NCTA Supports McCain Minority Ownership Bill

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Washington -- The National Cable Television Association
quickly endorsed a bill last week from Senate Commerce Committee chairman John McCain
(R-Ariz.) to provide tax incentives to media owners who sell to women and minorities.

NCTA president Robert Sachs said in a prepared statement
that McCain's bill had cable's "strong support."

The last such tax-incentive program was abolished in 1995,
when Viacom Inc. tried to get a huge capital-gains break by selling cable systems to
Tele-Communications Inc. and a minority investor.

"As communications media converge, it is critical that
businesses owned or controlled by minorities and women be able to participate in these
communications industries," Sachs said.

McCain said the bill (S.1711) would allow a seller to defer
some capital gains if the sale was to an eligible small business and the proceeds were
reinvested in another telecommunications business, or if a telecommunications business was
sold to anyone and the proceeds were reinvested in an eligible small business.

The bill would cap the annual tax deferral at $250 million.
Eligible minorities and women would depend in part on net worth. The Secretary of the
Treasury is responsible for establishing the eligibility criteria.

FCC commissioner Michael Powell issued a statement in
support of the bill.

"I have previously called for sustainable solutions to
ensure that all Americans, including minorities and women, are able to share in the fruits
of economic opportunity present in communications today. This bill will create such a
sustainable solution," Powell said.

FCC chairman William Kennard has been a strong advocate of
the tax program and, as FCC general counsel, he opposed its abolition in 1995.

Leo J. Hindery Jr., former president of AT&T Broadband
& Internet Services, expressed his opinion at a public forum in September that the
tax-certificate program would probably not create many opportunities for minority
ownership in the cable industry.

The tax program was eliminated at a time when it might have
been effective in cable, he said, but since then, cable consolidation has resulted in
virtually all systems being owned by large telecommunications concerns.

The certificate could conceivably play a role in
broadcast-television transactions, though. Viacom's acquisition of CBS Corp., for
example, could force the sale of some stations to minority owners.

McCain's bill, which is co-sponsored by Sen. Conrad
Burns (R-Mont.), will likely have trouble in the House. Four years ago, House Ways and
Means Committee chairman William Archer (R-Texas) led the fight to abolish the old tax
law. Archer, however, is serving his last term.

The bill broadly defines "telecommunications
businesses" to include radio and television stations, cable systems, Internet-service
providers, cable networks and cellular-phone companies.

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