roundtable: Telecommunications Politics, "Extortion," and PACs
roundtable: Telecommunications Politics, "Extortion," and PACs
Telecommunications Politics, "Extortion," and PACs
W. Curtiss Priest (BMSLIB@mitvma.mit.edu)
Tue, 06 Jun 95 09:59:38 EDT
Message-Id: <9506061401.AA10032@a.cni.org>
Date: Tue, 06 Jun 95 09:59:38 EDT
From: "W. Curtiss Priest" <BMSLIB@mitvma.mit.edu>
Subject: Telecommunications Politics, "Extortion," and PACs
To: Telecommunications Policy Roundtable <ROUNDTABLE@CNI.ORG>
Telecommunications Politics, "Extortion," and PACs
June 6, 1995
CITS Observations on attached article:
W. Curtiss Priest
We are gaining a lot of respect for the Center for Responsive
Politics. In Mary McGrory's piece yesterday on "Revolution on
the airwaves" a spokesperson for the Center talked about how
'the gift of air time [for political candidates] would "change
the whole dynamic of campaign."
In this article we find that the Center has carefully tracked
the flow of monies to companies such as Viacom, AT&T and others.
While the article points a finger at both democrats and
republicans
for arm-twisting for PAC funds, there is a strong indication that
current politics have promoted arm-twisting to levels of
extortion.
What makes the current politics particularly invasive is the new
practice of republicans in studying the whole range of gifts from
firms to determine their "allegiance."
This will have the effect of making political pendulums swing
even faster and harder!
Tucked near the end of the article is Hundt telling us that
"The few public advocates are overwhelmed financially."
True to a fault. It makes you wonder whether this is really
a government "by the people, for the people."
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New Yorker Magazine, June 5, 1995, pp. 52-56
ANNALS OF COMMUNICATIONS
PAY PER VIEWS
With legislation pending what can a media C.E. O. do to get
Congress on his
side? PAC funds help, but the new Republicans want more than Just
money.
BY KEN AULETTA
LAST November at election time,
Sumner Redstone, the chair-
man of Viacom, asked Frank J.
Biondi, Jr., Viacom's chief executive
officer, if the company's political-action
committees had hedged their electoral
bets by supporting Republican candi-
dates as well as Democrats. Redstone
had reason to be concerned. He was an-
gling for a four- to six-hundred-million-
dollar tax break, based on a 1978 law
granting tax concessions to companies
that sold broadcast or cable properties
to minority owners (or to consortiums
with minority partners in the lead), and
last fall Viacom had agreed to sell its
cable-television systems to a minority-
fronted investor group. According to
the Center for Responsive Politics, a
nonprofit nonpartisan Washington re-
search group, political-action commit-
tees controlled by Viacom and its Para-
mount subsidiary had contributed more
than a hundred and seventy-three thou-
sand dollars toward the 1994 congres-
sional elections, but only eighteen per
cent of that money had been directed to
Republican candidates.
Soon after the Republicans took con-
trol of both Houses of Congress, Via-
com began to fear that it and also the
affirmative-action program that provided
its tax break would be targets of the new
majority. By early April, Congress had
passed a retroactive law rescinding the
program. The legislation stipulated that
to be eligible for the tax concession a
company must have filed its applica-
tion with the Federal Communications
Commission by January 17th. The Chi-
cago Tribune Company, Rupert Mur-
doch, and Quincy Jones had filed before
that date and received the tax benefit.
Viacom, which had filed its application
on January 20th, didn't. And it was not
until last week that Viacom was able to
announce a preliminary agreement to sell
its cable systems. Biondi concedes that
Viacom's lopsided giving to Demo-
crats "may have" hurt the company in
the House, but thinks that Presiden-
tial politics and a backlash against
affirmative action were what really
killed their tax break. Tony Coelho, the
former chairman of the Democratic
Congressional Campaign Committee,
who is known in Washington as a
master fund-raiser, disagrees; he under-,
stands the base motivations of many o
members of Congress. "They were go-
ing to lose no matter what," he says
Biondi and Viacom.
COMMUNICATIONS is the United
States' fastest-growing industry,
and is highly dependent on the gov-
ernment's favor. Its nine major compo-
nents--broadcasting, cable, telephone,
Hollywood and music-recording studios,
publishing, computers, consumer elec-
tronics, wireless, and satellite--are well
aware of the government's power. Last
week, the House Commerce Committee
passed a sweeping telecommunications-
reform bill that will increase competition
and, almost certainly, profits. It allows
broadcasters to own television stations
reaching up to fifty per cent of viewers
(up from twenty-five per cent); deregu-
lates cable rates; permits telephone com-
panies to compete with cable companies
in some markets; and allows local tele-
phone companies to provide long-
distance service and long-distance com-
panies to provide local service. The final
legislation may not include all of these
changes, since it will have to be approved
by the full House and by the Senate; that
bill is expected to be sent to the Presi-
dent this year.
