Black and Hispanic Broadcasters, Congressmen Seek Bailout

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Maxine Waters photoRadio and television broadcasters - at least those catering to black and Hispanic audiences - soon may join financial services and auto manufacturers as the beneficiaries of a federal bailout. For the last half year, a group of executives of minority-themed media enterprises have been lobbying Capitol Hill to provide a boost to their money-losing operations. Having natural allies in the black and Hispanic congressional caucuses, they may win additional support from the Obama administration and any number of white lawmakers eager to expand their base of support. As it is, one of its key members already may have coaxed a loan modification from a financial giant. 

The Congressional Black Caucus (CBC), with fully 42 members, these past couple months have made little secret of their displeasure with Congress and the Obama administration, accusing them of giving scant attention to troubled black-owned businesses. Lawmakers such as Reps. Maxine Waters, D-Calif. (in photo), and Charles Rangel, D-N.Y., point to hundreds of billions of dollars in emergency loans going to companies such as Bank of America, Citigroup, General Motors and Chrysler. The matter came to a head about a month and a half ago when all 10 caucus members of the House Financial Services Committee skipped a full committee vote on a regulatory reform bill. "While we appreciate the need for expansion of regulatory authority, we can no longer afford for our public policy to be defined by the worldview of Wall Street," Waters explained at a December 2 news conference, vowing to "use our power and our influence" to change policies on foreclosure and unemployment.

The CBC lately has been making the case for a federal bailout of minority-owned broadcasting entities. Often highly leveraged, they're more than a tiny industry niche. Over the last several years there have been about 240 black-owned radio stations operating across the country. Notwithstanding, the spirit of racial grievance and entitlement is well and alive, perhaps most of all at New York City's Inner City Broadcasting Corporation. Founded in 1971 by the recently-deceased Manhattan power broker Percy Sutton and managed since 1991 by his son, Pierre, the New York City-based media company owns 17 radio stations nationwide. Until recently, it had been on the verge of defaulting on a combined $230 million in loans from Goldman Sachs and GE Capital. The caucus, having taken notice, arranged a November 16 meeting with Treasury Secretary Timothy Geithner and White House Chief of Staff Rahm Emanuel. Several times during the 90-minute session, Geithner told caucus members that he would be unable to meet their demands. At one point, Rep. Waters, currently in hot water with the House Ethics Committee for alleged improprieties in a federal bailout of Boston's OneUnited Bank, brought up the plight of Inner City Broadcasting. She wasn't too subtle either, reportedly telling Geithner and Emanuel to lean on Goldman Sachs to rework its loan.

To anyone familiar with Waters' style of political brinksmanship, the scene had the appearance of a shakedown - and a successful one at that. On Friday, November 27, Goldman Sachs officials agreed to rework the terms of its loan to Inner City, engaging in "constructive and mutually cooperative discussions," a Goldman spokesperson noted. Pierre Sutton was even less forthright. When asked if Goldman Sachs' decision to modify the loan was due to political pressure, he replied: "I'm not sure. That's not a position I want to be in, responding to that particular question." The administration was almost as evasive. "We share the concerns raised by CBC members about struggling minority communities, and that's why we've engaged in a positive way to make progress on these issues," said White House spokeswoman Jen Psaki.

The Congressional Black Caucus since the summer has worked with another set of allies on Capitol Hill: the Congressional Hispanic Caucus. Many Hispanic media enterprises also have come upon hard times. On July 12, the heads of 14 minority-owned media enterprises sent a joint letter to Treasury Secretary Geithner, insisting on special federal support. Their effort was a follow-up to an earlier letter sent to the secretary by key House Democrats such as Majority Whip James Clyburn (S.C.) and Committee Chairmen Barney Frank (Mass.), Charles Rangel (N.Y.), Edolphus Towns (N.Y.), Bennie Thompson (Miss.), Carolyn Maloney (N.Y.) and Maxine Waters (Calif.).

