The concept of American Independent Radio (AIR) is to give space to independent radio content providers, members of the underserved market and or Qualified Entities as defined by the FCC that have been absent and ever shrinking on the radio airwaves. The FCC has an obligation to insure fairness in the market place and Sirius XM realized that it has a responsibility to give space on its dial to voices that are not normally heard on terrestrial radio but need to be heard on satellite radio. Sirius XM Voluntary Commitments to make available 4 percent of its capacity for use by certain Qualified Entities, and an additional 4 percent of capacity for the delivery of noncommercial educational or informational (“NCE”) programming lays the foundation that something must be done to combat the absent of the underserved market on the radio.
This white paper will discuss the following,
1. The implication of Adarand
2. Application of Strict Scrutiny, how the three-prong test is met,
3. Supporting statistic about the state of minority radio ownership
4. The goal of AIR to walk the line of Race Neutral and Race Preference,
5. AIR solution of inclusiveness with the development of Digital Satellite Radio Consortium (DSRC) for Qualified Entities Active on the Docket (07-57) and
6. The wrap-up
1. The implication of Adarand
In Adarand Constructors, Inc. v. Peña, the United States Supreme Court case held that all racial classifications, imposed by whatever federal, state, or local government must be analyzed by a reviewing court under a standard of "strict scrutiny," the highest level of Supreme Court review.
In September 2005, the U.S Commission on Civil Rights issued a report finding that, ten years after the Adarand decision, federal agencies still largely fail to comply with the rule in Adarand. Specifically, the Commission found that the Departments of Defense, Transportation, Education, Energy, Housing and Urban Development, and State, and the Small Business Administration, do not seriously consider race neutral alternatives before implementing race-conscious federal procurement programs. The U.S Commission on Civil Rights found that the Strict Scrutiny standard under Adarand and other Supreme Court decisions requires such consideration. Commissioner Michael Yaki dissented from the 2005 Commission's report, arguing that the Commission was taking a "radical step backwards" from the "race-progressive policies" of the past
Scrutiny Scrutiny
Strict Scrutiny is applied based on the constitutional conflict at issue, regardless of whether a law or action of the U.S. federal government, a state government, or a local municipality is at issue. It arises in two basic contexts: when a "fundamental" constitutional right is infringed, particularly those listed in the Bill of Rights and those the court has deemed a fundamental right protected by the liberty provision of the 14th Amendment; or when the government action involves the use of a "suspect classification" such as race or national origin that may render it void under the Equal Protection Clause. To pass strict scrutiny, the law or policy must satisfy a three-prong test:
A. It must be justified by a compelling governmental interest.
(i) FCC has the inalienable right to maintain an equal playing field. Statically there is data that proves a huge disparage that the current state of minority with access and or ownership is dismal at best. Comments on Regulation of Access to Vertically-Integrated Natural Monopolies show the main idea behind regulations was that it was necessary because the market for telecommunication services was a natural monopoly, and therefore a second competitor would not survive. Regulations were imposed to protect consumers from monopolistic abuses. The overall goal of telecommunications policy is to maximize efficiency through competition. The logic of competition and antitrust law in the United States is to guard against restrictions and impediments to competition that are not likely to be naturally corrected by competitive forces. As an alternative to antitrust and competition law, economic regulation has been established in three exceptional case:
(1) For those markets where it is clear that competition cannot be achieved by market forces,
(2) Where deviation from efficiency is deemed socially desirable; and
(3) Where the social and private benefits are clearly different. In each of these cases, it is clear that a market without intervention will not result in the desired outcome.
In the first case, this is true by the definition of the category. In the second case, markets may lead to efficiency, but society prefers a different outcome, and intervention is necessary to achieve this. In the third case, maximization of social surplus does not coincide with maximization of the sum of profits and consumers’ surplus because of “externalities. Therefore the logic is sound however the practical implications have a tendency when it comes to an underserved market fall to the waist side.
B. The law or policy must be narrowly tailored to achieve that goal or interest. If the government action encompasses too much (over-inclusive) or fails to address essential aspects of the compelling interest (under-inclusive), then the rule is not considered narrowly tailored.
(i) The Telecommunication Act of 1996 aims to "preserve and advance universal service this means:
(1) High quality at low rates.
(2) Access to advanced services in all States.
(3) Access in rural and high cost areas at comparable prices to other areas.
(4) Supported by "equitable and nondiscriminatory contributions" by "all providers of telecommunications services."
(5) Specific and predictable mechanisms to raise the required funds.
