December 15, 1998


  1. Preliminary investigation of practices in the advertising industry that appear to undermine the ability of minority formatted and minority owned radio stations to raise advertising revenues.

  2. No Urban/Spanish Dictates
    the practice of prohibiting the placement of advertisements on radio stations that air urban, black or spanish formats

  3. Minority Discounts
    the practice of buying time on a minority-formatted radio stations at a rate that is less than what is paid to a general market formatted station with comparable size

  4. Questions:

  5. Additional Question:


  1. Anecdotal Evidence on Extent of These Practices and Reasons for them from Interviews With Minority-Format Radio Stations

  2. Survey of Minority-Owned Radio Stations to Assess Extent of These Practices

  3. Statistical Analysis of data on advertising revenues audience shares, and format to determine financial impact of these practices

  4. Statistical Analysis of data on advertising revenues, audience shares, format, number of radio stations owned by the owner, and minority/non minority status of the owner to determine financial impact of minority ownership.


  1. Statistical analysis clearly shows that minority format radio stations earn less advertising revenue per listener that non minority format stations.

  2. Survey evidence suggests practices of no urban/spanish dictates and minority discounts are pervasive.

  3. Anecdotal evidence suggests that racial prejudices and stereotypes of advertisers and/or society may be part of the reason for these practices in addition to the normal demographic factors that affect the revenues that radio stations are able to earn from advertising revenue.

  4. Statistical analysis also suggests that even after controlling for format and the number of stations controlled by the owner, minority owned radio stations may earn lower revenues per listener than non minority owned stations.

Conclusion #1:
Minority Format Radio Stations Earn Less Revenue Per Listener

  1. statistical analysis of relationship between power ratios and format

  2. power ratio = share of advertising revenue in marketshare of audience in market

  3. Main Result

    Type of Format Average Power Ratio

    non minority format


    minority format


Conclusion #2
No Urban/Spanish Dictates and Minority Discounts are Pervasive
Results From Survey of Minority Owned Radio Stations

  1. Ninety one percent of minority broadcasters indicated that they had encountered "dictates" not to buy advertisements on their stations

  2. Minority broadcasters estimate that 61% of the advertisements purchased on their stations are discounted. The amount of the discount was estimated to be 59%.

  3. Minority broadcasters estimated that "no Urban/Spanish dictates" and minority discounts reduce their revenues by an average of 63%.

Conclusion #3
Anecdotal Evidence Suggests That Racial Prejudices and
Stereotypes May Play a Role in Explaining These Practices

  1. racial/ethnic minority consumers are stereotyped as inappropriate for certain products even when there is evidence to suggest otherwise

  2. racial/ethnic minority consumers are stereotyped as having certain undesirable demographic characteristics even when there is evidence to suggest otherwise

  3. desire of advertisers to avoid attracting minority customers to their stores either because of a fear that this will drive away white customers or because of fears of pilferage from minority customers

  4. desire of advertisers to disassociate their image from minority consumers

  5. See Appendix for examples.

Conclusion #4

Minority Ownership Has an Negative Impact on Revenue Per Listener Even When Controlling for Format and Number of Stations Owned by the Owner

Type of Format Power Ratio

minority owner/ minority format


small majority owner/ minority format


minority owner/ majority format


small majority owner/majority format



  1. Minority station salespeople soliciting an advertisement from the Beef Council were told that the Council was not going to buy advertising time on urban formatted radio stations because "Black people don't eat beef."(National Association of Black Owned Broadcasters, Spring Conference, 1996, pages 1-2 of report)

  2. A major mayonnaise manufacturer refused to buy commercial time based upon the perception that "Black people don't eat mayonnaise." (National Association of Black Owned Broadcasters, Spring Conference, 1997, page 2 of report)

  3. In the Washington DC area the two leading minority formatted radio stations(WHUR, WKYS) have much lower power ratios than the leading "top 40" station(WPGC) even though the two minority format stations appear to have more desirable demographics based on measures of income, fraction of audience between 25-54, rates of college graduation, and rates of professional employment. (pages 4-5 of report)

  4. "For example, there are categories of advertising where Blacks are the dominant customer. For example, you take liquor, the cognac industry. Blacks represent 60-70% of the expensive cognacs, but almost never are directly targeted. Or, if you look at a lot of tourism advertising - tourism advertising for destinations like the Caribbean or other upscale places, almost never portray Blacks as a target because they feel that, in some way, it might create the impression that they're attempting to encourage Blacks to come to these destinations. And that this will turn off the White traveller. (interview with Byron Lewis, chairman and CEO of The UniWorld Group, page 37 or report)

