As the news outlets reported on the Iran Contra Affair, the government allegedly went after the media. Rumored of threats made behind closed doors trickled outside, and to prove a point the government did something drastic.
Bringing into prospective, an understanding of business tax breaks is helpful.
Normally, a new business venture can write-off losses for five years. Special media tax breaks removed that clause, allowing media companies to serve rural areas.
Radio stations had special exemptions that began at the end of a World War, and onset of The Cold War. In the event of nuclear attack or invasion, the government wanted a means of reaching out to assure and inform the public. Special tax breaks made sense. Even today, broadcasters tests air for the Emergency Alert System.
Hypothetical example, a media company owned five radio stations. Saint Louis MO, Gary IN, Chicago, Champaign and Gilman IL. Four are turning profits through advertising. Gilman is a rural farming area, simply not enough business in the region to support a radio station. Because it serviced a rural area, the media company was able to write-off that station in Gilmore beyond the normal five-years.
As Iran Contra unfolded in the news, government removed those special tax breaks for rural radio stations. Many radio stations found themselves scrambling to stay afloat.
Suddenly, that little country station in Gilmore was costing thousands of dollars a month to keep running. Many rural stations sold at very low prices. New owners had difficulty raising ad revenue, creating an entirely new problem. Rural stations went bankrupt, some going off the air.
Old laws required someone on onsite to read transmitter levels. If a station control booth was in the city and tower in the country, phone lines relayed transmitter outputs.
As the Computer Age came into play that old law changed and made things easier. A station in major city was able to buy a defunct radio station and use computers to link the stations.
Major media mergers are entirely different beasts… Allegedly
Copyright, Casper Parks 2015
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