramento, Calif. Online, “entry is way less expensive than other” media, Clyburn said: It’s “a segue to entry on other platforms.” McDowell sees “tremendous potential in new media” and said that’s where white spaces devices operating between TV channels “can be helpful.”
New media deserves focus from the commission and entrepreneurs, Baker said, citing the popularity of Apple’s iPad, iPhone and other mobile devices. The commission will hold another event on helping minorities raise funds this fall, she said. Efforts online to link investors to small businesses ought to bear much fruit, with minority use of the Internet for such purposes high, Baker added. “Speed dating between the entrepreneurs and the private equity folks” and “one-stop shopping” for business opportunities and making FCC rules clear for investors and businesses ought to help, she said. The Internet, Clyburn said, is “really the most important platform” where “the sky is the limit, it breaks down all kinds of barriers,” of geography and otherwise.
An overdue report to Congress covering 2009 on hurdles to minorities in media and telecom, under Section 257 of the Communications Act, is forthcoming, the FCC members said. “The commission has not forgotten about that report, we are definitely working on that,” Clyburn said. The item is on circulation, being edited and “lots of new ideas are being put into it,” McDowell said. Baker hopes the report will be finished and made public soon, she said. “The report’s important, but what we do at the commission every day is important.” Baker said she'd like to see low-power FM mentioned in the document.
Also forthcoming from the commission is implementation of a minority channel set-aside the agency ordered in 2008 as a condition for approving XM’s purchase by Sirius, commissioners said. “I totally understand the frustration,” McDowell said to an audience member who asked about the implementing order, due a year and a half ago. “I'm not going to make an excuse. … I tend to be sort of impatient with these things.” Work on the condition implementation at the FCC “is moving in a certain direction and hopefully soon we'll have something to report,” Clyburn said.