RTV Theory and Practice - Special Issue

а . distress sales : ln Мау of the 1978, the ГСС declared it would permit a broadcast licensee who had been designated for a disciplinary hearing to sell his or her station at a "distress sale" price under two conditions : 1 ) minoritieS would participate significantly in new ownership of the station , and 2) the sale occurred before the FCC hearing began (68 FCC 2D 979 (1978)). If a station owner chose to sell at a distress sale price and a buyer was founđ , then the buyer and seller would each submit an appraisal of the station's. fair mar Ket value . The average of the two appraisals would be used to calculate the purchase price which had to be at least 85 percent below the fair mar Ket value of the station. For the seller , the advantage of a distress sale was that it allowed him or her to avoid appearing before the FCC in a potentially costly and time consuming hearing , but it also reguired the owner to exit the broadcasting industry by not acguiring more broadcast properties . For the buyer, it meant the opportunity to purchase a station for at least 25/ below market value . Distress sales , it was predicted, would not contribute to increasing black ownership in an important way because licensees rarely behave in ways that Jeopardize their FCC licenses and because the FCC reduced licensee requirements during this period , so there were even fewer areas in which one could violate an agreement with the FCC . b. Тах certificates : Тах certificates became available to sellers of broađcast properties under the same 1978 policy statement which introduceđ the distress sale policy. Тах certificates could be issued to sellers pursuant to section 107 1 of the internal Revenue Service code (26 IRS 107 1,19 54) under which the FCC could permit sellers to defer payment of capital gains taxes from the sale of a broadcast property . The sale could only be made to a buyer where at least 50 percent of the owners were of a minority group or minority members owned controlling interest. The seller was also repuired to purchase another broadcast property . It was hypothesized that the issuance of tax-certificates to sellers would have a positive effect on black ownership because in this period of expansion sellers would be seekmg new properties while selling their old properties to minonties in order to receive these special tax benefits .

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