FCC Record, Volume 1, No. 7, Pages 1267 to 1368, December 22, 1986 - January 2, 1987 Page: 1,316
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Federal Communications Commission Record
ownership. The Board followed the court's ruling in TV
9 and did not require a showing of a nexus between
female ownership and program diversity before awarding
5. Minority and female preference policies have been
applied in numerous cases. In Cannon's Point Broadcasting
Co., 93 FCC 2d 643 (Rev. Bd. 1983), reconsid. denied,
94 FCC 2d 72 (Rev. Bd. 1983), review denied, FCC 84-161
(April 13, 1984), appealed sub nom. Steele v. FCC, No.
84-1176 (D.C. Cir. motion for remand granted Oct. 9,
1986), a comparative application proceeding for a new
FM broadcast station, the Commission's Review Board
found that, between two competing applicants, neither of
whom owned any other media properties and both of
whom were to be sole owner-operators of the station. the
woman's qualitative enhancement credits for 100% female
integration and past local residence prevailed over the
nonminority male applicant with an enhancement for
prior broadcast experience. The Commission affirmed this
decision and the losing applicant appealed, challenging
the constitutionality of the female preference policy.
6. A majority of a divided three-judge panel of the
Court of Appeals held that the gender preference was
invalid because it exceeded the Commission's statutory
authority, Steele v. FCC. 770 F.2d 1192, 1199 (D.C. Cir.
1985), and it reversed the Commission's decision. The
majority stated that the assumptions underlying the preference
policies "run counter to the fundamental constitutional
principle that race, sex, and national origin are not
valid factors upon which to base government policy." Id.
at 1198. The majority added:
[T]he Commission has been unable to offer any
evidence other than statistical underrepresentation
to support its bald assertion that more women station
owners would increase programming diversity.
Instead, a few Commission employees without any
evidence, reasoning, or explanation, gratuitously decreed
one day that female preferences would henceforth
be awarded. . .. Presumably, the Board
thought that it was a Good Idea and would lead to a
Better World. Contrary to the Commission's apparent
supposition, however, a mandate to serve the
public interest is not a license to conduct experiments
in social engineering conceived seemingly by
whim and rationalized by conclusory dicta.
770 F.2d at 1199.
7. The court, en banc, granted a rehearing and vacated
the panel opinion in an order released October 31, 1985.
In a subsequent order on November 22, 1985, the court
asked the parties to file supplemental briefs addressing the
Commission's statutory authority to grant gender-based
preferences and the constitutionality of such grants. The
Commission responded with a brief that expressed its
concern that both the female and minority preference
policies do not at present satisfy statutory and constitutional
requirements, because the Commission had never
undertaken a proceeding to determine whether there is a
nexus between the preference scheme and enhanced diversity,
but instead had assumed such a nexus. At the
same time, the Commission sought a remand so that it
could conduct such a proceeding. Steele v. FCC, No.
84-1176 (D.C. Cir. motion for remand filed Sept. 12,
1986). That motion was granted in an order released
October 9, 1986.
B. Tax Certificate and Distress Sale Policies
8. Applying the reasoning of TV 9 and in response to
concerns raised in the Federal Communications Commission's
Minority Ownership Task Force, Minority Ownership
Report (1978), the Commission has adopted two
additional minority ownership policies to encourage
broadcasters to seek out minority purchasers. Policy on
Minority Ownership of Broadcasting Facilities, 68 FCC 2d
979, 982-983 (1978). First, the Commission used its authority
under 28 U.S.C. 1071 to grant tax certificates to
assignors or transferors whose voluntary sales of their
broadcast stations would increase minority ownership
where it determined that "there is substantial likelihood
that diversity of programming will be increased." Id. The
Commission contemplated issuing tax certificates where
minority ownership would be controlling, and it would
consider issuing certificates in other cases where
"minority ownership [would be] significant enough to
justify the certificate in light of the purpose of the policy.
. . ." Id. at 983 n.20.5 Section 1071 authorizes the Commission
to issue tax certificates whenever a sale of a
broadcast property is found to be "necessary or appropriate
to effectuate a change in policy of, or the adoption
of a new policy by, the Commission with respect to
ownership and control of radio broadcasting stations."
Tax certificates allow the seller to defer capital gains
taxation on the proceeds of the sale.
9. Second, the Commission extended its existing distress
sale policy, -which as originally adopted allowed incapacitated
or bankrupt broadcasters to sell their stations, to
include distress sales to prospective purchasers with significant
minority ownership interests. Id. at 983. Under
this policy, the Commission permits a licensee whose
license or whose renewal application is designated for
hearing on basic qualifications issues to transfer or assign
its license to a qualified minority applicant at a distress
sale price, if the sale occurs before the hearing is initiated
and the parties "demonstrate how the sale would further
the goals" underlying the policy. Id. The goals are described
simply as "fostering the growth of minority ownership,"
id. at 982, because of the assumption in TV 9 that
minority ownership and participation in management can
be expected to increase diversity of program content as
well as diversity of control of the media. Id.6
10. The application of this distress sale policy is the
subject of a pending appeal in Shurberg Broadcasting of
Hartford, Inc. v. FCC, No. 84-1600 (D.C. Cir. supplemental
brief ordered Sept. 18, 1986). Recognizing that the minority
distress sale policy may implicate some of the same
statutory and constitutional concerns as the comparative
preference policy in Steele, the Commission asked the
court to remand Shurberg for further Commission consideration
after the Commission's Motion for Remand of the
Steele case was granted. The Motion for Remand, filed
October 23, 1986, is pending before the court.
11. The minority tax certificate policy, adopted in the
same decision as the distress sale policy, was premised on
the same diversity assumption, and therefore must necessarily
be addressed in the instant proceeding.
C. Commission Concerns
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United States. Federal Communications Commission. FCC Record, Volume 1, No. 7, Pages 1267 to 1368, December 22, 1986 - January 2, 1987, book, January 1987; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc1579/m1/55/: accessed January 22, 2019), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.