"Television has become the primary conduit of our national culture in the 20th century. More and more, what is on TV defines what our culture is." - William Kennard, Chairman of FCC'

As Chairman Kennard so succinctly describes above, television plays a powerful and pervasive within today's society as much as we hate to admit it, it truly does "define what our culture is." For as much as television is a recreational medium through which Americans can relax, have fun, and bond, it is equally a key vehicle through which people can be informed, voice their opinions, and hold forums. It is imperative that the television industry be constantly aware of these latter responsibilities, which can collectively be termed as its public interest obligations. One such obligation that has recently been brought under the public spotlight is the lack of economic equality in the television industry with respect to minorities. In this paper, we will seek to identify and explore the key economic structures, policies, issues and drivers of this inequality. Our analysis will begin with a look at the role of television in our society. Next, we will examine the role of one of the major players within the television industry - the advertisers. We will then identify and evaluate the impact of government policies and regulation of the television industry. Finally, we will look ahead to the future of minority equality within the television industry, with our focus being on potential solutions to the problem, such as the emergence of new Digital Television technology.

In its cultural role, television should be programmed mindful that viewers are citizens of a democracy which television was originally intended to serve. While government regulators may be lobbied into allowing the television industry to meet their public service obligations merely through the coverage of news events and political issues, this is not enough. To truly serve the public interest, television must take on an active role in the promotion of economic development and equality for minorities.

As Mark Lloyd, Executive Director of the Civil Rights Forum on Communications Policy puts it, "Communications policy will determine whether all citizens will be able to participate effectively in the political process, have access to public space, share in the fruits of publicly-funded research, or maintain the privacy we take for granted. In other words, we believe that communications policy is a civil rights issue." He goes on to relate that, "I am a member of a growing number of former broadcast journalists concerned about the direction of the industry we love. We know that television is not a toaster with pictures…and we know that it can be more than a mass entertainment machine making profits for a few. Television can be a powerful tool for democracy and civil society…and that is what I think the public interest obligation of [the television industry] really boils down too." 2

The economic driver of television is advertising. For broadcast television, it is for all intensive purposes the sole source of revenues. Broadcast television operates in what economics defines as a dual market. A dual market is a situation in which a business serves two markets. In this case, they are content consumers and advertisers. The television stations offer their most attractive content (TV shows) free to the public, in the hope that they can gain large audiences which they can sell to their "true" clients (or at least the ones that pay the bills), the advertisers. Cable television operates under a slightly different model, as they actually gain revenues directly from content consumers via subscription rates. Nevertheless, cable broadcasters still greatly value and seek revenues from advertisers. The bottom line is that, as a result of the economic dependency of the television industry on advertising revenues, advertisers exert great influence over every aspect of television, from what programs get put on the air to who puts them on. 3

The current problem this economic system Is presenting to minorities is that, in general, advertisers do not value or think very much of minority groups. This issue was recently thrust into the public spotlight by Vice President Al Gore in response to a recent FCC study which revealed numerous areas of inequality and prejudice towards minority groups in the television industry. Gore stated, "We must ensure that our airwaves provide opportunities for all Americans, and both reflect and respect the full diversity of the country they serve." He then urged the advertising industry to develop a code of conduct that would discourage companies from discriminating against media owned by or targeted to minorities 4. FCC Chairman William Kennard echoed these statements, in the following statement:

By stunting the free market flow of dollars to minority stations, and thus to the communities in which they are located, in which they provide jobs and income, advertisers are depriving minority communities of a valuable and much needed economic source of income.

