Minorities Chased into b’cast ownership

CBS' Franks: Station fund 'good business'

WASHINGTON — Chase Manhattan Bank has agreed to help finance a several-hundred-million-dollar fund being set up by CBS CEO Mel Karmazin and Clear Channel Communications CEO Lowry Mays to finance minority broadcasters.

Persons close to the deal have confirmed that Chase will not only provide institutional banking services for the fund, but will also be a lender. Karmazin and Mays have been soliciting other broadcasting companies to participate in the fund, to be formally unveiled next month.

While both the FCC and broadcasters insist there was no quid pro quo, the TV industry’s increased interest in minority ownership and investment in stations coincides with the FCC’s recent decision to relax the rules on duopoly.

News Corp. CEO Rupert Murdoch held talks with public interest groups last year that fizzled after they became public. But Murdoch’s initial proposal included a commitment by News Corp. to invest in minority broadcasting companies in return for their support to relax ownership rules. Lowell “Bud” Paxson also floated a similar proposal last year.

Good faith?

CBS senior vice president Martin Franks insists that Mays and Karmazin are acting in good faith to boost the level of minority representation in the broadcasting industry. Franks said Mays and Karmazin decided last spring that they would move forward with their investment fund “regardless” of any FCC action on ownership.

“It’s not just the right thing to do,” said Franks, “It’s good business.”

FCC spokesman David Fiske adamantly denied that efforts by broadcasters to fund minority ventures would have any impact on FCC decisions. “I am offended by whomever is peddling that idea,” Fiske said.

Broadcast lobbyists insist that their companies are motivated by concern that minorities are underrepresented among the industry’s stakeholders. Some lobbyists also acknowledge efforts to aide minority broadcasters are an attempt to curry favor with FCC chairman Bill Kennard, the FCC’s first African-American topper.

Kennard has pointed out at every opportunity that increased concentration in the broadcasting industry makes it difficult for minorities, women and new entrants in general to participate in the increasingly expensive pursuit of buying and selling stations. According to the National Assn. of Black Owned Broadcasters, minorities own just 20 television stations out of more than 1,500 and just 157 radio stations out of more than 12,000.

Surprise decision

Last week, Kennard and the two other Democratic members of the FCC surprised broadcast lobbyists with a decision that loosens broadcast ownership rules at the local level, freeing stations, for the first time since the 1960s, to own two stations in a market. In addition, the FCC voted to loosen rules that limit the ownership of radio and television stations in the same market. Both Mays’ Clear Channel and Karmazin’s CBS will directly benefit from the ruling.

In speeches, Kennard has singled out Mays and Karmazin for praise, painting their efforts to organize an investment fund as one creative way to ensure that African-Americans and other minorities don’t get left behind as the game of buying and trading broadcast properties becomes a game for the extraordinarily wealthy. Last April in a speech to the National Assn. of Broadcasters, Kennard commended Karmazin and Mays for their leadership and for “rising to the challenge.”

Kennard first signaled that he was willing to soften his stand against deregulation of the ownership last April in a speech to the National Assn. of Broadcasters. “With the changing realities of today’s marketplace, you need the flexibility to seize the opportunities and open the frontiers of the Information Age,” said Kennard. But in the same speech, he encouraged broadcasters to make sure minorities had opportunities in the broadcasting industry and again specifically praised Mays and Karmazin for their efforts.

Earlier this week, Lin Television announced that in partnership with the 21st Century Fund, it was backing Banks Broadcasting, a minority firm headed by a former Lin employee. Banks Broadcasting hopes to raise up to $175 million to buy stations in medium and smaller-sized markets.

Like Mays’ Clear Channel and Karmazin’s CBS, Lin Television was pleased with last week’s decision by the FCC to deregulate local ownership rules. Lin likes the ruling because it will allow the station group to buy several stations which it now operates through local marketing agreements, or LMAs. CBS and Clear Channel like the ruling because they will not be forced to spin off radio stations in markets where they own television stations.

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