The broadcasters, divided evenly between blacks and Hispanics, urged the secretary to set aside funds for direct federal loans or federally-guaranteed banks loans, plus an aid package analogous to the Treasury Department's Auto Supplier Support Program. The broadcasting executives didn't hesitate to rattle some sabers in expressing their sense of moral entitlement:

The recession and current credit crisis are having disastrous impacts in all economic sectors, but minority-owned broadcasters are close to becoming an extinct species. Even in better economic times, minority broadcasters have historically had difficulties accessing capital markets to make the meager gains achieved over a decade after the tidal wave of media consolidation.

The consortium rationalized their need for subsidies this way:

The primary source of news and entertainment for millions of minority communities in the U.S. comes primarily from minority-owned broadcasters. It would be unconscionable to have financial institutions that have accepted billions of federal government assistance to foreclose on these vital American voices.

Aside from odd grammar - the authors clearly intended "millions" to refer to minority individuals, not communities - this statement is wrongheaded on any number of levels.

First, the letter omits the inconvenient fact that quite a few of these enterprises have substantial holdings. If they have lost money, their business decisions don't merit insulation from market competition. One of the signatories to the July 12 letter to Secretary Geithner, for instance, was Walter F. Ulloa. And who is Walter Ulloa? He's chairman and CEO of the Santa Monica, Calif.-based Entravision Communications Corporation, founded in 1996. Here's how the company describes itself on its website:

Entravision Communications Corporation (NYSE: EVC) is a diversified Spanish-language media company with a unique group of media assets including television stations and radio stations. Our media assets are strategically located in fast-growing and high-density U.S. Hispanic markets where the Hispanic consumer base accounts for approximately $361 billion in consumer spending.

We own and/or operate 51 primary television stations across the United States. Our television assets principally consist of the largest affiliate groups for the two television networks of Univision Communications Inc., Univision and TeleFutura. We own and/or operate television stations in 20 of the top 50 U.S. Hispanic markets.

We also own and operate one of the largest groups of Spanish-language radio stations in the United States. Our radio group consists of 48 radio stations, 47 of which are located in the top 50 U.S. Hispanic markets.

This network has natural allies on Capitol Hill. Back in 2003, for example, its Southern California "Super Estrella" affiliate held a concert extravaganza in Anaheim to raise money for the Congressional Hispanic Caucus Institute. Hispanic lawmakers are sure to remember Walter Olloa's generosity - and reciprocate come crunch time.

Another signatory to the letter to Geithner is Sydney Small. He's chairman of Access.1 Communications, a New York City enterprise that owns radio stations in New York, New Jersey, Pennsylvania, Louisiana and Texas, not to mention a syndicating service, SupeRadio. Here's how Access.1 describes SupeRadio:

...a general market syndication company which distributes 40 radio programs through over 1,400 affiliate agreements with more than 725 radio stations. Of these 725 stations, approximately 150 are located in the top 50 markets nationwide.

One would think the black and Hispanic caucuses take their colleagues, the White House and American taxpayers to be fools. These are major corporations in no position to plead poverty, much less pending extinction.

Second, the authors argue that black and Hispanic media outlets, as "vital American voices," are somehow too important to fail. In other words, blacks and Hispanics desperately need media pitchmen to reinforce their collective identity. Such an assumption is condescending. More importantly, it assumes all Americans must be held perpetually hostage to the cultural and political preferences of certain minority groups. Why should taxpayers as a whole be conscripted to prop up operations that can't raise sufficient revenues through advertising and donations? If blacks and Hispanics really did find such programming indispensable, enough of them by now would have responded by tuning in (thus raising Arbitron ratings), buying from sponsors, and making generous donations.

Third, racial/ethnic separatism in the media has had certain balkanizing tendencies that shouldn't be subsidized under any circumstances. Hispanic radio stations, for example, conduct broadcasts almost exclusively in Spanish. What the Hispanic authors of the letter are saying is that American taxpayers should pay for what amounts to an ongoing bilingual maintenance program. One author is Norberto Sanchez, CEO of the Charlotte, N.C.-based Norsan Multimedia. The company website, less than grammatically, affirms its desire to promote linguistic separatism in an English-speaking metro area:

Our platform is not limited to radio and print, we also have the most visited Spanish internet site in town in the region, the only Spanish language mobile text platform in Charlotte and outdoor advertising vehicles, comprised of two billboard trucks, two Hummers and four vans.

