Kim M. Keenan became president/CEO of the Multicultural Media, Telecom and Internet Council a year ago. Radio World checked in with her on MMTC’s activities including its advocacy activities at the FCC.
Commentaries by MMTC are a recurring feature on radioworld.com.
RW: Why does MMTC spend time and effort on radio issues at the FCC?
Keenan: Radio may be widely considered an “old” or “heritage” technology; but age is a sign of maturity and resilience. One of the key things about AM radio is that it’s been the entry technology for diverse ownership in the media and telecom space. Two-thirds of minority-owned radio stations are AMs, and most minority FM and television station owners got their start in AM. Also important, AM dominates the talk realm, encouraging the listening public to engage in discourse and discussion, and a great many minority-owned stations have extensive programming for that purpose. That’s especially true for multilingual stations, which provide vital news and information to their communities.
RW: MMTC was active in pushing to secure an AM-only translator window, succeeding when the commission adopted its Report and Order last month. What role did your advocacy play?
KMK: MMTC and dozens of partners advocated fiercely before the commission to make this happen. In August, we filed a letter along with 50 CEOs representing diverse radio stations calling for the commission to act to revitalize AM Radio. In September, we filed another letter jointly with the National Association of Black Owned Broadcasters and the National Association of Broadcasters. We met with each commissioner or their legal counsel to underscore the importance of the issue. In October, Commissioners Clyburn and Pai both voiced exceptionally strong support, urging the other commissioners to act quickly on this important matter. And by the end of October, the commission unanimously adopted several engineering proposals in MMTC’s 2009 “Radio Rescue Petition.” This is welcome news for diverse radio owners across the nation and great news for consumers.
RW: You’ve expressed concern that the FCC dismissed 24 MMTC proposals to advance minority broadcast ownership. What was MMTC’s next step?
KMK: We took them to court! We’re currently in the D.C. Circuit as intervenors in the Stirk case in which progressive groups have challenged the FCC’s failure to do enough to promote ownership diversity generally, and minority ownership specifically. The commission rejected MMTC’s 24 proposals in a footnote, in one sentence without consideration, stating that they were outside the “scope” of the proceeding. They were, in fact, squarely within the scope of the diversity proceeding, and the Third Circuit had instructed the FCC to consider these kinds of proposals in its Quadrennial rulemakings. Oral argument will take place in December of this year.
Further, in 2011, the Third Circuit vacated the FCC’s definition of “eligible entities” as arbitrary and capricious and stated that the commission’s diversity efforts did not do enough to encourage diverse broadcast station ownership. The FCC has yet to come up with a definition of “eligible entities” that is more appropriate than its “small businesses” definition. This is important because the commission gave eligible entities advantages in certain instances, such as extending construction permits for new stations nearing their license expiration dates. The commission’s own Advisory Committee on Diversity recommended a workable, race-neutral definition — businesses that have overcome disadvantages — yet the commission rejected it.
RW: You’ve said the FCC has been too slow in addressing radio reform. Why?
KMK: To be fair, the FCC has had many other priorities that have arisen over the past few years. For example, the 2010 National Broadband Plan had 110 staff devoted to it, covering almost every issue the FCC addresses. And, of course, there was the open Internet issue which dominated the docket for two years, as well as a number of major mergers. At the end of the day, the commission had little time to focus on much else. With those issues largely behind it and one year left in this commission’s time under the current administration, we think the time has arrived for the FCC to turn its attention in a systematic and very thorough way to broadcast issues.
RW: What do you think the FCC has done well when it comes to broadcast reform?
KMK: We always credit the commission when they take action to diversify and improve access and opportunity for all Americans. During the first vote at a public FCC open meeting under Chairman Wheeler, the commission voted to relax the foreign ownership and investment rules. These rules barred foreign investors from owning more than a certain stake in American broadcast stations. MMTC believes that relaxation of those rules provides new sources of capital for minority and foreign language broadcasters and opens international reciprocity for broadcasters to gain a foothold overseas. We also credited the FCC for taking on television Joint Sales Agreements and Shared Services Agreements — “sidecar” arrangements structured for the primary purpose of evading local ownership duopoly rules, not to provide better service to the public. These are significant steps in the creation of additional incentives and opportunities for ownership, especially since access to capital has always been the largest barrier to minority ownership.
RW: What is the Tax Certificate Policy and why does MMTC feel it so important to bring it back?
KMK: In almost every year since 1995 when Congress repealed the Tax Certificate Policy, the FCC has encouraged Congress to restore and update it. The policy first was adopted in 1978. It permitted deferral of the capital gains tax to broadcast owners who sold stations to minorities. This incentive to sellers, all other things being equal, to sell to minorities, quintupled the number of minority-owned broadcast stations before its repeal in 1995. It was the most effective minority ownership policy ever developed. Sens. McCain and Menendez, and Congressmen Rangel and Rush have authored bills to reinstate it. However, as a tax bill, it must go through the House Ways and Means Committee, which has refused to schedule a hearing. The only chance of its restoration in the short run would be through a must-pass House bill.
RW: Tell us about the media brokerage, and what advice you give buyer’s side clients regarding the economic prospects for radio. Who’s interested in buying radio stations now?
KMK: MMTC operates the nation’s only nonprofit, and only minority-owned, media and telecom brokerage. Radio has great potential — predictions that it will disappear have never proven to be accurate. Legacy communications like newspaper and radio will always have a dedicated audience – people still go to movie theaters even though you can download a movie from the Internet. Radio will always have a dedicated and loyal constituency of millions of people into the distant future. The demographics and interests of the audience will change and evolve as they do with all media. So we encourage buyer’s side clients to just simply go in with their eyes open, be aware of the trends, and structure the deal so you do not pay all cash — use seller paper, use options, use LMAs. Use any number of tools that would enable you to have the best opportunity for successful ownership.
RW: MMTC operates a program to incubate new radio owners and operators. How does that work and what has it accomplished?
KMK: We realized that the skill set needed to own and operate a station are more extensive and different than the skill set necessary to manage a radio station. We encourage companies to donate stations to our program, then we find an operator and install them in a Local Marketing Agreement to operate the station, restore it to health and ultimately buy it at a deep discount, which helps them to finance it and get into the business in that way. We have done this now with 10 stations, most of which were sold to minorities and women. This process helped generate the first Hispanic, African American and Asian America-owned stations in Detroit, Minneapolis, Salem, Ore., and Laurel, Miss. We are very proud of this program, and we encourage companies to continue to donate stations to us that we can repurpose in this way.
RW: You told us radio has been important to you personally. Why?
KMK: Every morning, I start by turning on my radio. Whether it’s new music, breaking news or just morning chatter, radio starts my day off right. I have even taken broadcast courses to hone my own radio skills. Radio allows you to focus on enjoying the sound while going about your day. It is my secret weapon to beginning any challenging day.