Capital Scene: Powell Preferred

LAST YEAR, Congress repealed the tax-certificate policy administered since 1978 by the Federal Communications Commission. Under the policy, the owner of a broadcast station wishing to sell the property could win a substantial tax break if he found a minority buyer. Typically, the seller would pass on some of the savings through a price lower than what the free market would have commanded, giving the buyer an immediate windfall profit. Obviously, the point of the preferential scheme was to ensure minority purchase and ownership of broadcast and cable stations. Over the years, roughly three hundred tax-certificate deals were consummated.

One of these benefited Colin Powell. In 1985, Powell’s wealthy uncle J. Bruce Llewellyn recruited him and dozens of other blacks—including Quincy Jones, O. J. Simpson, Patrick Ewing, Julius Erving, Dave Winfield, Donald McHenry, and Mr. T—to buy WKBW-TV in Buffalo. Powell put in $100,000—the amount he had made through repeated sales of homes, according to Newsweek. Eight months ago, Powell sold his 1 per cent interest in the station for $250,000, a substantial but hardly suspicious profit.

About the Author

Terry Eastland

Mr. Eastland was a publisher of The Weekly Standard. His books include Religious Liberty in the Supreme Court (1993).

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LAST YEAR, Congress repealed the tax-certificate policy administered since 1978 by the Federal Communications Commission. Under the policy, the owner of a broadcast station wishing to sell the property could win a substantial tax break if he found a minority buyer. Typically, the seller would pass on some of the savings through a price lower than what the free market would have commanded, giving the buyer an immediate windfall profit. Obviously, the point of the preferential scheme was to ensure minority purchase and ownership of broadcast and cable stations. Over the years, roughly three hundred tax-certificate deals were consummated.

One of these benefited Colin Powell. In 1985, Powell’s wealthy uncle J. Bruce Llewellyn recruited him and dozens of other blacks—including Quincy Jones, O. J. Simpson, Patrick Ewing, Julius Erving, Dave Winfield, Donald McHenry, and Mr. T—to buy WKBW-TV in Buffalo. Powell put in $100,000—the amount he had made through repeated sales of homes, according to Newsweek. Eight months ago, Powell sold his 1 per cent interest in the station for $250,000, a substantial but hardly suspicious profit.