Sunday, April 06, 2008

5329: Fade To Black…


The Catch-22 of Buying Black Media
Field Deserves Support, but There Aren’t Many Outlets Left, and Most Have Limited Reach

By Mya Frazier

COLUMBUS, Ohio -- The chief marketing officer dreads opening the survey request from the National Association for the Advancement of Colored People each fall.

The request is always the same: Detailed data on where the brand this CMO manages spends its sizeable advertising budget -- including black-owned media. And each year, the request for a breakdown of ad budget is politely declined by the marketing chief, who cites its proprietary nature.

And so each year, the brand winds up with an F in the area of marketing and communications -- along with 16 others -- in the NAACP annual Consumer Spending Guide. The stated goal is to measure corporate America’s relationship with the African-American community -- a consumer segment that represents 13% of the U.S. population with spending power of $845 billion in 2007 -- a figure expected to leap to more than $1.1 trillion by 2012, according to the University of Georgia’s Selig Center for Economic Growth.

“All things being equal, we’d have no problem supporting” black-owned media, said the CMO, but “a lot of the true African-American owned media companies are small and very decentralized. That doesn’t fit our strategy of needing to have a national reach. We have looked at some of the options, but the delivery is so small in relation to cost it doesn’t fit our strategy.”

The survey’s goal is to urge the black community to buy from marketers that support black media and to boost media ownership within the community, according to Richard McIntire, a spokesman for the organization. “Brands have these huge budgets, and less than 1% is reinvested back into African-American media,” Mr. McIntire said. “The black press does not see the advertising dollars coming from major corporations who will advertise in a market with two dailies but won’t in the smaller community papers.”

Scale affects pricing
But some marketers argue that in an ever-more-complex media environment, it’s not that simple. In a world of scale -- and the benefits of lower ad pricing that come with it -- there are few independent, black-owned media outlets left to support, and those that exist don’t have the reach to offer competitive rates.

Some of the biggest names in black media today actually are owned by corporate titans. The most notable example is BET, which founder Bob Johnson sold to Viacom for $3 billion in 2000. Then there’s Essence: Time Warner’s publishing arm took full ownership of the legacy brand in January 2005.

But the most dismal rate of media ownership among African-Americans is in TV. Only five African-Americans own full-power commercial TV stations; they collectively own eight out of 1,379 commercials stations nationwide.

“It’s not an impossible environment, but it’s tough,” said Lyle Banks, founder and CEO of Banks Broadcasting in Chicago, which owned two TV stations before selling KSCW-TV, Wichita, Kan., to Schurz Communications in August 2007. “It’s not just minorities. For anyone coming in the last two years, it’s difficult to raise enough money to buy into TV stations that are being sought by those who have scale and lower costs. You might have enough money to buy one TV station in a medium or a small market, but unless you plan to hold on to that station and grow it, it’s going to be very difficult to buy more stations to survive in this competitive business.”

Minority ownership in decline
The minority-ownership rate in TV has plummeted in recent years, falling nearly 70% in the past decade, according to a 2007 Free Press study.

Recent declines in TV ownership are attributed to the bankruptcy in May 2007 of a single company: New York-based Granite Broadcasting, which operated nine stations in seven states. That’s not to say that TV ownership among African-Americans was ever strong.

In fact, it wasn’t until 1975 that an African-American even owned a TV station. In 1978, among other new policies, the Federal Communications Commission tried to encourage minority ownership by giving tax deferrals on capital gains to radio or TV owners when they sold stations to minorities. Additionally, tax certificates were awarded to investors for giving start-up capital to minorities to buy radio or TV stations. Ownership rates peaked in the mid-1990s, according to the National Association of Black Owned Broadcasters, when African-Americans owned 23 TV stations and 240 radio stations. But after the Republican takeover of Congress in January 1995, Congress voted to eliminate the tax programs.

A year later, the 1996 Telecommunications Act relaxed ownership rules -- prompting some of the most successful African-American TV owners to sell out to bigger players. “Some of them did very well, and most of them who cashed out did so because they figured they couldn’t compete anymore,” said Jim Winston, executive director of NABOB.

[Read the full story here.]

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