PLAN TO DEVELOP MINORITY OWNERS LACKING IN SATELLITE INDUSTRY

NASA, Boeing, Lockheed and others spend hundreds of thousands of dollars in scholarships annually for minorities expressing interest in science in engineering, but no comparable effort is being made on ownership issues, officials said. For example, broadcast and telecom industries have several funds such as Broadcap and Telecom Development Fund to encourage and help minority ownership in those industries. FCC also has set up tax credit programs in past to improve number of minority owners of broadcast properties, though no credits are currently available. Satellite industry never has had similar program.

Issue of broadcast ownership diversity was raised by Senate Commerce Committee Chmn. Hollings (D-S.C.) (CD July 18 p1), but it hasn’t officially spread to satellites. Black Entertainment & Telecom Assn. (BETA) Pres. Talib Karim told us it was “time for the issue to be addressed. With the privatization of Intelsat, it’s something we need to examine. Why can’t minorities own satellite companies just like they do broadcast properties?”

Worldspace is only company known to have minority owner, Noah Samara, who is of African descent. No African-Americans or women are owners of U.S. satellite company, but Minority Media & Telecom Council Exec. Dir. David Honig said there was one African-American DBS owner, “who was way ahead of his time,” that never got company off ground. He also said there was Hispanic teleport operator in Miami and other minorities who marketed use of transponders on satellites. Among women, Betty Alewine formerly headed Comsat, now Lockheed Martin Global Telecommunications. Iridium has minority principals in Washington attorney Tyrone Brown and Syd Com venture capitalist Herbert Wilkins, who are putting together group to establish satellite telephony service in 3rd World markets. Iridium Chmn. Dan Colussy has told us in past that Brown and Wilkins played key role in raising money and rebuilding Iridium following bankruptcy (CD Dec 13 p7).

Women and minorities do hold important executive positions and work as subcontractors for satellite companies and federal agencies, including NASA, Boeing, Hughes, Lockheed Martin, others. For instance, Odie Donnell was pres. of DirecTV until resigning to pursue other interests earlier this summer. Northpoint Broadwave, which seeks to use satellite spectrum for terrestrial service, is headed by Sophia Collier, with other women as major principals. Vp Toni Bush, an African-American and former telecom partner at Skadden, Arps, Slate, Meagher & Flom, told us goal of company was to provide minorities with business opportunities through network of service operators in 210 markets and 68 affiliates. Biggest reasons cited in our interviews on issue is “capitalization”, opportunity, expertise.

FCC Comr. Abernathy said minority ownership was something she “envisions happening.” She said in interview that BET was perfect example of possibilities. “If there are opportunities, we are hopeful minorities and women will take advantage of them.” She said it’s “absolutely a capital issue” not racial or gender one: “It’s not something that’s going to happen quickly, but eventually.” Satellite projects, including launch and service, cost minimum of $200 million and can reach billions of dollars with “great possibility” for failure, analysts said. Abernathy said few minorities would invest that kind of money in financial venture they knew little about.

Unlike TV industry, where Robert Johnson developed BET, satellite companies require highly technical background in engineering and science, so goal has been to introduce talented minority students to opportunities available, said ArianeSpace Pres. Clayton Mowry, former pres. of Satellite Industry Assn. “You have to get people working and leading in the industry before you can address the issue of ownership.” Still, minority ownership isn’t something “widely discussed” in satellite industry because of difficulties companies have had in developing diversity throughout ranks, Mowry said.

Honing said minorities had been shut out of ownership opportunities because satellite industry lacked “opportunities” in “numerosity of service. This isn’t an industry where there are 12,000 radio stations or 1,400 TV stations.” He said satellite industry always had been seen as “distribution mechanism” rather than “broadcast medium” and industry wasn’t covered by 1978-1995 tax credit intended to increase minority ownership.

Satellite is “relatively new industry,” in only its 2nd generation of ownership, compared with 4-5 generations for other broadcast outlets, Honig said. He cited fact that NASA didn’t hire first African-American astronaut until 1967, but he said industry should take steps to be inclusive: “There’s no business model anymore for segregation. We should still hold their [satellite industry] feet to the fire, but their feet haven’t grown as big” as other broadcast segments.

“Minority ownership is an issue that should be addressed,” Roz Parker, member of NASA Minority Resource Advisory Committee and partner at TEC Law, nation’s first African-American high-tech firm, told us. However, she was skeptical of anything positive happening “under this FCC and Congress.” Basically, Parker said, opportunities for minorities are limited and satellite companies have had difficult time making profits, making business unattractive to minority investors.

Parker cited fact that there were just 2 DBS owners, troubles of satellite telephone company and recent departure of Mowry from SIA to “French company” as indicators that U.S. commercial satellite industry has problems. “The industry is struggling on a lot of levels,” Parker said. “It’s not an attractive business. What can minorities look to in satellite industry that’s doing well? My frustration has been how to make some money. I go to space-related conferences and all I hear is the same old, same old. The reality is, when you look at the health of the satellite industry, it’s not doing well.”

National Assn. of Black-Owned Bcstrs. Exec. Dir. James Winston agrees money is “biggest barrier” to satellite ownership by minorities: “It’s extremely capital intensive. You have to invest a lot of money before you see a return.” He told us DBS wasn’t business that had “traditionally been open for investment by small businesses, nonminority or minority. That hasn’t shown any signs of changing.” Winston said some govt. role was “appropriate and there needs to be a minority presence in delivering information from every form of media by which American public receives its information.”