FCC Expected to Move on Incubator Order by August
The FCC is expected to move soon to create a broadcast incubator order, before a deadline, said broadcast and anti-media consolidation attorneys in interviews. The 3rd U.S. Circuit Court of Appeals told the agency to file a report on the status by Aug. 6 when denying an emergency stay of a media ownership reconsideration order (see 1802070053). Though the 3rd Circuit asked only for a report, it could hurt the agency’s case to show up without a voted-on incubator order or strong indications one is coming soon, said numerous attorneys on both sides. The agency is unlikely to show up to court empty-handed, said Georgetown Institute for Public Representation Director Angela Campbell.
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Broadcast officials expect an order by the Aug. 2 commissioners' meeting, and officials on both sides expect that order to use waivers of broadcast ownership rules as incentives for participation, directly counter to the unanimous recommendation of the FCC Diversity and Digital Empowerment Advisory Committee (see 1803270041). Commissioner Mike O’Rielly called the tax credit-based incubator plan recommended by the DDEAC “doubling down on failed policies.” Though some industry officials expect an incubator order to be a meeting item, it could be voted on circulation, said Andrew Schwartzman, senior counselor at Georgetown Law’s Institute for Public Representation. The commission didn’t comment.
Having an actual order would add more weight to agency arguments it considered ownership diversity when it struck down numerous ownership rules last year, said Fletcher Heald's Frank Montero. It would give the FCC something shiny to present to radio broadcasters at September’s NAB Radio Show, Montero said. It’s possible the regulatory could merely circulate an order by the court deadline or take some other interim step to demonstrate an incubator program is imminent, said Fletcher Heald's Harry Cole. Since the FCC has a history of defeats on media ownership before the 3rd Circuit, the agency likely will want the strongest case possible, he said.
Since the FCC lacks authority to create a tax credit, the DDEAC plan would require congressional action to be implemented, and broadcast industry officials said it's tantamount to doing nothing. Since the agency needs to show a concrete incubator plan to the 3rd Circuit, the court date adds pressure on the agency to create an incubator plan based on ownership waivers, a broadcast official said. National Association of Black Owned Broadcasters President and DDEAC member Jim Winston disagrees, but wouldn’t be surprised if supporters of broadcast waivers use the court as “cover.” Numerous broadcasters in docket 17-289 favored ownership waivers (see 1804260062). Broadcast ownership waivers are a bad choice for incubators because they encourage consolidation, the driving force behind the lack of diversity in station ownership, Winston said. The agency would be “hurting the cause it’s trying to help,” Winston said.
Encouraging diversity via tax credits has been a nonstarter with legislators, an industry lawyer said. That’s because the proposal traditionally has been presented as a broad industrywide benefit, said Multicultural Media, Telecom and Internet Council Senior Adviser and DDEAC member David Honig. A more-focused tax credit proposal, based on an incubator program and backed by the FCC, would be more appealing to lawmakers, Honig said.
Bayou City Broadcasting CEO DuJuan McCoy is on the DDEAC and voted for the tax credit proposal but supports that and an incubator. Having seen firsthand how hard it is to be a new entrant and minority owner in broadcasting, McCoy said companies need a range of options to encourage them to help fledgling owners get access to capital. Bayou City is now too big to qualify for an incubator program, McCoy said, though “paying it forward” is important. Some larger broadcasters might see more benefit in a tax credit than an ownership waiver, and some may see the reverse, he said. “The more incentives you can give to the drivers of these programs, the more likely you are to succeed.”