Like Entravision, this isn't exactly a shoestring operation.

Black media, of course, conduct their programs in English. But they pose a different sort of problem, providing platforms for advocates of racial separatism. The experience of Inner City Broadcasting Corp.'s flagship station, WLIB-AM in New York, is instructive. WLIB began in the Sixties as a jazz haven, but became aggressively political in an Afrocentric way in the early Seventies following its purchase by Inner City; black picketers outside the station had demanded black ownership. Under the leadership of Percy Sutton (who'd in fact been Malcolm X's attorney), the station promoted black political interests in a variety of ways, for example in 1989 getting out the black vote to elect the city's first black mayor, David Dinkins. Reverend Al Sharpton long has hosted a weekend show on WLIB. It was on WLIB and an Inner City Broadcasting-owned sister station, WWRL-AM, where Sharpton and a top lieutenant, Morris Powell, issued menacing broadcasts during the latter months of 1995 against the allegedly "racist" white owners of a Harlem local business, Freddy's Fashion Mart. On December 8 of that year a crazed local black activist murdered seven people inside the building before killing himself. WLIB continues to air Sharpton's show. Apparently, the Congressional Black Caucus thinks the federal government ought to be funding it.

Fourth, the letter fails to point out that mainstream (i.e., white-owned) networks devote much of their programming to minority audiences anyway. Turn on virtually any music station with an "adult contemporary" or "pop" format, and you will hear songs written or performed by blacks. It isn't just "black" stations that play blues, rhythm & blues, rap, reggae, gospel and other forms of music with widespread appeal to black musicians and audiences. Nor is it just such stations that provide in-depth news coverage of black politicians, athletes, entertainers or businessmen. The truth is that blacks and Hispanics no more need separate media networks than they need separate colleges and universities. If they want to support them, they should avail themselves of the illusion of guaranteed taxpayer support.

Fifth, the appeal for federal funds rests on a specious "everyone else is doing it" argument. Since certain banks, insurance companies and automakers collectively have received tens of billions of dollars, the signatories argue, the government owes struggling black stations favors as well. The response is that banks and other industries shouldn't be receiving bailout funds, something National Legal and Policy Center repeatedly has argued. But quite aside from that, it's not the job of government to bail out failing media enterprises. The idea that it should be underscores how ingrained the attitude of "government to the rescue" has become. When people refer to the "bailout culture" they are restating in colloquial terms what economists long have termed "rent-seeking behavior" - that is, behavior by firms and industries designed to obtain unearned advantages over competitors. Would-be recipients fear, justifiably or not, they can't succeed without government help. But over the long run, rent-seekers are better off not seeking it. For when favoritism becomes routine, it dulls discovery, innovation and efficiency, undermining our economy.

Journalism is a particularly dangerous case of feeding at the trough of government. In a free society, print and broadcast media are a key line of defense against government malfeasance, whether corruption takes the form of public officials acting alone or in collusion with businesses, unions and other institutions. When media enterprises tie their fate to government subsidies, they render themselves less able to perform their classic adversary role. Editors and reporters, fearing being fired, may balk at investigating or criticizing acts of excess and corruption committed by their benefactors. Print and broadcast media would operate more as government functionaries than as enterprises. Writing this past July in the Indianapolis Star, Jeffrey McCall, a professor of communications at DePauw University, observed:

However well-intentioned, any government bailout of the journalism industry is a bad idea. Public confidence in the media is already on shaky ground. That will surely erode further if citizens are given reason to think the journalism industry might take it easy on the government in exchange for tax breaks, antitrust exemptions or subsidies.

There is nothing inevitable about "black" or "Hispanic" radio any more than "white" radio. Broadcasters require sound balance sheets to stay in business. If they can't generate necessary revenues through donations or advertising, they should change their business practices or their format. Media enterprises have every right to cater to a particular audience. But they have no right to enlist taxpayers and effectively become adjuncts of government.

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