Free Press, March 12, 2007
By S. Derek Turner

I am here today to talk about our work in the area of ownership diversity, specifically the issue of women and minority ownership of the most influential media in our nation — local broadcast television.

Most of what I speak about today comes from a study Free Press released last fall called Out of the Picture (PDF).

It is a fundamental belief of mine that in a democracy, the media and those who own it should reflect the diversity of the population that it serves. Now I'm sure everyone here shares that belief, and policymakers in Washington do as well.

Now, in order to promote the goal of diversity, you must first have a good understanding of it. Who owns what? And this is where the first hurdle is: the official monitoring effort is wholly inadequate.

The Commerce department took a shot at tracking minority broadcast ownership in the 1990's, releasing over a half a dozen reports from 1990 to 2000, using the best available information to them, and providing good insight.

However, for no explainable reason, the department stopped looking into the issue after 2000, and has not released any new reports since.

In 1999, the FCC began requiring all license holders file information about the race, ethnicity, and gender of owners.

This was a major step forward, as it promised to help the FCC live up to its obligation under the 1996 Telecommunications Act.

You see, the Act specifically requires the FCC to promote female and minority broadcast ownership.

Now again, the FCC can't really do anything to live up to this mandate unless it first knows the answer to the question, "who owns what?"

But since they began gathering information on the race and gender of owners, the FCC has done nothing with it.

Nothing at all.

Thus, we undertook our study to partially remedy this lack of information by determining the race and gender of the owners of every single licensed full-power commercial TV station in the country.

The results are stark, and quite disappointing.

• Despite comprising half of the U.S. population, women own just 5% of the TV stations.

• Minorities make up a third of the U.S. population, but own just 3.3% of the TV stations.

Now of course, some people's first response might be, "that's bad, but aren't women and minorities underrepresented in ownership of most businesses?"

• Yes, but the level of ownership by women and minorities is over 6 times higher in the rest of the economy than it is in the broadcast sector.

• And minority and female ownership has risen steadily over the past years in every sector of the economy tracked by the Census Bureau. But as our results show, it has actually dropped in the broadcast TV sector.

• Furthermore, when we look at who is at the top of the women-owned stations, we see that only a third of the female-owned stations have women CEO's or Presidents. And less than 40% of these stations are controlled by a company where women hold 100% of the ownership.

• And women of color fare the worst of all, owning less than one-half of one percent of all stations.

But our study went far beyond a mere tabulation of the numbers. We looked at the data in a number of different ways that can help inform policymaking.

• We found that women and people of color were more likely to be smaller station group owners, that is, women and minorities own an average of about 2 stations per unique owner, compared to approximately 5 stations per unique white male or corporate owner.

These numbers are important, because our research documented how small group owners struggle to compete in today's consolidated media environment, where large corporate owners can undercut the smaller independent owners ability to compete for programming and advertising dollars.

• We also found that women and minorities were far more likely to be local owners. About half of their stations are locally owned and operated, compared to about a fifth of all white male or corporate owned stations.

• This is an extremely important result, because official FCC research has definitively shown that local owners air more locally focused news compared to non-local owners, about 5.5 minutes more per half hour newscast.

We also focused on the affiliations and local news operations of each station.

As you all know, in the local news business, affiliation with one of the "Big 4" usually means you'll have a local news operation.

• But minorities don't own many big-four affiliated stations, just 1.5% of the total. It's slightly better for women, but still extremely low at 4.9% of all big 4 affiliates.

Despite this disparity, women and minority owners are producing local news at levels that equal or exceed non-minority owners, particularly by making better use of their independently affiliated stations, which they have relatively more of.

• 22% of stations owned by women and 35% of minority-owned stations are independent affiliates, versus just 10% of white-male and corporate owned stations.

• And only 16% of white-male owned independent stations air local news versus 30% of non-white-male owned independent stations.

• Another important finding was that women owners were far more likely to employ women news directors. Of the stations that air news, over 40% of the women owned stations had a female news director versus just a quarter at the other stations.

Thus we see that women and minority owners are smaller, local, more independent, and dutifully serving the needs of their local communities.

