NCPA - National Center for Policy Analysis

Basing Communications Policy On A Flawed Study

May 19, 1999

A recently released Federal Communications Commission report charges that "advertisers regularly discriminate against minority-owned radio stations and stations that have large African-American or Hispanic audiences." Researchers found that minority stations earn less revenue per listener than general audience stations -- indicating that advertisers are paying less for airtime. Conducted by the year-old Civil Rights Forum, the study is being used to justify FCC policy changes.

But even the study's authors point to problems in its methodology, such as:

  • Gathering "a data set for a representative number of markets and stations containing both station performance and demographic data was beyond the scope of this project."
  • And "disparities in advertising performance" between minority-formatted radio stations and general market stations "may be attributed to a wide variety of factors."
  • In addition, the researchers were only able to obtain a 22.5 percent response rate to their questionnaire.
  • Even the FCC cautioned that the findings were "preliminary."

There are a number of salient economic reasons for advertising price differences. These include the lower income, and thus lower buying power, of minority audiences -- as well as geographic differences between markets. For instance, the average income for black families in 1997 was 59 percent the average of whites -- which was exactly the differential in ad revenue per listener that researchers found.

However, the FCC senses "discrimination" and proposes to increase regulation. It would set standards for acceptable advertising practices, propose an executive order prohibiting government contracting with violators of these practices, and require that broadcasters use accredited market research.

If this scheme succeeds, communications experts warn, costs of doing business will rise and advertisers will search for more cost-effective venues. Normal business practices will be subverted because of charges of "racism." And the ultimate losers will be minority enterprises themselves.

Source: J. T. Young (Senate Republican Policy Committee), "Racism in Advertising?" Investor's Business Daily, May 19, 1999.

 

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