Vote May Thwart Viacom Cable Sale

The House Ways & Means Committee on Feb. 8 voted to kill an FCC program designed to increase minority ownership in the media, applying the action retroactively to effectively block Viacom’s planned $2.3 billion sale of its cable systems to a minority-controlled partnership.

The vote came after a rancorous session in which Democrats accused Republicans of trying to roll back programs that benefit blacks and other minorities. Rep. Charles Rangel (D-N.Y.) said that “today it’s this. Tomorrow it’s affirmative action and the next day I suppose we’ll be repealing the 13th (abolishment of slavery) and 14th (due process afforded all citizens) Amendments. Then we’re back to where we started.”

At issue is a longstanding Federal Communications Commission tax certificate program that allows cable TV operators and broadcasters to avoid or defer taxation by selling their media properties to minorities. In killing the program, the Ways & Means panel used a portion of the money saved from the tax certificate program to fund the permanent extension of unemployment benefits to self-employed workers.

Republicans on the committee chaired by Rep. Bill Archer (R-Texas) questioned the worthiness of the program, focusing on Viacom’s proposed cable system sale to highlight what they have dubbed “corporate welfare.”

Under Viacom’s deal, the media conglomerate would avoid or defer as much as $640 million in federal and state taxes by unloading its cable properties to a partnership comprised of Sacramento-based media exec Frank Washington and cable giants Tele-Communications Inc. and Intermedia Partners.

Washington, who is black, designed the FCC tax certificate program while serving at the FCC in the late 1970s. He plans to invest about $2 million of his own money in exchange for a 20% stake as controlling general partner of the new company.

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