This prejudice advertisers hold against minorities is based upon outdated and untrue notions and stereotypes of minority communities. As Chairman Kennard described above advertisers are failing to realize the "untapped markets right here at home in the neighborhoods of our long neglected minority communities." The following examination of recent studies of television viewing should demonstrate the validity of Chairman Kennard's assertion. African-Americans watch 75 hours of television per week, as against 40 hours for the rest of the population. They spend 13% more time watching television during prime time, but they spend a whopping 90% more time watching TV during late night hours. 6

Cable television is to the latter decades of the 20th century what the telephone represented to the first decades. Both technologies are ones that the user rents the service. However, unlike the telephone, where African Americans and Latinos have lagged behind whites, cable distribution shows no significant differences in household penetration. There does, however, appear to be a difference in premium channel subscription and use patterns 7. African-Americans subscribe to premium cable at nearly twice the rate of white households (45% to 26%), while Latino households also have a higher subscription rate of 35%. Looking at a particular cable channel, 22% of HBO's subscriber base is African American, amounting to 42% of all African American homes. African Americans order pay-per-view programs at twice the rate of whites, with Latinos again in between. Moreover, 70% of African American cable households subscribe to a pay service, compared to about half that for all other households 8 This behavior is even more striking when seen from the perspective of education and family income. In general, the higher the level of education and family income, the greater the likelihood of household subscription to cable services. That African Americans (and Latinos), who experience lower levels of educational attainment and family income than whites, consume premium services at higher rates implies that minorities value cable differently 9.

If all these statistics are true, then it is clear and powerful demand for minority focused, owned, and based programming and advertising. Undoubtedly, the median income per viewing family is certainly lower for these minorities than for whites. However, what broadcasters and advertisers need to realize is that the aggregate income of this group is large and thus there is still a huge profit potential for a market directed towards these minorities. Imagine a TV viewing world there may be 10 white viewers, each with 5 dollars to direct towards buying advertised goods on cable TV - thus a total value to advertisers of $50. However, in this same viewing world you might have 30 minority viewers, each with $2 to spend towards consuming advertised goods - thus a total value to advertisers of $60. While this simple example may not exactly illustrate the current market for television advertisements, it does serve to point out the following general point: As individuals, minorities may be poor consumers to target (although this is certainly disputable). However, as a group, they are a huge market. This is clearly supported by the viewing statistics we mentioned above.

Recent policy decisions are moving television away from its public interest obligation. The Telecommunications Act of 1996 allows for greater concentration of broadcast ownership. Broadcast owners are now only restricted by a national audience cap of 35% ~ With this deregulation of ownership concentration rules, it can be expected that the larger networks and stations will immediately seek to reach this new maximum ownership capacity. Once they have successfully achieved the new cap of 35%, it is likely that these major players will make another push to raise the ownership cap restrictions. If government policy continues along its current path, such efforts will probably lead to continued deregulation of ownership concentration policies with the end result being even higher maximum ownership cap rates. In essence, the big will get bigger and the small will get smaller - and the minorities will be among the small. While it may be argued that this would simply be the result of a fair market environment, I believe the more important question is whether such a "fair market result" is what we are ideally looking for. For the natural consequence of less diversity of ownership is less diversity of voices - and the voices that will be hit hardest will be those of minorities.

True, America's current prosperous economic climate certainly points to the benefits of economic deregulation in favor of natural market competition. Such opportunity for capitalism -letting the invisible hand of the market guide the economy - is after all, one of the fundamental principles of our democracy. However, another of the fundamental principles upon which our country is built is to honor free speech. And as Professor Sunstein of the Civil Rights Forum on Communication Policy reminds us, "While we purport to honor free speech, we have left it unprotected in a system of unregulated markets. The Federal government has the power to correct this. Under the First Amendment, with regard to broadcasting, it is the free speech rights of citizens that are paramount, not the rights of private industry. The free speech rights of viewers is harmed if the government continues to leave diversity of expression the prerogative of broadcasters." 11

With the emergence of digital television technology in combination with relaxed ownership and concentration regulations, broadcasters will be able to broadcast 4 or more broadcast channels simultaneously. In the not-so-distant future, it is not unreasonable to foresee dominant broadcasters controlling one or possibly two stations or networks in most major markets, broadcasting 6 to 12 channels simultaneously. Far from encouraging programming diversity, these decisions seem only to multiply existing voices, rather than granting new voices, minority voices, a chance to express themselves. It is because of the threat of such scenarios from becoming realities that the allotment of DTV is so vital to the minority movement towards equality.

