Congressional Black Caucus Seeks to Ease Radio’s Woes

story by NY Times
written by Eric Lipton and Eric Lichtblau

WASHINGTON — The radio business has nothing to do with the plan to overhaul the nation’s system for regulating banks and other financial institutions.

Except, it turns out, in Congress.

One of most intriguing mysteries here in recent weeks is why members of the Congressional Black Caucus have chosen to buck their party and president in trying to stall financial regulation reform.

The answer lies at least in part with an aggressive lobbying campaign by a troubled New York City-based radio broadcasting company, Inner City Broadcasting, whose co-founder is a prominent New York politician and businessman, Percy Sutton.

In a rare break with President Obama, the caucus, made up of black members of Congress, is holding back support for the legislation because it wants the administration to help minority-owned businesses, including Inner City, whose financial plight has been specifically identified in meetings with top administration officials.

Inner City Broadcasting, which owns 17 commercial stations nationwide and was co-founded in 1971 by Mr. Sutton, faces a possible financial collapse because of pressure by Goldman Sachs and GE Capital to repay nearly $230 million in debt, Pierre Sutton, his son, said in an interview Wednesday.

Inner City has been battered by declines in advertising, as have many stations around the country, which have experienced drops of 10 percent or more in the last year because of the recession and the move of advertisers to the Internet.

While others are suffering, too, Black Caucus members and lobbyists for Inner City in a series of meetings have pressed the administration for special help for black-owned broadcasters like Inner City, participants in the meetings said.

Caucus members made their case about minority-owned businesses directly to the Treasury secretary, Timothy F. Geithner, and the White House chief of staff, Rahm Emanuel, last month.

In pushing its cause, Inner City hired a prominent Washington lobbying firm, the Podesta Group, which assigned to the case a former senior aide to Senator Charles E. Schumer, Democrat of New York, and a former executive director of the caucus.

Mr. Sutton, even today at age 89, remains a prominent African- American power broker in New York City. The father and son have been major campaign contributors to one of the leaders of the caucus, Representative Charles B. Rangel of New York, who is also a protégé of the senior Mr. Sutton.

Members of the caucus asked the administration to squeeze lenders like GE Capital and Goldman Sachs to renegotiate their loans with Inner City and other black-owned radio stations, arguing that these financial institutions themselves had already received federal assistance.

Some caucus members even pushed to include black-owned radio stations in the bailout.
“There is a lot of concern about Inner City Broadcasting,” said Barney Frank, Democrat of Massachusetts, the chairman of the House Financial Services Committee, who set up one recent meeting with Mr. Geithner and Mr. Emanuel at the request of the Black Caucus.

Mr. Frank said the radio stations were only one issue raised by the caucus, and that others included financial difficulties faced by black-owned auto dealers, newspapers, banks and government contractors.

Inner City and other radio stations have been a repeated topic, dating back to last spring, when Mr. Rangel and eight other Black Caucus members wrote to Mr. Geithner about the concern.

“It is absolutely essential that we do not allow this once-in-a-generation financial crisis to erase the modest inroads minorities have made into the broadcast industry,” the letter said.

Mr. Frank also said Wednesday that at the request of the Black Caucus members, he had called “private and public companies” on behalf of the radio station owners, to urge them to work with Inner City and other media companies. He would not name the companies, but he did not dispute it when asked if it included Goldman Sachs.

The matter came to a head Wednesday, when 10 members of the Congressional Black Caucus skipped a House Financial Services Committee meeting, intentionally missing a critical vote on the regulatory reform package, to reinforce demands they have placed on the White House to take steps to address the way the financial crisis has hurt black businesses, including Inner City. That vote allowed the legislation to move to the full House floor, where it is expected to be taken up next week.

If caucus members vote against it, the legislation could fail, dealing a significant blow to the administration. “While we appreciate the need for the expansion of regulatory authority, we can no longer afford for our public policy to be defined by the world view of Wall Street,” Maxine Waters, Democrat of California, said Wednesday, in explaining the decision by Black Caucus members to withhold their votes.

The administration declined to discuss requests related to Inner City and other radio stations. “We share the concerns raised by C.B.C. members about struggling minority communities, and that’s why we’ve engaged in a positive way to make progress on these issues,” Jennifer R. Psaki, a White House spokeswoman, said in a written comment.

But privately, participants in some of the meetings said, the Obama administration has raised objections, saying it did not believe it was appropriate to pressure financial institutions to make concessions for specific loans or businesses, according to one person who attended a meeting with Treasury and White House officials on the topic but asked to remain anonymous.

Paul A. Brathwaite, a Podesta Group lobbyist who is the former executive director at the Congressional Black Caucus, said the financial crisis has had a particular impact on the radio industry, because of the combined effect of declines in advertising, recent changes in the way radio audience ratings are calculated and the squeeze in the credit markets that has made getting new loans or refinancing difficult.

Michael DuVally, a Goldman Sachs spokesman, confirmed Wednesday that the company has been involved in talks with Inner City Broadcasting about its debt. He would not say if it had received appeals from officials in Washington related to the matter.

But Pierre Sutton said Wednesday that this intervention by officials in Washington has already helped, as negotiations are under way with Goldman and GE Capital to refinance the loans. “The awareness was certainly made more acute,” he said. “They got the message.”