(6) Access to advanced telecommunications services for schools, health care, and libraries
As Section 2 (i)(4) Equitable and Nondiscriminatory contributions” by “ all provides of telecommunications Services” of The Telecommunication Act of 1996 is what I take concern with. When the Commission accepted the Applicants’ voluntary commitments to make available 4 percent of its capacity for use by certain Qualified Entities, and an additional 4 percent of capacity for the delivery of NCE programming, which will enhance the diversity of programming available to consumers, it obligate itself to act as the custodial to ensure the Qualified Entities, the underserved markets would be heard which is not over inclusive because Sirius XM understood the importance of diversity and actively took a stand to allocate 4 percent commercial and 4 percent non-commercial as to keep in line with the goals of The Telecommunication Act of 1996 to "preserve and advance universal service”. The compelling interest as the custodial the Commission must address the current dismal state of minority ownership because its foundation, the reason the Commission was created was
“For the purpose of regulating interstate and foreign commerce in communication by wire and radio so as to make available, so far as possible, to all the people of the United States, without discrimination on the basis of race, color, religion, national origin, or sex…. and for the purpose of securing a more effective execution of this policy by centralizing authority heretofore granted by law to several agencies and by granting additional authority with respect to interstate and foreign commerce in wire and radio communication, there is hereby created a commission to be known as the ''Federal Communications Commission,'' which shall be constituted as hereinafter provided, and which shall execute and enforce the provisions of this Act”.
3. Finally, the law or policy must be the least restrictive means for achieving that interest. More accurately, there cannot be a less restrictive way to effectively achieve the compelling government interest, but the test will not fail just because there is another method that is equally the least restrictive.
(i) The lease restrictive means was creative on July 25, 2008, when the Commission voted to approve the application of Sirius Satellite Radio Inc. (“Sirius”) and XM Satellite Radio Holdings Inc. (“XM”; jointly, the “Applicants”) to transfer control of the licenses and authorizations held by Sirius and XM and their subsidiaries for the provision of satellite digital audio radio service (or “SDARS”) in the United States. The Commission found that the grant of the application, with the Voluntary Commitments made by the Applicants (Sirius XM) and other conditions is in the public interest. Further, the FCC's order approving the merger of Sirius XM defined a "Qualified Entity" as one that is "majority-owned by persons who are African American, not of Hispanic origin; Asian or Pacific Islanders; American Indians or Alaskan Natives; or Hispanics addressing the FCC compelling governmental interest in maintaining equality.
(ii) Further when the FCC granted Sirius XM the right to merge and the FCC accepted their Voluntary Commitments to make available 4 percent of its capacity for Qualified Entities, and an additional 4 percent of capacity for NCE it obligated itself to perform its inherent duties of telecommunications policy to maximize efficiency through competition. That competition includes giving Qualified Entities the ability to compete in the open market.
3. Supporting statistic of the state of minority radio ownership
(a) In a study done S. Derek Turner Research Director of The Free Press entitled Off The Dial: Female and Minority Radio Station Ownership in the United States explains media consolidation is one of the key factors keeping female and minority station ownership at low levels. As consolidation cuts back the already limited number of stations available, women and people of color have fewer chances to become media owners and promote diverse programming. In Prometheus v. FCC decision, the Third Circuit chastised the FCC for ignoring the issue of female and minority ownership. But since then, the FCC has done very little to address the issue. The FCC has abdicated its responsibility to monitor and foster increased minority and female broadcast ownership but know has a chance to change all of that. Here are the facts and the state of minority and female ownership;
i. The Dismal State of Female and Minority Ownership
The results of this study reveal a dismally low level of female and minority ownership of radio stations in America that has left two-thirds of the U.S. population with few stations representing their communities or serving their needs. Women own just 6 percent of all full-power commercial broadcast radio stations, even though they comprise 51 percent of the U.S. population. Racial or ethnic minorities own just 7.7 percent of all full-power commercial broadcast radio stations, though they account for 33 percent of the U.S. population. Latinos own just 2.9 percent of all U.S. full-power commercial broadcast radio stations, but they comprise 15 percent of the U.S. population and are the nation’s largest ethnic Minority group.
ii. Radio Station Ownership Lags Behind Other Economic Sectors
Our previous study, Out of the Picture, found that female and minority ownership of broadcast television stations was similarly anemic. Women own 5 percent of broadcast TV stations, while people of color own just 3.3 percent of stations. These groups' level of radio station ownership is only slightly higher, despite the fact that the cost of operating a radio station is dramatically lower than a TV station. Moreover, radio station ownership is very low compared to the levels seen in other commercial industry sector.
iii. According to the most recent figures available
1. Women own 28 percent of all non-farm businesses.
2. Racial and ethnic minorities owned 18 percent of all non-farm businesses, according to the most recent data.
3. In sectors such as transportation and health care, people of color own businesses at levels near their proportion of the general population. But in the commercial radio broadcast sector the level of minority ownership is over four times below their proportion of the general population.
iv. No Diversity at the Top of Station Management
Not only do women and people of color own few stations, but also commercial stations have very few women and minorities at the top — in the positions of CEO, president or general manager.