The key issue in this debate over the allotment of DTV is the impact particular allotment scenarios will have on LPTV. For, in some areas, the allotment of DTV channels will result in crowding that will most likely result in the darkening of some of the "less-important", smaller LPTV stations. LPTV stations serve small geographic areas across the country. Nearly 90 percent of the minority-owned broadcast television stations are LPTV. They provide programming for diverse ethnic communities in Spanish, Korean, and many other languages. Also, the majority of such LPTV stations are minority owned as well. Because of this important dual role LPTV stations serve in minority communities, it is imperative that the minority focused programming content as well as the minority ownership/leadership of these stations be preserved - even if the LPTV technology itself has become obsolete. For, despite their small size and subsequent "lack of importance" of LPTV stations, they still do serve a vital purpose in the fight towards equality in the television industry. It might be said that they represent what little voice the minority community has in the television industry. 12

Despite the threat that DTV poses to LPTV stations and thus the minority community, the FCC asserts that the benefits and innovations to be derived from the transition to digital television, which include lower marginal costs for broadcasts as well as greater coverage area capability, outweigh the switching costs and potential darkening of some LPTV stations. However, the FCC does not intend for DTV to be the cause of extinction for LPTV and minority broadcasting. Rather, it has come up with several proposals that it believes will leverage this new technology into helping minority programming not only survive, but in fact grow and flourish -just not in the format of LPTV. One such proposal to aid these minority LPTV stations that is currently under debate is whether, once DTV channels have been allotted to full-service television broadcasters, should licensed LPTV stations be afforded a window of opportunity to seek "primary" use of DTV channels -- that is, ahead of new broadcast entrants.

Another solution the FCC has proposed has been to promote a channel sharing policy in digital broadcasting to lessen the impact on LPTV stations. Under such a policy, existing LPTV stations would get priority over new entrants. Such a channel-sharing plan could be expanded for facilitating new entry to broadcastings as well. Meaning, when channels become available in the future, the FCC could seek a number of broadcasters -- all new to broadcasting -- to share the channel. If the capacity of the channel is four simultaneous SDTV programs, the FCC could license four new broadcasters, a few of which could be former LPTV stations that were darkened. Furthermore, the FCC could then investigate ways of incubating some of these new (or formerly LPTV) broadcasters using the channel sharing plan as well ~ The FCC could reserve some full allocations for "graduates" of this shared channel "prep school/incubator" when audience levels and experience match the capacity of a full station.

Regardless of which of these proposed DTV policies goes through, if any at all, it is imperative that the FCC help ensure that minority LPTV stations as well as completely new minority broadcasters receive the opportunity to be a part of the very attractive DTV picture. The importance of LPTV stations on minority communities cannot be ignored.

In regard to the advertiser prejudice problem, the most obvious solution is to simply bring advertisers to awareness of the untapped market potential of minority communities, just as Vice President Gore comments and the FCC's studies and forums have done. However, in addition to such actions, there is another potential solution to this issue.

Statistics show that African-American and Latino audiences watch and buy more products from television based shopping shows such as the Home Shopping Channel than whites (HSC). However, in this instance, unlike cable subscriptions, education and family income appear to be contributing factors. Individuals without a high school education report watching HSC twice as often as those with a graduate education (36% vs. 19%). Family income correlates in the same direction, though with less intensity: 24% of households with a family income of $50,000 plus report watching HSC, as opposed to 34% of households with a family income of less than $20,000. 15 From these figures, it is clear that these minority groups who on the average have less education and income than do whites, actually exhibit greater participation in televised home shopping. The proposed solution to the advertiser prejudice problem is to take advantage of this rather unusual phenomenon in which the group with less income actually spends more. One way to do this is for advertisers to channel more money into either selling or just advertising their products on existing shopping channels like the HSC. Better yet, groups of advertisers could form partnerships with existing or would be minority broadcasters to create their own new shopping channels to serve this proven minority televised home shopping market.