Now, while the overall ownership figures I cited earlier are important, broadcasting is a local market focused service, and it makes sense to examine things at the local market level.

• Here we find that 18 of the nation's 210 TV markets have populations where minorities comprise the majority of the population.

• But 7 of these 18 markets have no minority owners. And in the remaining 11 markets the level of minority ownership is very low, some 3 to 10 times below the level of minority population living within each market.

• Women make up the majority of the population in nearly all of the nation's TV markets, but own stations in just a fifth of the markets.

And the female and minority audiences reached by these owners is also quite low.

• 3 out of every 4 women are NOT served by a female-owned TV station.

• 4 out of every 5 minority households are NOT served by a minority-owned TV station.

OK, all these numbers are bad and disappointing, but what role does FCC media ownership policy play in all of this?

This is where, in my opinion, the most important part of our study comes in.

Commissioner McDowell said yesterday at this meeting that he was extremely troubled by the data I've presented to you today, and that he wanted to know why women and minorities own such a small percentage of stations, and why the level is lower than in other industries.

Well, the answer is clear as our research demonstrated.

First, we tracked the sale of every single station that was minority-owned as of 1998 and found that the majority of these sales would not have been permitted under old ownership rules that were abandoned in the late 1990's.

Furthermore, the bulk of the remaining sales were to large corporate giants, and may not have occurred if not for the market pressures brought on by increased consolidation.

Next, using econometric methods, we showed that as a market becomes more concentrated, the probability that a station will be owned by a minority drops significantly, even when controlling for market and station characteristics.

We also found that markets that added new minority-owned stations after 1998 were significantly less concentrated than those that did not, even after controlling for market factors.

Also very telling, we found the same effect indirectly for women owned stations. The presence of a minority owned station in a market significantly increases the probability that a woman owned station will be in the market, and vice versa, even when controlling for market factors.

Thus, women ownership and minority ownership are complementary. Which makes sense, because when a local market is a fertile environment for diversity, diversity will thrive.

Thus the evidence is very clear: Past policy decisions that led to increased market concentration hurt minority owners, and any further moves to increase concentration will unambiguously lower the already extremely low level of women and minority TV station ownership — something that is the exact opposite outcome mandated by Congress.

Let me say in plain language, the goals of increasing women and minority ownership and the goals of increasing media consolidation are diametrically opposed. You just can't do both.

Thus the simple answer to Commissioner McDowell's question is that the broadcast market is one of scarcity, where each locality has only a handful of available licenses.

And FCC and Congressional policy has fostered a climate of consolidation, creating tremendous economic pressure that drives current women and minority owners out of the market, and raises insurmountable barriers for new women and minority owners to enter the market.

So what can you do? What policies should you advocate for that will remedy this sorry situation?

First, we need better data. The FCC should be conducting studies like this on a regular basis.

Second, some groups have proposed restoring incentives for companies selling stations to sell to women and minority owned businesses.

This is certainly a good idea. Studies commissioned by the FCC showed that the past policy of awarding credit for ownership by women was effective.

We also need to pay attention to the issue of access to capital.

An FCC study also showed that women and minorities applying for debt financing as a part of their attempt to become broadcast station owners, were less likely than white males to have those applications approved.

We know that among current owners, that the minority owners paid significantly higher interest rates on their loans than did other borrowers.

But it is extremely important to realize, whatever packages of incentives and other policies that are put forth in order to deal with this crisis, that none of it will be effective if we continue to allow massive market consolidation.

We want women and people of color to own top tier stations, not just the leftovers that the biggest companies decide they no longer want.

So I encourage you as an organization to continue your amazing work in this arena.

A-W-R-T filed a very powerful set of comments in the current FCC ownership proceeding that rightly pointed out that the Commission has the duty to promote female and minority ownership, and that allowing more consolidation would run counter to this duty.

Given that all 5 of the FCC Commissioners have recently commented on the need to do something about this problem, it is clear that you are having an effect.

We all need to keep up the pressure, and hopefully the next person you invite to your conference to deliver the latest statistics will have better news for you than I did today.

Thank you very much.

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