Investors Slam Comcast For Lack Of Lobbying Transparency

from the fat-man-behind-the-curtain dept

While we think we have a solid grasp on how much companies spend on lobbying and influence peddling, we actually have no idea. Case in point: while a company like Comcast may disclose its overall spending on "lobbying" (as defined as visiting DC to speak to politicians in a bid to shape policy), there's a universe of other influence peddling it's not at all transparent about. For example when AT&T and Comcast wanted the FCC to kill net neutrality rules, both paid a long list of legitimate and sometimes shady groups to express support for the move, even if that support ran in stark contrast of the interest of their constituents.

Hand in hand with "astroturf" and other efforts, companies often pay a long list of consultants, academics, think tankers and others to parrot support for what, quite often, is anti-competitive and anti-consumer policy positions. For example, paying an ex-politician to write an op/ed supporting the death of net neutrality isn't strictly "lobbying," but it's influence peddling. Yet such efforts aren't usually included in many companies' financial disclosures. Participation in proxy trade organizations and state-level lobbying often lacks the same transparency as standard "federal lobbying" disclosures.

Some Comcast investors have apparently grown tired of this lack of transparency. In a recent letter to the company, an investment group dubbed Friends Fiduciary demanded greater transparency into the company's lobbying practices, arguing that failure to do so is actively harming the company's reputation:

"Comcast's lack of lobbying transparency perpetuates its negative public image and could fuel regulatory backlash or contribute to the rise of municipal broadband, potentially threatening company profitability. In a highly regulated industry providing essential services such as telecommunications, we maintain that careful consideration of reputational risk becomes even more crucial."

The group is quick to single out Comcast's disingenuous "support" for net neutrality--and its opposition to community broadband--as examples of how the company is actively harming its overall reputation (while inviting an inevitable post-Trump-era regulatory backlash) and therefore its overall corporate value:

"Comcast's lack of lobbying transparency perpetuates its negative public image and could fuel regulatory backlash or contribute to the rise of municipal broadband, potentially threatening company profitability. In a highly regulated industry providing essential services such as telecommunications, we maintain that careful consideration of reputational risk becomes even more crucial. Municipal broadband has drawn bipartisan support, especially in conservative areas.

More than 750 communities in the US have decided to operate their own networks. As one article puts it, "Our desire for better broadband, and our collective disdain for Comcast, tends to be one of the few things capable of bridging the partisan divide." Comcast's consistent low rankings in the areas of trust and citizenship speak to the potential for its lack of transparency to impact its future prospects.

Not too surprisingly, Comcast says the company isn't keen on bringing more transparency to its lobbying expenditures, claiming doing so would be too expensive and time consuming:

"Because the information that this proposal seeks to be disclosed is generally publicly available in appropriate detail, implementing this proposal would require us to incur unnecessary expense, would divert management attention away from our primary business activities and would raise potential competitive concerns," Comcast said."

Of course most activist-leaning investor proposals like this one usually struggle to get shareholder approval. After all, there's a lot of money to be made by natural monopolies and regulatory capture. When you're happily enjoying tepid, rubber stamp regulators and little to no real competition in most of your markets, what incentive do you have to actually engage in more ethical, transparent behavior? Any real progress on this front needs to come via broader lobbying disclosure reform, something lobbyists often put an end to before it can gain any real traction.

Filed Under: influence, influence peddling, net neutrality, transparency
Companies: comcast

AT&T Cans Exec Over Cohen Payment Kerfuffle, Pretends This Kind Of Influence Peddling Isn't Perfectly Routine

from the whoops-a-daisy dept

As you've probably seen, AT&T was recently exposed for paying $600,000 into a shady shell LLC operated by President Trump's "fixer" Michael Cohen. Initially, AT&T tried to claim that the company had simply hired Cohen for "insight" into President Trump. Given AT&T could easily gain said insight into Trump from any number of its lawyers, lobbyists, and above-board consultants (not to mention the ocean of politicians and regulators in its back pocket), the idea they'd pay a dubious NYC "fixer" for such insight never really carried much weight.

It seems fairly obvious at this point that AT&T was probably paying Cohen for additional access to the President. A leaked document provided to the Washington Post makes it clear that AT&T hoped to gain some advantage in its business before the FCC (net neutrality, privacy, protectionism, protecting its monopoly power), and its efforts to gain regulatory approval for the company's $86 billion Time Warner merger:

"A “scope of work” describing Cohen’s contract in an internal AT&T document shows that he was hired to “focus on specific long-term planning initiatives as well as the immediate issue of corporate tax reform and the acquisition of Time Warner.”

