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Non-profits don't have flesh-and-blood owners

The FCC seeks to diversify the non-profit broadcast community, but ownership data won’t help

I was thinking about the persistence of disbelief earlier this year. I filed comments at the Federal Communications Commission (FCC) when it asked holders of noncommercial and educational broadcast licenses to identify their owners. (C-SPAN operates an FM radio station in Washington, D.C.) It was part of an ongoing effort to encourage minority and female ownership of radio and television stations. Six years earlier, the FCC asked the same question, and it got answers that it apparently did not believe. Hence, we had to answer the question again.

Back in 2009, we told the FCC that non-profit organizations don’t have any owners. When the agency asked the question again this year, it was put to us this way, essentially: “Last time you told us that non-profit organizations don’t have any owners, but … really?” My answer took five pages to say, essentially, “Really.”

It is understandable that the smart people at the FCC would not believe that hundreds of thriving, influential and often wealthy organizations operating radio and television stations would not have real flesh-and-blood owners. There is a generally held and ordinarily sensible view that everything of value in our economy must be owned by somebody. But, believe it or not, non-profit organizations do not have owners. If they did, they would not qualify to be non-profit organizations under state law, nor would they qualify for federal tax exemptions. 

I should cut the FCC some slack here because it is under pressure to encourage diversity among broadcasters. It’s been getting detailed ownership reports from commercial broadcasters for years. On the surface, it seems logical that the FCC should apply its diversity goals to public TV and radio broadcasters as much as it does to their for-profit counterparts. But the agency bureaucrats (and I do not use that term as a pejorative) started out on the wrong foot when they assumed they could get to the heart of the diversity conundrum by applying that old Washington path to the truth, “follow the money.” The logic was, “If we know where the money is and how it got a broadcasting license from us, we can devise policies that hopefully lead to more women and minorities owning public TV and radio stations.”

Unfortunately, the FCC is following the money to a dead end in this case. The agency will discover, again, that the directors and officers of the non-profits holding broadcast licenses do not have any ownership interest in their radio or TV stations. Many of the officers are paid staff of charities. Some of the directors are state, city, county or university employees who serve on the boards by virtue of their positions. Other directors are community representatives. None of them can be said to be “owners” of the corporations that hold the licenses. At most, the directors and officers of a non-profit organization can be regarded as stewards of the organization’s assets—here, a valuable broadcast license. In noncommercial radio and TV, the board members and officers control the asset, but they can’t sell it, buy more of it, borrow against it or take profits from it. 

I and others are trying to persuade the FCC to drop the new “ownership” questions it wants to add to our required biennial filings. The agency is trying, in effect, to use a thermometer to measure distance in a situation where the “distance” doesn’t matter. There might be some information public radio and TV stations could provide the FCC to help it diversify the community, but ownership information is a dead end.

 

Bruce D. Collins is corporate vice president and general counsel of C-SPAN, based in Washington, D.C. Email him at bcollins@c-span.org.

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Bruce D. Collins

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