FCC's Diversity Advisory Committee Approves Incubator Proposal Over O'Rielly Objections
The FCC’s advisory committee on diversity unanimously approved a broadcast incubator proposal Tuesday based on congressionally authorized tax credits, immediately after Commissioner Mike O’Rielly urged them not to. The Advisory Committee on Diversity and Digital Empowerment also unanimously approved plans for a diversity in procurement workshop with the Office of Communications Business Opportunities, and a series of meetings with tech companies to create diversity best practices for the industry. The committee’s incubator proposal will be filed as comments in docket 17-289, the agency’s incubator proceeding.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
“Doubling down on failed policies makes no sense,” O’Rielly told the committee before its vote, saying some groups, in “a cynical and destructive play to undermine our media ownership rule changes,” don't want the FCC’s incubator proposal to be successful. Several entities opposed to media consolidation said the FCC should abandon the incubator proposal (see 1803120055). Numerous committee members disputed O’Rielly’s characterization of the previous minority tax credit program as “failed,” and no members spoke in opposition to the tax credit plan. “A review of the history of that policy would support that bringing it back would be the most effective way of increasing ownership in this industry,” said National Association of Black-Owned Broadcasters President Jim Winston.
“The commission also has an open proceeding on creating a small entity broadcaster incubator program and Commissioner O’Rielly is hoping that proceeding will result in a robust record with new, thoughtful ideas,” an aide to O’Rielly told us after the committee vote.
The committee’s incubator proposal involves two programs, one in which established broadcasters would co-own a full-power broadcast station with incubatees in a “joint venture” and another in which broadcasters would bequeath stations to “mission-based organizations” such as historically black colleges and universities (HBCUs) and Native American nations, the proposal said.
Mission-based organizations and Native American nations aren’t defined by race, and the broadcasters incubated through the joint venture would be chosen under the “Overcoming Disadvantages Preference” (ODP), a concept established by the previous iteration of the FCC’s diversity committee to create a mechanism for designating eligible entities that could survive constitutional challenges. The definition of an eligible entity is one of the contentious points in an ongoing court battle between the FCC and groups such as Prometheus Radio Project. That case is on hold awaiting the results of the FCC’s incubator proceeding (see 1802070053). Numerous industry commenters in the incubator docket said they oppose using ODP as a basis for the incubator program.
In both concepts, the incubator broadcaster would receive a tax credit for the value of the station in exchange, a reward that would require congressional action to implement, said Multicultural Media, Telecom and Internet Council senior adviser David Honig. Without congressional action, broadcasters could still give stations to HBCUs and tribes in exchange for a tax deduction, though that would be less of an incentive, Honig said. The proposals are intended to provide incentives to companies to incubate smaller and diverse entities without providing the opportunity for abuse, Honig said. The joint venture proposal would limit the use of sharing agreements and require both incubator and incubatee to finance the project, to ensure they both have “skin in the game,” said DuJuan McCoy, president of Bayou City Broadcasting.
A tax credit program “would be a heavy lift” to get through Congress, O’Rielly said. “The committee's time will be best served focusing on ideas based on regulatory relief for existing stations willing to participate.” The categories of eligible entity in the committee’s proposed incubator program are “too ripe for abuse,” O’Rielly said. Commissioner Brendan Carr also spoke before Tuesday’s meeting, and urged the group to take “a fresh look” at policies for broadcasting. Winston countered that all legislation is a heavy lift, and Honig said the limited rewards -- tax credits for only the value of the specific station involved in the incubator relationship -- will discourage abuse. “We can't make policy, but we have to in good faith recommend the policies that we think will make a difference and not sit and shake like a leaf because we think someone might object,” National Urban League President Marc Morial said.