Communications companies have in-
vested millions of dollars to affect the out-
come. Since the mid-seventies, they, like
an increasing number of other companies
and most trade and labor organizations,
have formed political-action committees,
or PACs, which permit individuals within
an organization to join a pool, which can
donate up to five thousand dollars a can-
didate, compared with the thousand dol-
lars permitted an individual acting alone.
On May 23rd, the Center for Respon-
sive Politics issued a lengthy report on
all the contributions of industry PACs
during the 1994 elections. The report
notes that the communications industry
was the sixth-largest PAC giver, trailing
such groups as the finance, insurance,
and real-estate sector and the health in-
dustry. PACs run by what the center calls
the communications-and-electronics
sector contributed a total of nine million
four hundred thousand dollars to the
1994 congressional elections. Peter
Barton, the president of Liberty Media,
which is the programming arm of Tele-
Communications, Inc., the nation's larg-
est cable company, explained the dona-
tions this way: "You buy war bonds on
both sides."
f But in the 1994 elections, eighty per
cent of the contributions from commu-
nications PACs were earmarked for in-
cumbents, and since at the time the
Democrats controlled both the House
and the Senate--as they have for most
of the past forty years--they got more
than half the money. The largest single
contributor was A.T. & T.: it gave can-
didates $1,295,994, of which fifty-
nine per cent went to Democrats. Of the
top ten Senate and top ten House recipi-
ents of money from communications-
company PACs, eleven served on the House
Commerce Committee or the Senate
Commerce Committee (which oversee
the communications industry), and three
others were majority or minority leaders.
The largest sum of money from com-
munications PACs to go to a single recipi-
ent was $190,608, and the recipient was
Jack M. Fields, Jr., of Texas, who was
then the ranking minority member of the
House Commerce Committee's Tele-
communications Subcommittee and is
now its chairman.
As an industry group, the local tele-
phone companies were the most generous
givers (three million one hundred and
twenty-seven thousand dollars). The
Baby Bells gave slightly more than half
their money to Democrats. The cable
and satellite industries' PAC gifts (a mil-
lion twenty-nine thousand dollars) also
tilted toward the Democrats. The Holly-
wood studios and media and entertain-
ment companies contributed a total of two
million two hundred and ninety-four
thousand dollars, and sixty per cent of it
went to Democrats. Entertainment com-
panies such as MCA and the music
companies were, like Viacom, lopsidedly
Democratic. The publishing and com-
puter industries gave relatively small sums.
The nine million dollars in PAC gifts
probably represents less than half the to-
tal donations to congressional candidates from
the communications industry, since
individuals also make campaign contri-
butions. The 1994 figures for individual
contributions have not yet been analyzed,
but for the 1992 election fifty-four per
cent of communications-industry giv-
ing--ten million dollars, according to the
Center for Responsive Politics--came from
individuals in the industry, not from
PACs. Nor does the 1994 total in-
clude four million dollars of so-called soft
money that communications companies
gave to the Democrats or nearly three
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and a half million given to the Republi-
cans. (There is no limit on such soft-
money donations.) For the 1992 elec-
tions, Time Warner dispensed four
hundred thousand dollars in soft money,
three-fourths of it to the Democratic
Party. MCA gave two hundred and fifty-
eight thousand dollars, more than ninety
per cent of it to the Democratic Party.
Unsurprisingly, there are also less no-
ticeable ways to curry favor. For instance,
gifts to the Progress and Freedom Foun-
dation, the think tank closely tied to
Speaker Newt Gingrich--or to Senate
Majority Leader Bob Dole's charity for
the disabled, the Dole Foundation--
won't show up in standard campaign-
finance reports. And, of course, money
is not the only form that gifts can take.
Tele-Communications, Inc., has made
some of its channel space available to
National Empowerment Television, a
politically conservative programming ser-
vice that has been championed by
Gingrich. Liberty Media's Peter Barton
says that the service was put on cable be-
cause it generated a good audience in
various markets where it was tested.
There may have been other reasons, too,
since John Malone, the chief executive
officer of T.C.I., is a libertarian conser-
vative, and since documents on file with
the Federal Elections Commission reveal
that in the week before the November
elections T.C.I. shovelled two hundred
thousand dollars--soft money--to the
Republican National Committee.
