Loading...

Diversity Groups Push for Revival of Minority Tax Program

August 17, 2021 by Dan McCue

Seven diversity organizations have joined the call for Congress to revive a tax certificate program intended to encourage minority and women ownership of broadcast stations.

Rep. G.K. Butterfield, D-N.C., and Sen. Gary Peters, D-Mich., introduced the bill to reestablish the Minority Tax Certificate Program at the Federal Communications Commission during the last Congress.

Last week, Butterfield revived the effort when he and Rep. Steven Horsford, D-Nev., introduced the Expanding Broadcast Opportunities Act of 2021. 

Sens. Gary Peters and Bob Menendez, D-N.J., are sponsoring the companion bill in the Senate.

In a letter to the congressional leadership, the organizations say “supporting these pieces of legislation would eliminate barriers and create new opportunities for women, people of color and socially disadvantaged individuals to own local TV and radio stations.”

Established in 1978, the minority tax certificate was designed to provide broadcasters with an economic incentive to sell their stations to minority owners. 

Rather than directly subsidizing the potential owners, the certificate instead gave a tax break to sellers that incentivized them to sell to the minority-owned business even if there were multiple bidders for their properties. 

If the seller sold to a minority-owned business, the seller could take the proceeds from the sale and roll those proceeds over into a new media property without recognizing the taxable gain from the sale. 

Unlike the typical like-kind exchange where the roll-over into a new property has to proceed within a few months of the sale, the tax certificate treated the sale as an involuntary sale (like the sale of a property because of a government’s exercise of eminent domain) under Section 1033 of the tax code, giving the seller several years to roll the proceeds over into a new purchase. 

At that point, the new property would have the same tax basis as the old – meaning that no gain would be recognized until the sale of the new property. 

This spurred many sales to minority companies by broadcasters looking not to get out of the business, but instead looking to realign their holdings or to move up into larger markets. Several hundred radio and TV stations were purchased under this program in the last 20 years of the program’s existence. 

The letter writers argue that the program was an extraordinarily “effective mechanism for bringing more people of color into station ownership,” increasing minority ownership by 550%.

Despite this success, the program had its critics, some of whom questioned the constitutionality of racial set asides, while others asserted it quickly became a vehicle for gaming the tax system.

These concerns came to a head in early 1995, when Viacom Inc. agreed to sell its cable television systems for $2.3 billion to a minority-led investor group, in a deal in which Viacom stood to save $400 million to $500 million in federal taxes.

The buyer of the Viacom systems is a partnership headed by Frank Washington, a black attorney and entrepreneur from California who helped develop the FCC program in 1978 while he was an official in the Carter administration.

Washington’s co-investors in the Viacom systems include InterMedia Partners, a San Francisco-based cable company, and Tele-Communications Inc., the nation’s largest cable operator.

Though he insisted he wasn’t singling out Viacom or Washington, Rep. Bill Archer, R-Texas, the conservative chairman of the House Ways and Means Committee, immediately scheduled hearings to review the program.

Within weeks, both the House and Senate had voted to repeal the program.

The pending bills would establish limits on the program to overcome some of the objections that existed to the program in the last century. 

To overcome some of the constitutional objections, the bill applies to all “socially-disadvantaged individuals” – not just to businesses that are minority-owned. 

To overcome the concerns about this program being exploited by big businesses that don’t need government assistance, the program proposes to cap the size of the sale that could take advantage of the certificate – a cap somewhere between $10 million and $50 million, as decided by the FCC after a rulemaking. 

The bill also requires that socially-disadvantaged individuals be involved in the management of the stations acquired, and that the properties be held for at least three years to avoid the purchased stations quickly being turned over to non-qualifying businesses.

The letter was signed by the Multicultural Media, Telecom & Internet Council, the National Association of Black Owned Broadcasters, the League of United Latin American Citizens, the Hispanic Federation, the National Urban League, the U.S. Black Chambers and Asian Americans Advancing Justice.

Media

October 11, 2021
by Dan McCue
Americans’ Trust in Media Continues to Slide

WASHINGTON – Americans’ trust in the news media continues to plummet, dropping four percentage points from last year’s already low... Read More

WASHINGTON – Americans’ trust in the news media continues to plummet, dropping four percentage points from last year’s already low 36%, a new Gallup poll has found. The poll, which was released last week also found the media continues to be a decidedly politically polarizing issue... Read More

September 22, 2021
by Dan McCue
Bill Aimed at Saving Local Journalism Included in Reconciliation Package

WASHINGTON -- A key piece of a bipartisan proposal to sustain local journalism has passed through the House Ways and... Read More

WASHINGTON -- A key piece of a bipartisan proposal to sustain local journalism has passed through the House Ways and Means Committee and is now part of the $3.5 trillion budget reconciliation package currently awaiting a vote in the full chamber. When it was proposed by... Read More

September 22, 2021
by Tom Ramstack
Trump Accuses His Niece and NY Times of Conspiracy for Revealing His Tax Returns

Former President Donald Trump accuses his niece and The New York Times of deceit and conspiracy to obtain his tax... Read More

Former President Donald Trump accuses his niece and The New York Times of deceit and conspiracy to obtain his tax returns in a lawsuit he filed Tuesday. The lawsuit asks for $100 million in compensation after the former president says he was victimized by an “insidious... Read More

September 16, 2021
by Dan McCue
Lone Sentence in Popular Series Could Cost Netflix a Cool $5 Million

LOS ANGELES, Calif. - A single line in Netflix sensation “The Queen’s Gambit,” which is expected to rake in the... Read More

LOS ANGELES, Calif. - A single line in Netflix sensation “The Queen’s Gambit,” which is expected to rake in the statues at this weekend’s 73rd Primetime Emmy Awards, could wind up costing the streaming giant a cool $5 million thanks to a defamation lawsuit filed Thursday... Read More

September 4, 2021
by Dan McCue
Broadcasters Say Media Ownership Rules Are Detrimental to Competition, Diversity

WASHINGTON -- Regulations governing the ownership of broadcast radio and television stations harms broadcasters’ ability to compete in the marketplace,... Read More

WASHINGTON -- Regulations governing the ownership of broadcast radio and television stations harms broadcasters’ ability to compete in the marketplace, stymies service to local communities and fails to promote diversity in ownership, the National Association of Broadcasters said in a lengthy filing delivered to the Federal... Read More

September 1, 2021
by Dan McCue
Nielsen Has National Ratings Accreditation Yanked by Media Rating Council

Nielsen, which for decades has been providing television ratings for everything from presidential debates and political conventions to nightly newscasts,... Read More

Nielsen, which for decades has been providing television ratings for everything from presidential debates and political conventions to nightly newscasts, was reeling Wednesday after a key industry organization pulled its support of the company’s services. The Media Rating Council is a United States-based nonprofit organization that... Read More

News From The Well
Exit mobile version