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Number Crunching

FCC, others have analyzed minority-station ad sales. Is discrimination really a factor?


One of Helen Little's first jobs in radio was to hustle ads for a black-owned radio station in Durham, N.C. And one of the first leads she pursued took her to one of that city's most popular black-owned restaurants. It seemed like an easy sale until Little began discussing the listener demographics of her urban-formatted station.

"I don't want the people who listen to your station in my restaurant," the African American owner told her. "I don't want black people in here."

Little is now director of urban programming for Chancellor's national chain of stations. But she's never forgotten that day in Durham because it illustrates the image problems she says even successful minority-owned or targeted radio stations have to deal with on a daily basis.

"It's not limited to national advertising. It's not limited to racism," Little says. "It's a question of perception. A perception of people. A perception about buying patterns. A perception of income. And it's a perception about reality."

In January, the Federal Communications Commission weighed in on that subject, releasing a 150-page report that concluded that advertisers regularly discriminate against minority broadcasters and stations that have large African American or Latino audiences. Among the report's findings was anecdotal evidence that 91% of the minority broadcasters questioned had encountered dictates on the part of ad buyers not to buy time on their stations. Moreover, nearly two-thirds of the ads purchased on their stations were discounted, reducing revenues by an average of 63%.

In the wake of that report, the White House announced a five-step plan to combat discriminatory advertising practices, and the American Advertising Federation convened a panel to explore ways to "enhance cultural diversity within the marketplace." As part of that mission, the federation panel in June asked 550 organizations to provide information about minorities in their advertising and marketing divisions and to describe ongoing diversity initiatives in their organizations.

"It spurred, I think, a really productive debate," FCC Chairman William E. Kennard says of January's report. "The advertising community has come forward and they've listened. And they've stepped up to the plate to try to solve the problems. It's an issue that's certainly not going to be resolved overnight, but people are starting to focus on it."

However, not everyone agrees there's a problem. In the preliminary draft of a recent study by Audrey B. Davidson and Barry Haworth entitled "Discrimination and Minority Ownership in Radio Broadcasting," the University of Louisville economics professors say they found no evidence of discrimination in the radio industry, at least discrimination that would be detected by a revenue handicap for minority-owned stations. In fact, the professors say, they found evidence suggesting that minority ownership may actually be an advantage, not a handicap.

Using the same data the FCC study employed and holding station characteristics constant, Davidson and Haworth determined that minority-owned stations earn more revenue overall and generate more money per share point than majority-owned stations.

Meanwhile, minority-formatted FM stations--that is, Spanish-language or urban-music stations that tend to draw minority listeners--earn, on average, 18% more per year than general-formatted stations, the professors say.

To reach that conclusion, they ran the raw numbers through a complicated mathematical equation that factored in ratings, the power of FM signals versus AM signals and several other variables.

Taking such factors into account is vitally important in measuring the relative strengths of competing stations, says radio analyst Allen Klein of Media Research Graphics Inc. in Encino. The average age of a station's audience, where listeners live, listening patterns and even the aggressiveness of the station's sales staff also are likely to have more of an effect on a station's bottom line than just ratings alone. That's because some listeners are not as attractive to advertisers as others, for reasons that have nothing to do with race.

But revenue does affect a station's on-air programming, and those stations that aren't getting their fair share are likely to suffer. According to Brian K. Knox, vice president and managing director for the Urban Dimensions division of Katz Communications Inc., a New York-based rep firm, unjust advertising practices can hurt a station in several ways. They inhibit stations from hiring the best salespeople, for example, and place an arbitrary cap on a station's billing potential. And that revenue cap leads to a cap on salaries, making it more difficult for stations to retain popular on-air talent.

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