SINCE the elections, a lobbyist says,
the local telephone companies have
shifted from donating their PAC money
more or less evenly to awarding about
seventy per cent of it to Republicans.
Frank Biondi says that since the 1994
elections Viacom's PAC donations have
been "more balanced" than they were be-
fore November. This month, Viacom
had planned to sponsor a fund-raising
breakfast for Larry Pressler, of South
Dakota, who is now the chairman of the
Senate Commerce Committee. Accord-
ing to one Viacom executive, a friend of
Pressler's phoned to request the fund-
raiser. The intermediary is reported to
have said, "The Senator would like Sum-
ner to do it." The goal, another Viacom
executive said, was to raise thirty thou-
sand dollars for Pressler's 1996 reelection
campaign. According to Viacom, Sum-
ner Redstone, a lifelong liberal Demo-
crat, who worked in the Truman Ad-
ministration and has raised money for
the Kennedys and Clinton, had not yet
decided whether to lend his name or his
liberal reputation to Pressler, a conserva-
tive Republican. But this is about busi-
ness, not personal convictions. "The
practical realities of life are that Re-
publicans are in control of congres-
sional committees," Biondi says.
"We recognize that. And we'll deal
with it." The practical realities are
also that Viacom wants to avoid em-
barrassing publicity, so last week, af-
ter inquiries were made by The New
Yorker, the plans for the fund-raiser
were dropped.
Pressler has lately been doing a
sort of whistle-stop tour: he has held
a series of fund-raisers involving the
communications industry, and the
stops have included T.C.I., in Den-
ver, a five-hundred-dollar-a-head
Motion Picture Association of
America fund-raiser in Hollywood,
and, in New York, an event spon-
sored by Time Warner at the "21"
Club, one sponsored by Rupert
Murdoch's News Corp., and one at
the home of the former media mo-
gul John Kluge. Asked through a
spokeswoman about the propriety of
a committee chairman's shopping for
money from industries he regulates,
Pressler declined to respond.
An experienced telephone-company
lobbyist responded to the same question
this way: "These committees have these
companies by the balls. It's the cost of
doing business. What contributions do is
prevent your opponent from getting an
advantage. If you don't give, you build up
subtle resentments."
In the sense that incumbency gets re-
warded, none of this is new. Neverthe-
less, the magnitude of the shift of money
is startling. "If you close your eyes you
can hear money pouring into Washing-
ton," I was told by the communications
attorney Nicholas W. Allard, who used
to work on Capitol Hill as chief of staff
for Senator Daniel Patrick Moynihan.
And figures from the Federal Election
Commission reveal that in January, Feb-
ruary, and March of this year--the lat-
est period for which the F.E.C. has com-
puterized the filings--PAC giving has
swung sharply to Republicans. A.T. &T.,
which has been fighting to make inroads
in providing local phone service, and
which gave fifty-nine per cent of its po-
litical contributions to Democrats in the
last election, reported giving four times
as much to Republicans as to Democrats
in those months, including five thousand
dollars to Thomas J. Bliley,Jr., the chair-
man of the House Commerce Commit-
tee, and two thousand dollars each to
Pressler, Dole, and Dick Armey, the
House Majority Leader. Ameritech, the
Chicago-based Baby Bell, which like
other local phone companies seeks to add
long-distance service, gave three and a
half times as much to Republicans as to
Democrats, including thirty-five hun-
dred dollars to Pressler and three thou-
sand dollars to Jack Fields. The National
Association of Broadcasters, which
wants a relaxation of radio-ownership
rules, and which gave Democrats the
edge last year, has given three times as
much to Republicans as to Democrats so
far this year, including five thousand dol-
lars to Fields, two thousand to Bliley, and
four thousand to Armey.
There is also a Presidential dimension
to this shift. The guessing in Washing-
ton is that when Dole's PAC reports are
made public this summer he will emerge
as the major beneficiary of the commu-
nications industry. Dole's Presidential
PAC, Campaign America, received, ac-
cording to the Center for Responsive
Politics, a hundred and sixty-nine
thousand dollars from communications
PACs and individuals during the 1994
elections--before he became a Presi-
dential candidate. Pressler nominally
calls the shots on telecommunications
legislation in the Senate, but Dole's voice
is more dominant. It is Dole, not
Pressler, who will decide when to bring
the telecommunications-reform legisla-
tion to the Senate floor. And Dole has
already softened his long-standing oppo-
sition to the long-distance carriers: he
now favors legislation requiring the Baby
Bells to allow long-distance competitors
into their home markets before they may
enter the long-distance business them-
selves. "Communications is the feeding
ground that Bob Dole has been looking
for," a prominent Clinton Democrat as-
serts. "Like all animals, Presidential can-
didates need their own feeding ground."
