In an effort to increase diversity in station ownership, the Multicultural Media, Telecom and Internet Council today asked the FCC to conduct a proceeding to explore a marketplace means of doing it — tradeable diversity credits similar to the carbon emissions credits used in the energy industry.
Here’s how it would work, according to the MMTC:
As the administrator of the program, the FCC would give diversity credits to small disadvantaged businesses (SDBs) and to sellers in deals that result in greater structural diversity.
Buyers in deals that result in less structural diversity would have to pay the FCC for that loss in the form of diversity credits. If they didn’t have enough, they could buy them from other companies or SDBs, which would use the money to fund station acquisitions.
The program would inject greater efficiency into station trading. Today, when large media companies merge, they often have to spin off or swap stations to comply with FCC ownership limits and, in some cases, negotiate additional conditions with the FCC and citizen groups.
On top of that, it can take six months for the FCC to review a deal and make sure that all is in order.
With the diversity credit, the merging companies would simply determine how many diversity credits they need and then go out and buy whatever they don’t have.
“The transaction could proceed with much greater speed. While some conditions might still be needed, they would not be as extensive as such conditions sometimes are now.”
Summing up, the MMTC said: “Diversity credits would:
- Disincentivize consolidation;
- Place on the beneficiaries of consolidation the responsibility of paying for the remediation of some of consolidation’s ill effects;
- Serve as a mechanism to provide access to capital to SDBs;
- Capture the measure of diversity more precisely than an inherently approximate voice test; and
- Allow for easier administration than a system of voice tests and waivers.”
The FCC “voice test” is part of the FCC’s local TV ownership rules. A station group may not own two stations in a market if there are eight or fewer “voices” — that, independently owned TV stations — in the market.
The diversity credit was among five the FCC recommended in its filing.