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"Selling Advertisers on Serving All Americans"

William E. Kennard
Chairman, Federal Communications Commission
The American Advertising Federation
New York, N.Y.
February 22, 1999

(As Prepared for Delivery)

Thank you, Wally Snyder, for that kind introduction. For a moment there I thought that Donnie Simpson was going to introduce me. And knowing the limits of my musical ability, I wouldn't do much for his ratings - and forget about his advertisers.

I also want to thank Wally Snyder and the American Advertising Federation for hosting this meeting. The initiative that AAF has shown on this issue gives me hope that business, government, and indeed the entire nation can work together to make our country stronger and greater.

To do that, of course, takes leaders - leaders like Congresswoman Carolyn Cheeks Kilpatrick, Congressman Bob Menendez, and Commissioner Mozelle Thompson - public servants who work tirelessly in Washington on behalf of their constituents and consumers. They are good friends of mine and allies to all friends of opportunity.

There is a leader here today who has left Washington, but - luckily for me - has entered the communications industry so I can continue to work with him. Henry Cisneros has been a public servant of the highest order and now he is making his mark in the broadcasting industry. I am happy to welcome him here today.

And, of course, it takes a national leader, too. A leader with vision and with determination. We are all lucky that we have that in Vice President Al Gore.

Last year, he raised the issue of advertising practices and minority broadcasting and focused our attention on it. For his leadership, for his friendship, I thank him.

In the course of my tenure as chairman of the FCC, I have come across many issues and problems that are important. Many people have studied them, and many are interested in them.

But is rare that you come across an issue - one that affects us all -- and you can't believe that no one has done anything about it. The advertising practices towards minority radio stations is such an issue.

The American way has always been that if you work hard, if you are the best, you will be fairly rewarded. In radio, this means that if you have more listeners, you will have more advertising dollars. Sadly, the FCC found that this is not the case for minority broadcasters.

The use of minority discounts and "no urban/Spanish dictates" has had a significant effect on minority broadcasters' bottom lines. In fact, the minority broadcasters interviewed in our study estimate that these practices reduce their revenues by as much as two-thirds.

For broadcasters, advertising is their lifeblood. It is what enables them to develop programming, invest in new equipment, and serve the public.

But these practices do not hurt only broadcasters. They hurt advertisers, consumers, and indeed, us all.

For advertisers too, these practices hurt their bottom line. Their failure to realize that there are untapped markets right here at home in the neighborhoods of our long-neglected minority communities, deprives them of a whole range of customers.

And as our country becomes more diverse, this myopia - this failure to understand that there is not only a diversity of peoples in America, but a diversity of types of people within each group - will hamper these companies' growth.

To succeed on the Main Streets of tomorrow, Madison Avenue must recognize the reality of minority consumers and the power of minority-formatted stations in reaching them.

By staunching the free-market flow of dollars to these stations, consumers in these communities suffer as well. As companies decide not to advertise on minority radio stations, African-American and Hispanic families find themselves bypassed by some of our biggest companies -- on the outside looking in to our national marketplace.

If radio stations can't tell their listeners about new products or great sales, how can they serve their listeners? How can these listeners be full equals in the most equitable arena there is - the marketplace?

And if these stations can't provide the news, community information, and public affairs programming that their listeners count on, who will?

In the end, these advertising practices don't just hurt these stations, they hurt us as a nation. Economically, we can not prosper if the purchasing power of all Americans is not respected and unleashed. Politically, our democracy is weaker if our airwaves and our national debate lack strong voices from all corners of our country.

Looking out and seeing all of you - advertisers, broadcasters, and community leaders - gives me hope that we can solve this problem.

I have always believed that the best solution to a business problem is a business solution. Where the government can, it should let industry find answers on its own. Where it can not, it should help them. That is what we are doing today.

In its role as the expert agency on communications, the FCC can help in our search for a solution.

First, I am happy to announce that the FCC's State of the Radio Industry report will now include a section on small and minority-owned stations.

In addition, we have amended our broadcast licensee reporting forms to begin collecting information that will help us identify minority and female-owned licensees. By gathering this information we hope to help provide what you need to identify problems and work on solutions.

Also, I am proposing to you today a set of principles of fairness in communications. A foundation for a voluntary code of conduct which I hope all companies and organizations who use our broadcast media will adopt.

These principles are few in number but draw on the many values which we cherish as a nation. They call on companies to:

Use accurate information about consumer purchasing practices to ensure fair access to information.

Promote fair competition.

And expand opportunity for all Americans.

By dedicating themselves to these principles, I hope that companies will be able to create an open and fair broadcasting marketplace - one where stations at the top of the ratings won't find themselves at the bottom when it comes to revenues.

For with a good faith effort and cooperation, all of us will win.

Minority broadcasters will get the attention and revenue that they deserve.

Companies will be steered to untapped markets.

Those that listen to these stations will be respected and better served by the marketplace.

And we, as a nation, will have a radio system open to a wide range of views and fair to all.

Thank you.