He was also directed to “creatively address political and communications issues” facing the company and advise the company on matters before the Federal Communications Commission."

There's every indication that this additional attention may have paid monumental dividends.

While the Trump DOJ did sue to block AT&T's merger (DOJ antitrust chief Makan Delrahim wandering off script to actually defend antitrust law), the repeal of net neutrality and broadband privacy rules was a smashing success. AT&T has also had great success in its efforts to force NAFTA "reform" making it easier for AT&T to expand into the Mexican wireless market. And AT&T's luck has been stellar at the FCC, where the Commission majority (the makeup of which was dictated by AT&T lobbying) has rubber stamped AT&T's every desire, including the protection of its business broadband monopoly.

As the scandal has grown, AT&T CEO Randall Stephenson was forced to admit the error of his ways in an e-mail to AT&T employees. Stephenson admitted the payments to Cohen were a mistake, but tried his best to pretend that this wasn't routine behavior for AT&T:

"To be clear, everything we did was done according to the law and entirely legitimate. But the fact is, our past association with Cohen was a serious misjudgment. In this instance, our Washington D.C. team’s vetting process clearly failed, and I take responsibility for that.

As somebody who has covered AT&T for decades now, I can assure you this Cohen payment is just a tiny portion of the greasy influence peddling AT&T engages in on a daily basis. The idea that this behavior wasn't perfectly in line with AT&T's "values" is laughable. And in a country where flimsy lobbying disclosure requirements are routinely tap danced around, trying to claim that this was all above board because you didn't violate any laws is akin to claiming you're an expert high jumper because you cleared a bar one inch off the damn ground.

And despite the payment being well in line with AT&T's behavior, the company decided to throw top lobbying and policy man Bob Quinn under the bus as penance for its sins:

"For the foreseeable future, the External & Legislative Affairs (E&LA) group will report to our General Counsel David McAtee. Bob Quinn, Senior Executive Vice President – E&LA, will be retiring. David’s number one priority is to ensure every one of the individuals and firms we use in the political arena are people who share our high standards and who we would be proud to have associated with AT&T."

Bob Quinn had been on the job for less than two years after the retirement of former top lobbying and policy man Bob Cicconi. You may recall Quinn from such hits as AT&T's laughable efforts to pretend it supports net neutrality while simultaneously spending millions to dismantle popular federal net neutrality protections. And again, while paying Cohen to gain access to the President is certainly shady, it's well in line with AT&T's behavior over the last several decades. The question then becomes: will anybody actually do anything about any of it?

AT&T's a shining example of how "creative" influence peddling has infected this country down to its marrow. From co-opting minority groups and creating fake consumer groups to undermine productive proposals, to using think tanks, hired consultants and academics to spread disinformation, testify as "objective" experts and write Op-Eds where financial ties are rarely disclosed, there's a universe of influence peddling and lobbying AT&T routinely engages in that existing U.S. laws don't even operate in the same dimension on.

America has, time and time again, made it abundantly clear that this kind of influence peddling, lobbying and disinformation is not just perfectly legal, it's the norm. So whether this latest scandal results in substantive change or is just brushed aside as a one-off instance of bad judgement by just a few otherwise innocent companies will be interesting to see.

Filed Under: antitrust, bob quinn, donald trump, influence peddling, lobbying, michael cohen, randall stephenson
Companies: at&t, essential consultants

Access Hollywood: Detailing A Hollywood Mogul's Connections To The White House

from the modern-politics dept

There's been plenty of talk about how the Democratic Party is strongly supported by Hollywood -- and MPAA boss Chris Dodd famously threatened politicians that Hollywood might not fund their campaigns if they didn't support SOPA. So it's quite interesting to see Mother Jones' detailed analysis of Hollywood mogul Jeffrey Katzenberg's strong support of President Obama's last campaign. There's a lot of nuance in there, so this is not just a case of clear tit-for-tat political funding in exchange for political favors. The article states multiple times that Katzenberg doesn't really seem that focused on getting anything back for his efforts and money.

Katzenberg has said he wants nothing, personally or professionally, in exchange for his support of the president, and DreamWorks' DC agenda is hard to glean: The studio has no lobbyists and is not part of the Motion Picture Association of America (MPAA).

