Incentive Auction Will Devastate Minority Ownership, Say MMTC Panelists

Minority-owned TV stations and minority programming will be devastated by the incentive auction, said speakers at Brownout, a panel at the Multicultural Media, Telecom and Internet Council's Access to Capital and Telecom Policy Conference Thursday. Women and minorities will own less than 1 percent of full-power TV stations after the incentive auction, and the low-power stations that carry most minority-focused programming will be nearly wiped out, predicted Ravi Kapur, CEO of network Diya TV, which targets Indian viewers. “It’s stunning that this is happening in plain sight, in front of a very diverse FCC,” he said. “This is a failure on many fronts,” said Hogan Lovells broadcast attorney Ari Fitzgerald.

Though FCC anti-collusion rules make it unclear which stations are participating in the incentive auction, Kapur said minority-owned stations are most likely to sell their spectrum because they're independent and often in desirable urban areas. Such a station has a “fiduciary duty” to participate in the auction, considering the large sums on offer in the $86 billion reverse auction, Kapur said. “It’s very sinister,” he said. Before the auction, hedge funds and entities with equity capital bought or invested in many independent stations, said Anita Stephens-Graham of investment firm Graham Communications. Such entities would be motivated to sell in the auction, she said.

The auction will also affect minority programming because the repacking process is likely to squeeze out many low-power TV stations, panelists said. LPTV is one of the main vehicles for programming targeting minorities, Kapur said. “You better believe it won’t survive after the auction.” There aren’t many ways the FCC can help LPTV, Fitzgerald said.

The forward auction also doesn’t look like a good opportunity for minority ownership, since the companies that are likely to buy the spectrum are less diverse than in broadcasting, Graham said. Buying FCC licenses may not be the right answer for the future anyway, said Frank Washington, CEO of Crossings TV. Apps and software may provide more opportunities for minorities after the auction, Washington said. “I’m not convinced that continuing to put money into acquiring broadcast licenses is the best plan for the future.”

The panelists didn’t offer much hope for stopping the auction’s effects on minority ownership and programming. “This ship has sailed,” Kapur said. She and the other panelists said MMTC and minorities in the communications industry should put pressure on Congress and the FCC to address the problem. “This is a deplorable situation,” Fitzgerald said.