Broadcast Ownership Diversity Act

Summary#

The Broadcast Varied Ownership Incentives for Community Expanded Service Act (Broadcast VOICES Act) would amend the Communications Act of 1934 and the Internal Revenue Code. Its stated goal is to increase diversity of ownership in broadcasting; it is not yet law and has been referred to the Senate Finance Committee.

  • The Federal Communications Commission (FCC) would have to issue tax certificates for qualifying broadcast-station sales, under rules it must adopt.
  • The bill would let eligible sellers elect special federal tax treatment for certified sales. It would also create a tax credit for qualifying contributions of stations or station interests to certain charities.
  • A station qualifies as owned by socially disadvantaged individuals if those individuals meet the ownership threshold and control management and daily operations. The bill defines them to include women and people subjected to racial or ethnic prejudice or cultural bias because of group identity.
  • The FCC would have to report on ownership numbers and recommendations, report annually on issued certificates, and examine whether ownership diversity is linked to viewpoint diversity.
  • The bill sets limits and conditions for certificates, including a sale-value cap of no more than $50 million and a 2-to-3-year minimum ownership period for certain sales.

What it means for you#

  • Station sellers and investors: A person selling an interest in a qualifying station could apply for an FCC certificate. Qualifying sales include sales that result in or preserve qualifying ownership and control, and sales by an investor who contributed capital to a station already owned by socially disadvantaged individuals.
  • Sellers who owe federal tax on a gain: If the sale is certified, the seller could elect to have it treated under rules for involuntary conversions. This is not a blanket tax exemption. The bill also provides that tax benefits can be lost if the seller stops meeting certain FCC rules.
  • Buyers and station owners: For some qualifying sales, the station must remain owned by socially disadvantaged individuals for a period set by the FCC, and those individuals must participate in management as the FCC’s rules require. Buyers would have to certify compliance every 180 days during the holding period.
  • Charities and donors: A donor could claim a tax credit equal to the fair market value of a contributed station or interest if the recipient is a qualifying charity, the FCC certifies its training purpose, and it holds the contribution for at least two years. The donor could not also claim a charitable deduction for that contribution.
  • FCC and Congress: The FCC would have new reporting, rulemaking, and examination duties. The bill does not itself create a new agency or a front-line service for the public.

Money#

No cost estimate is available in the supplied material; the bill would provide federal tax benefits whose revenue effects are not stated.

  • The FCC must adopt rules and produce reports, but the bill gives no staffing or administrative cost estimate.
  • The tax treatment for certified sales is elective and subject to conditions. The bill does not state the likely number or value of such sales.
  • The contribution tax credit is based on fair market value, but no overall cap or revenue estimate is given in the supplied text.

What is unclear#

  • The FCC must set rules for applications, sale limits, management participation, and compliance. Those rules are not in the bill; the FCC has up to one year after enactment to issue them.
  • The bill lets the FCC set an ownership threshold other than “more than 50 percent,” but does not say what other threshold it might choose.
  • It does not specify how applicants must show that someone meets the definition of socially disadvantaged individual.
  • The bill does not give a penalty for failing to file the required 180-day certification. It requires the FCC to report that failure to the IRS and Congress.
  • The supplied material does not include the current Communications Act or Internal Revenue Code, so the existing rules and how these provisions would interact with them could not be verified. The sales tax provisions would apply after a one-year delay and would sunset after 16 years; the contribution credit would apply to tax years beginning after enactment.

Case for#

  • The bill appears intended to address the low ownership rates described in its findings, using tax incentives to encourage transfers and contributions of broadcast stations.
  • Tax treatment tied to qualifying ownership and control could make some station sales more attractive while requiring the station to remain under that ownership for a set period.
  • The reports would give Congress recurring information on ownership and recommendations for increasing the number and value of qualifying stations.
  • The FCC’s examination could provide evidence about whether ownership diversity and viewpoint diversity are connected.

Case against#

  • The tax incentives could reduce federal revenue, but the bill provides no estimate of the cost or likely use.
  • Much of the program’s operation depends on future FCC rules, including who qualifies, what management participation means, and how sales are limited.
  • The bill requires ownership and management conditions for certain sales, but does not spell out a full compliance process or consequences for every kind of noncompliance.
  • The bill requires the FCC to examine a possible link between ownership and viewpoint diversity, but does not require a particular finding or outcome.