1. Just 4.7 percent of all full-power commercial broadcast radio stations are owned by an entity with a female CEO or president.
2. Only 1 percent of the stations not owned by women are controlled by an entity with a female CEO or president.
3. Just 8 percent of all full-power commercial broadcast radio
stations are owned by an entity with a CEO or president who is a racial or ethnic minority.
4. Less than 1 percent of stations not owned by people of color are controlled by an entity with a minority CEO or president. However, minority-owned stations are significantly more likely to be run by a female CEO or president than non-minority-owned stations, and female-owned stations are significantly more likely to be run by a minority CEO or president than non-female-owned stations. And both female-owned and minority-owned stations are significantly more likely to employ a woman as general manager.
(v) Female and Minority Owners Control Fewer Stations per Owner
Female and minority owners are more likely to own fewer stations per owner than their white male and corporate counterparts. They are also more likely to own just a single station.
1. Of all the unique minority owners, 67.8 percent own just a single station. However, only 49.6 percent of the unique non-minority owners are single-station owners.
2. 60.8 percent of the unique female owners are single-station owners, versus just 50.4 percent of the unique non-female station owners.
3. Only 24.4 percent of the unique minority station owners are group owners -- owning stations in multiple markets, or more than three stations in a single market -- compared to 29.5 percent of non-minority owners.
4. Just 16.9 percent of female owners are group owners, versus 30.4 percent of non-female owners.
5. Overall, racial and ethnic minorities own 2.6 stations per unique owner compared to 3.9 stations owned per unique white, non-Hispanic owner.
6. Women own 2.1 stations per unique owner compared to 4.1 stations owned per unique male owner. Female- and minority-owned stations differ from non-female- and non-minority-owned stations in other ways as well. For example, women and people of color are more likely to own less valuable AM stations and their stations are more likely to be found in larger, more populated markets.
(vi) Female- and Minority-Owned Stations Are More Local, More Often
1. Localism is supposed to be one of the FCC's key considerations in crafting media ownership regulations. Local owners, in theory, are more connected to the communities they serve and thus in a better position to respond to public needs than absentee owners who reside hundreds or thousands of miles away. Our study found that female owners are significantly more likely to be local station owners.
2. 64.4 percent of all female-owned stations are locally owned, versus just 41.6 percent of non-female-owned stations.
3. For minority-owned stations, the relationship is somewhat more complex because the minority population is more concentrated in certain areas. Minority-owned stations are more likely to be locally owned than non-minority-owned stations in larger markets, which have bigger minority populations.
4. Among all radio stations, 43 percent of minority-owned stations are locally owned, the same level as non-minority-owned stations.
5. But in Arbitron radio markets (where four out of every five minority-owned stations are located, and which have significantly higher minority populations), 38.3 percent of minority. In unrated markets (which have significantly lower minority populations), 56 percent of minority-owned stations
(vii) Female- and Minority-Owned Stations Thrive in Less- Concentrated Markets
Our analysis suggests that both female- and minority-owned stations thrive in markets that are less concentrated. Markets with female and minority owners have fewer stations per owner on average than markets without them.
1. The level of market concentration is significantly lower in markets with female and minority owners.
2. The probability that a particular station will be female- or minority-owned is significantly lower in more concentrated markets.
3. The probability that a particular market will contain a female- or minority-owned station is significantly lower in more concentrated markets.
4. Female- and minority-owned stations are more likely to be found in each other’s markets.
Allowing further industry consolidation will unquestionably diminish the number of female- and minority-owned stations. The FCC should seriously consider these consequences before enacting any policies that could further concentration.
(viii) Female and Minority Ownership Is Low, Even When They're in the Majority
The study shows that women and people of color everywhere – regardless of their proportion of the population in a given market – have very few owners representing them on the radio dial.
1. The average radio market has 16 white male-owned stations for every one female-owned and every two minority-owned stations.
2. Minority-owned stations are far more likely to be found in markets with higher minority populations. But even in these markets, the level of minority ownership is still low.