WHEN Tony Coelho was chairman
of the Democratic Congres-
sional Campaign Committee, in the
mid-nineteen-eighties, he traded access
to Democratic leaders for campaign con-
tributions. Coelho, for example, orga-
nized a Speaker's Club: in return for in-
dividual donations of five thousand
dollars a year or PAC tributes of fifteen
thousand dollars, members were listed as
"trusted, informal advisers" to the
Democratic leaders. In the spirit of the
turn-of-the-century Tammany Hall
leader George Washington Plunkitt, the
Democrats split hairs between "dishon-
est graft" (unreported cash gifts, which
are illegal) and "honest graft" (reported
cash gifts, which are legal).
Yet, however sleazy the Democrats
have been in years past, the new Repub-
lican majority has in some ways been
even more crass. "It is a time-honored
practice for fund-raisers to hit up the in-
dustry affected by the committee assign-
ment of the members," one prominent
lobbyist who is a Democrat says. "But
now it seems to be noticeably more ag-
gressive in three respects. First, the Re-
publicans who took over the committees
moved much more quickly to exploit the
leadership positions. In the communica-
tions industry, House Republicans, led
by Jack Fields, did a clever thing: they in-
vited more than thirty C.E.O.s and other
leaders to two days of briefings. There
was never any mention of supporting
anyone. It was all 'We want to pick your
brains.' Much as these C.E.O.s like to
think of themselves as savvy, they don't
know how politics works in this town.
They came out and said, 'This is really
terrific. They want to know how I feel
about issues.' Then they got the calls from
the fund-raisers and the Party
chairman. After the meeting, I got three
calls from Haley Barbour," the Republi-
can National Chairman. (All lobbyists--
regardless of party affiliation--are per-
ceived first as sources of cash.) Then, this
Democrat went on to say, came calls to
companies and trade associations urging
them to get rid of their Democratic lob-
byists and hire Republicans. Among the
first to switch were the long-distance-
telephone companies, which retained the
former Republican senators Howard
Baker and Paul Laxalt to lead their lob-
bying effort. "There's a runaway hubris
operating here," the lobbyist concluded.
The hubris was visible at the House
Commerce Committee briefings, on
January 19th and 20th. Held in the Can-
non House Office Building, they were
closed to the press and to Democrats. At
dinner the first night, Gingrich was the
featured speaker, and he took the occa-
sion to attack the media as too negative
and too biased, and even unethical. Af-
ter the speech, Time Warner's C.E.O.,
Gerald Levin, rose and gently rebuked
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Gingrich for being too general in his re-
marks. Surely Gingrich did not mean to
tar all journalists with the same brush--
to lump, say, Time in with the more sen-
sationalist tabloid press? "I hope you
don't mean all of us," Levin concluded.
"Yes, I do," Gingrich is reported to
have replied. "Time is killing us." And,
according to several accounts, he went on
to say that he had been particularly in-
censed by Time s account of his mother's
interview with Connie Chung, of CBS--
the interview in which his mother con-
fided that her son had called Hillary
Clinton "a bitch."
Although spokesmen for both Gin-
grich and Levin take pains to say that it
was not "a hostile confrontation," and to
note that the two men have recently had
pleasant one-on-one chats, and to make
the fair point that the Speaker has free-
speech rights, too, others found it chill-
ing that the Speaker would, in effect,
press the C.E.O.s to have their journal-
istic troops hold their fire. "We're at
greater risk now of that kind of pressure
having an impact," Nicholas Allard says.
"Traditionally, there has been a separa-
tion between news and corporate func-
tions. Given the consolidation, you may
have more instances where the top busi-
ness executives, who have many corpo-
rate policy objectives, may find it tempt-
ing to impose control over their news
divisions to advance corporate objec-
tives." The new model may be that
of Mark H. Willes, the new C.E.O. of
the Times Mirror Company, who was
hired away from General Mills. Al-
though there's no way to know what
Willes will do, according to those who
recruited him he brings a fresh perspec-
tive, because he has no prior involvement
with the main business of the company,
which is news.