Later in the article, it notes that Chris Dodd asked Katzenberg to speak to Obama to find out his stance on SOPA in January of 2012, which was "mortifying" for Dodd, since Dreamworks is not a member of the MPAA. Katzenberg, who did support SOPA, still refused Dodd's request, but then did help to "soothe the egos" of other studio heads after Obama came out against SOPA, to make sure they kept funding him. As the article notes: "In the end, Katzenberg chose to help Obama win over his industry rather than helping his industry win over Obama."

Elsewhere:

Obama officials say they respect Katzenberg not only for his fundraising, but also because he has no specific "ask"—no ambassadorship to Switzerland, no regulatory tweak, no nights in the Lincoln Bedroom.

While that's good, the article does make clear two things: (1) even if he's not asking for anything specifically, he does have incredible clout, (2) the administration seems to want to keep wider Hollywood happy anyway, knowing that it will keep Katzenberg happy. In other words, even if Katzenberg's own motives are entirely pure, the possibility of policy pandering to him and his friends is high.

Obama takes Katzenberg's calls, and he and his political adviser, Andy Spahn, visited the White House almost 50 times between them during Obama's first term. (Not all of Spahn's visits had to do with Katzenberg.) It has also left him well positioned to advocate for his industry's and his company's interests in China's booming film market.

And, of course, lots of Democratic politicians now want to curry favor with Katzenberg and his friends, whether or not he asks for it.

Adds Paul Begala: "Every Democrat who has presidential ambitions is now going to beat a path straight for Jeffrey's door. Or they're too dumb to be president."

The end result, of course, are favorable deals even if they don't ask directly.

Yet it is hard to deny that he—along with Hollywood as a whole—has benefited from his connections. In the 2012 fiscal-cliff fight, for instance, the White House insisted Congress preserve a $430 million tax break for film studios that keep production jobs in the United States.

But, the much bigger deal, as the article explains, is how the administration, led by Joe Biden (of course), has helped clear the way for the Chinese market.

In July 2011, ahead of a trade visit to China, Vice President Joe Biden met with industry leaders who asked him to press their case. Biden, too, returned empty-handed. Seven months later, Xi Jinping, then China's leader-in-waiting, made his first official visit to America. On hand to greet him was Katzenberg, who scored a seat next to Xi at a State Department luncheon.

Later that week, Xi and Biden traveled to Los Angeles, and Katzenberg joined them for lunch with Gov. Brown. Biden spent the day pushing Xi on the film quota and profit sharing disputes. The White House wanted to bump the studios' portion from 13 percent to 27 percent, but as the negotiations intensified, Biden asked Katzenberg and Disney CEO Bob Iger what they could live with. Then Biden made Xi a new offer: 25 percent. Xi agreed, and he also said China would let in 14 more foreign-made 3-D and IMAX movies each year.

Katzenberg was simultaneously working on a $350 million deal to open Oriental DreamWorks, a new animation studio in Shanghai—and it couldn't happen without Xi's approval. That same day, at a US-China economic forum held at a downtown LA hotel, Katzenberg officially unveiled the project—and proudly announced that it now bore Xi's personal endorsement.

Having the VP of the US personally negotiate a huge deal like that for you is certainly a nice side benefit.

There's a lot more in the profile, which is really worth reading in full. It seems pretty clear that, unlike some who donate heavily, it really doesn't seem like Katzenberg is funding Obama because he wants something back directly, but rather because he believes in Obama himself. But what's most interesting to me is that, even if that's the case, the end results are almost still the same thing. Even without specific policy desires or asks, because of the money on the line, politicians (especially those vying for that money in the future) often feel they need to heed the general desires of the industry in order to keep that money flowing. That, alone, at least gives the appearance of corruption. Or, as Larry Lessig has called it repeatedly, "soft corruption." It's not the out and out bribery that many people think, but rather the overall set up that generally incentivizes behavior in the direction that favors the funders, even if it's at the expense of the public.

Of course, in the end what this comes down to, as always, is the issue of money and politics, and how it turns a democratic process into one in which those with more dollars have a lot more power and say. And that's still a big problem.

Filed Under: china, corruption, democrats, funding, hollywood, influence peddling, jeffrey katzenberg, lobbying, money in politics, politics, president obama, soft corruption, sopa
Companies: dreamworks, mpaa