MINORITY GROUP ASKS FCC TO RECONSIDER DISTRESS SALE POLICY
The Minority Media & Telecom Council (MMTC) asked the FCC to reconsider a decision that MMTC said eviscerated the Commission’s Distress Sale Policy, which was designed to encourage minority ownership. The case involved Family Bcstg., licensee of WSTX(AM) and WSTX(FM) in Christiansted, Virgin Islands. The Audio Div. of the FCC Media Bureau concluded that the company’s conduct was so egregious that it wouldn’t allow Family to sell the licenses under the policy, apparently feeling that the case should go to a hearing, where Family could lose everything and anyone -- potentially not a minority -- could win access to the spectrum. Family has filed an application asking for review by the full Commission and MMTC filed an amicus curiae brief last week in Family’s support, saying the public policy dimensions were more important than the minutiae of the case itself.
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MMTC argued that Family’s conduct, while unfortunate, was rather typical in what happened in instances where the Distress Sale Policy was invoked and that the FCC had gutted the policy by denying Family the opportunity to use it. What’s more, MMTC said the policy provided benefits to the public by bringing about a quick resolution and, therefore, perhaps uninterrupted broadcasting service, as opposed to a long, drawn-out court case and the possible shutting down of facilities. “The Media Bureau has delivered the sharpest insult to all who love diversity. Without a word of analysis, regret or remorse -- or even recognition -- the bureau has issued a decision that would nullify the FCC’s only remaining minority ownership policy,” MMTC said. The FCC said Family repeatedly deceived the Commission, ignored Commission correspondence and repeatedly violated FCC rules, including those designed to protect the public from exposure to RF radiation. The agency said the policy should not be “rigidly applied” in such a case.
The Commission already had given Family a 2nd chance after the parents in the African-American family-owned business agreed to relinquish control to their children. The same problems arose subsequently and the parents didn’t actually get out of the business, we were told by people familiar with the case. This time around, Family has stipulated to its transgressions, but wants to sell its facilities and licenses to an unrelated 3rd party, Caledonia, a potential minority owner of the property.
Under the Distress Sale Policy, Family could reap up to 75% of the fair market value of the radio assets by selling to an eligible minority. However, if the case went to a hearing, the FCC could withdraw the operating licenses altogether and Family would be left with nothing more than its equipment. MMTC said that stark choice often led to invocation of the Distress Sale Policy, which produced more minority ownership and increased diversity of the airwaves. But FCC staff apparently wanted to send the message that an aberrant licensee couldn’t sell its way out of wrongdoing and that allowing a Distress Sale in such a case wouldn’t provide a sufficient deterrent to future would-be wrongdoers.
Asked whether the FCC wasn’t simply trying to send a message in this case, as opposed to a wholesale revoking of the minority policy, MMTC Exec. Dir. David Honig said he believed the decision was the equivalent of revoking the policy without a public hearing. “It [the FCC staff action] has killed it as surely as if you cut off a person’s head. Leaving the body doesn’t mean you have a live person,” Honig said. Situations similar to the one at Family Bcstg. often result in a Distress Sale case, Honig said. “This has an enormous impact on the state of the law,” he said.
The Distress Sale Policy was instituted in 1978 under then Chmn. Richard Wiley. MMTC said the policy had resulted in about 40 broadcast stations’ being sold to minorities and led to the birth of Radio One, which owns 66 urban-oriented radio stations. There’s no telling when the Commission might issue a decision on Family’s application for review.