Congress and the Federal Communications Commission (FCC) have a history of supporting programs that foster diversity of broadcast station ownership, in general, and minority and female ownership, in particular, as a means to achieve that goal. Structuring the programs narrowly may be necessary in order to survive a judicial challenge. To qualify for a tax certificate, the purchasing business had to be controlled by a minority. If the certificate was granted the selling corporation was allowed to defer paying taxes on any capital gain from the sale. However, to the extent that those programs are designed to benefit individuals based on their race, they will likely be subject to the standard of review described below. Judicial Review of Racial Classifications in Broadcast Ownership Policies

In 1995, the Supreme Court decided Adarand Construction v. Peña , which held that all race-based classifications by the federal government must withstand strict scrutiny, as discussed in the following section. In the context of tax provisions and FCC programs that encourage SDBs to own broadcast properties, the government interest that has been articulated is to promote broadcast viewpoint diversity. Though Metro Broadcasting can provide some guidance as to the arguments that would be advanced in favor of finding that broadcast viewpoint diversity is a compelling government interest, because the Court applied a lower standard of scrutiny to what it termed a "benign racial classification," deeper analysis is required to determine if the interest is sufficiently compelling to withstand strict scrutiny.
Amidst growing media ownership consolidation and a significant decline in minority ownership of telecommunications businesses, there has been renewed interest in programs that foster diversity among telecommunications business owners. One potential avenue under consideration is to revive, in revised fashion, a tax program that would allow current owners who sell their broadcast properties to eligible purchasers to defer taxes on gains from the sale. That program had been available for sales to minority-owned firms, defined as socially and economically disadvantaged businesses (SDBs). It was abolished by Congress in 1995 amidst allegations of abuse. In that same year, the Supreme Court held that all government race-based classifications must meet the most exacting standard of review applied by the Court, meaning that all racial classifications must be narrowly tailored to achieve a compelling government interest. To the extent that legislation or FCC programs seek to increase racial and ethnic minority ownership of broadcast stations, they are likely to be subjected to intense scrutiny if challenged in court. The analysis that may be conducted is discussed in detail in this report.