3. Minority-owned stations are found in about half of all Arbitron radio markets.
4. In 288 of the 298 U.S. Arbitron radio markets, the percentage of minorities living in the market is greater than the percentage of radio stations owned by minorities.
5. 23 of the 298 U.S. Arbitron radio markets have "majority-minority" populations. But in these markets, too, the percentage of radio stations owned by people of color is far below the percentage of minority population.
6. In two of these "majority-minority" markets (Stockton, Calif. and Las Cruces, N.M.), people of color own no stations.
7. Minorities own more than one-third of a market’s stations in just seven of the nation’s 298 radio markets. Minorities own more 25 percent of a market’s stations in just 24 of the nation’s 298 radio market.
(xi) Despite making up half the population in every market, the level of female-station ownership is still extremely low across the board.
1. Female-owned stations are found in about 40 percent of all Arbitron radio markets.
2. The Stamford-Norwalk, Conn. market is the only market in the United States where women own more than half of the stations.
3. Women own more than one-third of a market’s stations in just six of the nation’s 298 radio markets.
4. Women own more than 25 percent of a market’s stations in just 18 of the nation’s 298 radio markets.
(x) Format Diversity, Market Revenue and Audience Share
Minority owners are more likely to air formats that appeal to minority audiences, even though other formats are more lucrative. Choosing these different formats has a practical impact on the market status of minority-owned stations, as measured by audience ratings and share of market revenues.
1. Among the 20 general station format categories, minority-owned stations were significantly more likely to air “Spanish,” “religion,” “urban,” and “ethnic” formats. The Spanish and religion formats alone account for nearly half of all minority-owned stations.
2. Primarily because the Spanish, religion and ethnic formats attract smaller segments of the market, the average audience ratings share and share of market revenue held by minority owned stations is significantly lower than the rating
(xi) Ownership and Programming Diversity: A Case Study of Talk Radio
Though the focus of this study was on structural ownership, controversy-surrounding remarks by two prominent talk radio hosts Rush Limbaugh and Don Imus — spurred an examination talk radio programming on minority- and female-owned stations. We found:
1. No minority-owned stations aired “Imus in the Morning” at the time of its cancellation.
2. All minority-owned stations and minority-owned talk and news format stations were significantly less likely to air “The Rush Limbaugh Show," as were female-owned stations.
3. Having a minority- or female-owned station in a market was significantly correlated with a market airing both conservative and progressive programming.
4. Overall, markets that aired both progressive and conservative hosts were significantly less concentrated that markets that aired just one type of programming.
These results suggest that diversity in ownership if applied can leads to diversity in programming content. This result show women and minority are in a perilous state of under-representation of ownership of broadcast media. But policymakers may have forgotten the reason behind ownership rules and limits on consolidation: Increasing diversity and localism in ownership will produce more diverse speech, more choice for listeners, and more owners who are responsive to their local communities. However what is occurring is a massive consolidation and market concentration as one of the key structural factors keeping women and minorities from accessing the public airwaves. In short the FCC has the opportunity to make a difference with the Voluntary Commitment and give the underserved market the ability to be heard while chipping away at the current gap.
(4) Race Neutral vs. Race Preferences
The concept of race-neutral, gender-neutral when applied, assurance against actual discrimination. This is the type of Affirmative Action contemplated by President Lyndon Johnson’s Executive Order 11246, in which he sought to ensure that individuals have equal opportunity WITHOUT regard to their race, sex, or ethnicity. In this 1965 Executive Order, President Johnson consistently and repeatedly used the term non-discrimination and never once mentioned racial quotas or preferences. The original, unamended version of the Civil Rights Act of 1964 similarly emphasized race-neutrality and non-discrimination, racial-preferences and gender-preferences for the correct races and genders. Under this definition, Affirmative Action is comprised of programs and policies that grant favorable treatment on the basis of race or gender to government-defined “disadvantage” individual. Under this definition, racial or gender preference must be granted even when the favored / aggrieved minority or gender has no actual evidence or proof that a company, boss, individual, or government agency has discriminated against them due to their race or gender.
AIR’s concept is to develop the proposed 24 channels offered by Sirius XM by topic that would be inclusive of race on a non-discrimination basis. By defining the proposed channels by topic you broaden the spectrum of talent, interest and diversity. This concept insures the underserved markets needs are met, the thing we share in common become apparent, and line between race-neutral and race preference slowly becomes invisible.