Also bringing a fresh perspective are
Republican leaders like Gingrich and
Armey, who have called on companies to
be more ideological in their giving. An
Armey spokesman concedes that in April
Armey sent a letter and supporting ma-
terials to Fortune 500 C.E.O.s to com-
plain of their philanthropic gifts to such
"liberal" charities as the American Can-
cer Society. The new Republican major-
ity, Tony Coelho observes, has "taken
what I did and moved it to a higher
level." He explains, "The committee
chairmen are saying, in effect, 'We're go-
ing to look at who you contribute to. If
you expect our help, we don't expect to
see you on the Democratic list.' "
This view is nonsense, says Gingrich's
spokesman, Tony Blankley. "Read 'Hon-
est Graft,' " Blankley says--referring to
Brooks Jackson's book about how Coelho
muscled money from corporations--
"and see how Coelho raised money. We
never did anything like what they did,
which was to virtually blackmail con-
tributors. It was as ruthless a system of
money extraction as one can conceive
of. He was attempting to extract money from
contributors who disagreed with the
policies the Democrats were putting for-
ward. We make the case that the free-
market principles they support are our
principles, and if they're going to support
candidates they should support those who
share their views. That's a fundamental
difference."
But if Republicans threaten, or imply,
retribution against those who differ with
them--like Time, or pragmatic givers, or
corporate philanthropists who donate to
"liberal" charities--then they have in fact
extended Plunkitt's definition of"honest
graft." Like Coelho, they have promised
access in return for donations, but by im-
posing an ideological test on givers they
have introduced a new level of coercion.
They don't just twist arms for contribu-
tions; they now ask givers to profess their
unwavering loyalty--or else. Republicans
say that such coercion is not their intent,
but the best way to judge coercion is
not by what is said but by what is heard.
A major communications lobbyist who
directs a corporate PAC says, "You're be-
ing extorted. People say, 'Contribute.'
You feel that unless you contribute you
won't have the ability to do what you need
to do."
THE line between extorted funds and
campaign contributions--between
"dishonest" and "honest" graft--can be
almost imperceptible. Josh Goldstein,
the research director of the Center for
Responsive Politics, says, "These contri-
butions to incumbents sitting on the
committees that have jurisdiction over
the PACs' interests are the clearest cir-
cumstantial evidence we have that the
money contributed is not, as the donors
and the recipients claim, for good gov-
ernment. It's directed money, and it's di-
rected for clear legislative reasons. It's not
illegal. But the difference between what
one calls a bribe, which is illegal, and a
campaign contribution is unclear."
The big loser in all this, of course, is
the public. "By and large, the public is
not represented by the lawyers and the
lobbyists in Washington," Reed Hundt,
the chairman of the Federal Communi-
cations Commission, says. "The few
public advocates are overwhelmed finan-
cially. It's all very fine to say that you are
in favor of competition. I am. The Ad-
ministration is. Congress is. But compe-
tition won't give you everything the
country needs from communications
companies. We've got to be able to stand
up to business on certain occasions and
say, 'It's not just about competition, it's
about the public interest.' "
One consequential issue that govern-
ment must soon decide is how to allocate
new broadcast-spectrum space that has
been made available by advances in digital
compression; Hundt says the extra space
will be worth thirty to a hundred billion
dollars. Suddenly, there will be room
for as many as six new broadcast sub-
channels within each current channel.
Should government allow the existing
broadcast stations to use this space to
provide movie-quality high-definition
images, which require more spectrum
space to transmit? Should government
allow broadcasters to create, say, new all-
sports or all-news or data channels? Will
the F.C.C. reclaim and auction off the
analog channels currently used by broad-
casters after the transition to the new
digital channels is complete? Or should
it instead auction the extra spectrum?
And if the space is auctioned who should
be permitted to bid--just broadcasters?
Everyone? Should government impose
some public-interest requirements as a
trade-off for access to what have tradi-
tionally been construed as the public air-
waves?
"It's getting harder and harder to get
people to make the argument for the pub-
lic interest, because of this chant--'Com-
petition! Competition! Competition!'--
which is drowning it out," Hundt says.
"That chant is well funded. The funds
give you access to Congress and to gov-
ernment of all kinds."
#end
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| W. Curtiss Priest, Ph.D., Director *********************** |
| Center for Information, Technology, & Society * Improving humanity * |
| * through technology * |
| 466 Pleasant Street *********************** |
| Melrose, MA 02176-4522 BMSLIB@MITVMA.MIT.EDU |
| Voice: 617-662-4044 Gopher or WWW to our publications: |
| Fax: 617-662-6882 gopher.eff.org (under similar organizations, CITS |
| WWW: http://www.eff.org, under Documents & File Archives, under Gopher |
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