With the recent announcement that Congress is now considering the introduction of legislation to restore tax incentives for the sale and donation of stations to women and other minority-led groups. Those of us that are old enough to remember the last time this was tried ought to also remember the abuse and manipulation that resulted and the ultimate demise of this policy.
The Broadcast Varied Ownership Incentives for Community Expanded Service Act, also known as the Broadcast VOICES Act proposes to revive the long-defunct Minority Tax Certificate Program, originally created in 1978 and repealed in 1995.
In 1978, the FCC established the Minority Tax Certificate Program, providing a tax incentive to those who sold their majority interest in a broadcast station to minorities. Though repealed in 1995, the tax certificate boosted minority ownership significantly, raising the number of minority-owned stations from 40 to 323. H.R. 4871, the Expanding Broadcast Opportunities Act will reinstate the tax certificate program at the FCC, opening opportunities for minority ownership in the broadcast industry by incentivizing sales to minority purchasers and encouraging investment of capital in minority-owned stations.
The Minority Tax Certificate Program, which was designed to encourage the sale of broadcast and cable properties to minority-owned businesses by offering tax incentives, was terminated in 1995 primarily due to political and ideological shifts in Congress.
Concerns Over Affirmative Action and Quotas: Many lawmakers, particularly Republicans, viewed the program as a form of affirmative action or a quota system. Senator Bob Packwood (R-Ore.), then-chairman of the Senate Finance Committee, expressed that the “day of affirmative action in the sense of quotas is gone,” signaling a broader political move away from such policies.
Large Corporate Tax Deferrals: Critics argued that the program was being exploited by large corporations to defer massive tax bills. For example, Viacom’s proposed $2.3 billion sale of cable systems to a minority-controlled partnership raised concerns that the tax benefits were disproportionately favoring big companies rather than genuinely supporting minority ownership.
Overwhelming House Vote: The House of Representatives voted 381-44 to eliminate the program, rejecting an amendment that would have capped the tax deferral at $50 million. This overwhelming vote reflected bipartisan skepticism about the program’s fairness and effectiveness.
Shift in Policy Focus: There was a growing sentiment that policies should focus on broader access to capital rather than race-based incentives. Some lawmakers indicated they might support similar initiatives if framed around economic opportunity rather than minority status.
It will be interesting to see how this plays out this time around. In our opinion, no matter how Congress or the FCC attempts to put in guardrails, there will be abuse. Token minority and female (even transgender?) involvement will open Pandora’s Box. Will the courts or Congress, this time around, find economic opportunity is more important than minority status?
The Federal Communications Commission (FCC) and organizations like the National Association of Broadcasters have periodically explored new initiatives to promote diversity in media ownership. However, without strong financial incentives like the former tax certificate program, progress has been slow.
That’s 30 for now…