However, perhaps the best solution to the advertiser prejudice problem is one that is voluntary. Let me explain what I mean. I believe that most educated people will agree that, in general, the government has historically been good at identifying areas that need regulation, but they're just not very good at executing such regulation. Therefore, some would argue that the threat of government regulation could in and of itself provide an incentive for voluntary action by industry players. In other words, most industry players would most likely tend to view the possibility of government regulation as a far worse outcome than any sacrifice or solution they could come up with themselves. In reality, such a scenario is actually beginning to come to fruition (although the advertisers would likely deny that fear of government regulation is their motivation, instead choosing to credit their altruistic and good natures).

Soon after the FCC released its study on advertiser discrimination against minority TV and radio broadcasters, the National Association of Broadcasters (NAB) announced the formation of a $10 million fund dedicated to helping minorities buy TV and radio stations. "A broad-based, major effort by the industry on an independent, voluntary basis would demonstrate that solid industry initiatives can be a more effective means of achieving the FCC's goals than government regulation," said NAB fund organizers. "NAB has long supported increasing ownership and employment opportunities for minorities," said Eddie Fritz, NAB president, which in turn allows local broadcasting to remain relevant to local communities. CBS Chief Executive Mel Karmazin and Clear Channel Communications CEO Lowry Mays, are organizing the fund and say that there is much industry interest in the fund and hopes that it will grow. 50 major radio and TV stations have been asked to launch the fund and are looking into "volunteer initiatives" such as training programs that would prepare minorities employees for station management. The idea for a minority fund has been in the works for a while but industry execs shied away from the idea until Federal Communication Commission Chairman William Kennard revealed plan to tighten ownership rules last fall. Chairman Kennard had voiced concern of minorities being shut out after consolidations following the 1996 Telecommunications Act and the resulting deregulation of ownership restrictions among many policies within the industry. 16

Perhaps the most revealing statement of the television industry's true motivation, and one that firmly supports my proposition that the threat of government regulation is a powerful motivating factor and perhaps the FCC's most effective course of action, was made by David Honig, executive director of the Minority Media and Telecommunication Council. He said, "The NAB would like to see an industry solution, instead of a regulatory one and plans to go ahead with the fund even if the FCC imposes new ownership restrictions.. This is broadcasters doing something voluntarily, and they don't appear to be asking for anything." -- Nothing except that the government leave them alone. 17

Every day you can pick up a newspaper, have a chat by the water-cooler, or, ironically, turn on the old boob tube and hear a story about some controversy related to the television industry. Usually, such controversies center around television content issues such as protecting children from violent or inappropriate television content, which some people believe leads to terrible incidents like the Columbine High tragedy. The public and its government representatives have done a swift and good job of improving and dealing with this area of weakness within the television industry. We now have warning ratings displayed before every show. Unfortunately, one area of the television industry that is still greatly lacking is that of fairness of opportunity to minority groups. Undoubtedly, many of barriers against minorities have been broken down in the past few decades. We now have an increasing amount of minority broadcast television and cable programming, led by industry players such as Fox and Warner Brothers, who air numerous programs directed at minorities. In fact, many would argue that Fox gained its network status largely through its minority-focused marketing strategy - for in effect, Fox tried to become the people's station (people meaning, lower income, minority people). In addition, today's cable television industry can even boast minority-centered channels such as Black Entertainment Television (BET), a black owned, black programming based channel which is thriving despite catering to a lower median income group. Furthermore, it appears from examples like the formation of the NAB minority ownership aid fund that FCC policy (or in this case, the lack thereof), have begun to have an effect. Slowly, but surely, progress is being made towards giving minorities a chance for equality in the television industry --- and in so doing, giving all of us a chance to express and hear more voices... a goal and promise our democratic nature must continually guard, protect, and nurture.

6.) BJK&E Group (February 1996) TV Viewing among blacks.

9.) Mueller, M.L. & Schement, J.R. 1996. The Information Society, ch 12, 273-292.

12, 13, 14.) Taglang, Kevin. Advanced Television Systems and Their Impact upon Existing

15.) Garmer, Amy Korzick, ed. (1998). Investing in Diversity. Washington DC: The Aspen

Institute, pp 87-124.

16, 17.) McConnell, Bill. "Gore Pushes Code to Combat Ad Bias."