(5) AIR solution of inclusiveness with the development of Digital Satellite Radio Consortium (DSRC) for Qualified Entities Active on the Docket (07-57)
It is clear from several conversations with the FCC that one Qualified Entity will not be awarded the proposed 12 commercial channels. Further in other conversations it appears that Sirus XM does not want 12 different Qualified Entities programming these channels. Therefore iClick2Media believe the formation of the Diversity Satellite Radio Consortium (DSRC) can solve all the issues mentioned. The DSCR would be made up of the most active participants on the docket (07-57) whom currently does not have a major stake in terrestrial radio (i.e. Radio One with 51 Stations and Entrvison with 49 Stations). All member that would join the DSCR would have to fall under the definition of Qualified Entity, be able to past the muster of Adarand with the application of Strict Scrutiny and be able to open the doors that have be kept closed to the underserved market.
The DSCR will divide the channels up equally and work together in the development, and support of its members and their content. For example if there were three members in the DSCR then each member would get four (4) channels.
It is clear from iClick2Media’s position that, if three or four active members on the docket combined its missions and goals then the Merge Order’s Voluntary Commitments accepted by the FCC will best be served by a unified consortium that promote diversity for the underserved market.
(6) The Wrap-up
What does it all mean?
There is no question that the hot potato on everyone plate as it relates to the Sirius XM Voluntary Commitments to assist in bring more minority to satellite radio is Adarand.
The application of the Strict Scrutiny must show that such classifications are constitutional only if they are narrowly tailored with a compelling governmental interest, a "fundamental" constitutional right is infringed or when the government action involves the use of a "suspect classification" such as race or national origin that may render it void under the Equal Protection Clause. On July 25, 2008, when the Commission voted to approve the merger between Sirius and XM and as part of the Merge Order accepted the Voluntary Commitment designed by Sirius XM for what it wanted to achieve with the four percent commercial and four percent of non-commercial channels, inadvertently compelled itself to act within the scope and duties granted to the FCC and narrowly tailored the government’s interest by defining what a Qualified Entity was further obligating itself to insure fair competition in the SDARS market for all.
As proof of the FCC compelling interest to level the playing field as is relates to minority in radio in an report entitled “Off The Dial”, released in 2007, found that women and minorities own just 6 and 7.7% of all broadcast radio stations in the country respectively. The year before in 2006 “Out of the Picture,” an unprecedented report on broadcast television ownership, which found that women of all races own just 5% of the 1,400 commercial broadcast television stations in America. People of color, who make up 33% of the national population (and will be more than 50% by 2050), own just 3.6%. To further the point of the dismal outlook of minority on the dial the Third Circuit chastised the FCC in Prometheus v. FCC for ignoring the issue of female and minority ownership only proves there is a compelling interest for this governmental agency to act.
If the FCC in the eleven-hour decides to kick the responsibility back to Sirius XM and have Sirius XM decide who should have the four percent commercial and the four percent non-commercial channels then the duties granted to the FCC from it creations to regulating interstate and foreign commerce in communication by wire and radio so as to make available, so far as possible, to all the people of the United States, without discrimination on the basis of race, color, religion, national origin, or sex falls to the waist side and ultimately fails in protecting the people of the United States including the Qualified Entities.
The overall goal of telecommunications policy is to maximize efficiency through competition, which is necessary because the market for telecommunications services is a natural monopoly, and therefore a second competitor would not survive. Regulations were imposed to protect consumers from monopolistic abuses. The logic of competition and antitrust law in the United States is to guard against restrictions and impediments to competition that are not likely to be naturally corrected by competitive forces. As an alternative to antitrust and competition law, economic regulation has been established in three exceptional cases: (i) for those markets where it is clear that competition cannot be achieved by market forces. This holds true by the statically data presented showing the widening gap of minorities lack of radio ownership. (ii) Where deviation from efficiency is deemed socially desirable. Sirius XM Voluntary Commitment as defined in the Merge Order understood the need to open it channels to a more diverse community and by setting aside 4 percent commercial and 4 non-commercials for Qualified Entity recognized a need and keen business sense to grab a audience that is growing in leaps and bounds and (iii) where the social and private benefits are clearly different. It is a fact that the private benefit has and continues to keep minority and women off the dial. When you look at the data and see the number of minority owned stations folding monthly there must be an action by the FCC to stop this trend. On the social side the FCC is bound to protect the interest of the people of the United States and that includes opening the field where minority content providers and or the underserved market has access to the airwaves including digital and satellite. This can be achieved now by the Voluntary Commitment offered by Sirius XM and the acceptance of the Voluntary Commitment by the FCC that addresses the compelling governmental interest in maintaining equality.
[11] Commission Approves Transaction Between Sirius Satellite Radio Holdings Inc. And XM Satellite Radio Holdings, Inc. Subject To Conditions July 28, 2008