  5. "I recall being in front of a buyer and we were discussing at the time Ivory Soap and the buyer was telling me they were not going to buy the stations. And the question was: "Why not?" And they said, "Well, we have studies that show that Hispanics don't bathe as frequently as non-Hispanics." (interview with Luis Alvares, Local Sales Manager, WSKQ and WPAT, Spanish Broadcasting System, page 40 of report.)

  6. "[Part of the problem is] the fact that the [advertising] agencies, or a good deal of the agencies here in the St. Louis market, are lily white in terms of front door to back wall, or agencies that only have a couple of Black people involved in them. So the whole idea of understanding what Black people are all about is difficult . . . There's also the underlying aspect of the stigma of young Blacks being not into serious things even to the point of being gang members and that sort of thing. (Interview with Pierre Troupe, Account Executive, Jacor Communications of St. Louis, page 42 of report)

  7. If I'm selling groceries, Hispanics are the best possible consumers that there are. And this is not my data. Its been demonstrated by many people that Hispanics will spend more (as an index against a norm). Hispanics will overspend on groceries compared to everybody else. So if you use the index of 100 with 100 being the norm, Hispanics might index at 120 or 130% for groceries. Why? Because the households are larger; because the family structure and lifestyle is such that people don't go out to eat at restaurants as much. They eat with each other more. And so, Hispanics are great consumers for groceries and everything that's inside of a grocery store which might be 30% of what you hear on a radio station, 40% of the advertising is either the grocery store itself or all the products you find inside of grocery stores. So if logic held, you would spend more to reach that Hispanic consumer that you would send to reach anybody else. Because you know that once you reach 'em, they're going to spend 20 or 30% more than the typical consumer will for those kind of products. Well, instead what you find is people telling you, "Well, we don't advertise to Hispanics. Or when we do it's a token buy," as opposed to really seriously going after the consumer. Why is that? Usually, people will be economically rational. I think it's a combination of things. On the one hand, you have prejudice, which is hard to quantify and prove, but is there. And there are just people who say, "Well, I don't want Hispanics in my grocery store," Or you have consumer product people sitting in a place like Cincinnati or Minnesota, or some other location where there are not a lot of Hispanics. So all they know about Hispanics is they've been to Mexico once or twice and saw a lot of poor people there. They watch TV and most of the people on TV that are Hispanic are pimps, prostitutes, illegal aliens, drug dealers, somehow on the opposite side of the law. And so, to them it's not an attractive market."(Tom Castro, Chairman and President of El Dorado Communications, pages 44-45 of report.)

  8. Michael Banks, Station Manger of the urban formatted station, WBGE-FM, said he was told by one potential advertiser "Your station will bring too many Black people to my place of business." (page 46 of report)

  9. "For example, 4 or 5 years ago a store moved [from New York] to Huntsville on the South end of town. [Huntsville] is divided racially by North and South. Most of the Blacks live North. And in this very nice little strip mall, this guy said, "I know I need your audience. Your people spend more than the average White customer that comes in here. And let me try you." So we put an OES schedule on for him - an optimum effective schedule - on the radio station. And Black folks showed up. And then he said, "I'm going to have to cancel my business." I said "Why?" He said, "Well, my pilferage rate is higher." I said, 'Can you prove that?' "No but, I don't' have enough people, and I have suspicious people coming in here. And I believe they're shoplifting." (H. Bates, CoOwner WUPA AM & FM, Huntsville, p. 46 of report.)

  10. Quotation from memo of Katz Radio Group to its salesforce (page 47-48 of report)

    "Get buyers to understand that WABC is one of the most upscale select stations in New York. We must get the buying community to understand and appreciate the unique qualitative, personality, and foreground profile of WABC. Advertisers should want prospects not suspects."

  11. . "I was managing a station where the sales [representative] came back and she was practically in tears because the agency had told her that the client said that the reason they don't advertise in the Hispanic market (it was a Macy's department store) was because their pilferage will increase. (Luis Alvarez, Local Sales Manager,WSKQ and WPAT, Spanish Broadcasting System, p. 46 of report.)