A lobby the media won't touch.

How the media lobby wields its power in Washington -- and how it gets away with it

For more than a year now, in the best tradition of a free press, "NBC News" has been aiming its proud beak at examples of what it calls the "Fleecing of America" -- public offenses often committed by the big, bad federal government. One of the show's segments last July singled out the owner of a telecommunications company in Cedar Rapids, Iowa, who had won four licenses at a poorly advertised auction for the rights to public airwaves serving 16 million people with cell phones, beepers, walkie talkies, and other electronic devices. The winning price: $1 per license. Anchor Tom Brokaw reported that the company's chief, Clark McLeod -- who said he would have paid up to $200,000 for the licenses -- "stands to make a fortune with your help, and you didn't even know about it. Your government gave him the deal of a lifetime. You decide: Is this the Fleecing of America?"

But while you're deciding, ask yourself another question: Where exactly was NBCs "fleecing" crew when the network and its fellow broadcasters won the right to use the new digital TV channels without paying a dime? Each channel contains enough bandwidth to offer six separate ones that can be used, not only for high definition TV (HDTV) broadcasts, but also for subscription services ranging from wireless cable to data transmission. Based on auction revenues for other public airways in recent years, the FCC had estimated that a public sale of the digital spectrum could bring up to $70 billion to the U.S. Treasury. Instead, the major broadcasters got the rights to a significant -- and highly lucrative -- chunk of the airwaves spectrum, for absolutely nothing.

Is it possible that Brokaw & Co. did not recognize the parallels between the episode in Cedar Rapids and what happened in Washington? If so, this lack of imagination was apparently shared by the other network giants: A data search for "digital TV auction" drew no hits on any of the broadcast networks during a time when CNN ran 31 stories in 16 months. Or did the decision of the big four news divisions to ignore the debate on digital auctions have more to do with keeping the public eye off the political machinations of their network employers and of their employers' employers -- corporate parents such as General Electric, News Corp., Westinghouse, and Disney? As Tom Brokaw would say, "You decide."

Anatomy of a Windfall

The auction controversy began heating up in late 1995, when then-Senate Majority Leader Bob Dole (R-Kan.) announced that he wanted to add auction requirements to the telecommunications reform bill he and House leaders had nearly completed after a four-year struggle. The law's main aim was to transform the long-regulated telecommunications industry into a more competitive market, which would bring lower consumer prices. The key to Dole's sudden departure from the long-awaited deal became apparent in a private meeting (one of many) on November 30, 1995, between top broadcasters, legislators, and lobbyists, including Fox's Rupert Murdoch and the heads of other networks. According to a report of the meeting in The Washington Post -- first appearing six weeks after the fact -- Dole asked broadcasters: "Why should I give you a $40 billion giveaway when you're driving my [approval ratings] through the floor on Medicare?" The disgruntled Republican leader then formalized his demand for an auction with a speech in the Senate. The major news outlets, however, showed little interest in this development, even failing to pick up the Poses report of Dole's bold threat.

After the telecom bill passed the House in January 1996, Dole vowed not to let it through the Senate without further discussion of the spectrum giveaway. Finally, Dole convinced other congressional leaders to send a letter to the FCC, asking Chairman Reed Hundt for assurances that, if the bill were passed, Hundt would not allow licenses for use of the new spectrum to be handed out until the possibility of an auction received further review on the Hill. Hundt agreed. The bill sailed through the Senate and was signed into law the following month by President Clinton. A still dissatisfied Dole, however, kept agitating for spectrum auctions, eventually winning the support of Sen. John McCain (R-Ariz.) and a few other legislators equally horrified by the mammoth giveaway. By March, the National Association of Broadcasters (NAB), the industry's chief lobby, had had enough insolence. Flexing its muscles, the industry decided to go around Congress to the "grassroots" with a $9.5 million blizzard of public service announcements attacking auctions as "a tax on free television" that would force "your favorite shows" off the air. As a result, lawmakers were buried under an avalanche of pleas to save "free TV." Dole accused broadcasters of "bullying Congress" and misleading the public. But on June 11, he stepped down to run for president. A week later, his successor, Louisiana Republican Trent Lott, quietly sealed the deal for broadcasters. In a letter to the FCC co-signed by House Speaker Newt Gingrich and other GOP leaders, Lott directed the agency to disregard Dole's wishes and grant broadcasters the new channels without auction by April 1997

So what happened? Some say Gingrich had been co-opted by the industry, as evidenced by the infamous book deal with HarperCollins (another Rupert Murdoch property) and by the Speaker's allowing Donald Jones, a wealthy cable entrepreneur and GOP contributor, to work for months in his office under cover. The Wall Street Journal reported that Jones (whose firm included a subscription cyberporn service) spent most of 1995 as a part-time "volunteer" in Gingrich's office at a time when key parts of the telecommunications bill were being negotiated. On the Senate side, industry observers suggest that Trent Lott's letter to the FCC marked a high point in the career of Edward O. Fritts, the president of the NAB -- and a close friend and college classmate of Lott. But the fact that congressional leaders could hand out such a treasure trove of public property without causing an uproar was due not so much to expert lobbying as to thin news coverage. As Senator McCain says: "In the final analysis, the pressure has to come from the people."

But "the people" had been kept pretty much in the dark about what was going on. (Inquiries by The Washington Monthly to the network chiefs at ABC, CBS, and NBC about the lack of coverage of telecom issues brought only silence. For his part, veteran CBS newshound Mike Wallace clarified recently: "I've been waiting to do a story on the telecom bill now for over a year, but I still haven't found a peg for it") With essentially no network reporting on the auction issue and little on other telecom issues during the two-year debate, it fell to the print press to take up the slack. But it too failed to distinguish itself, possibly reflecting many publishers' big stakes in radio and TV. The New York Times' Broadcast Group, for example, comprises eight television and two radio stations; The Washington Post Co. owns six TV stations; and Gannett, the owner of some 93 newspapers nationwide including USA Today, operates 20 television stations. A telling survey of 100 newspapers by James H. Snider and Benjamin I. Page of Northwestern University found that "every one whose owners got little TV revenue editorialized against the spectrum `giveaway,' whereas every one with high TV revenues editorialized in favor of giving broadcasters free use of spectrum"

Even after winning such a monumental spectrum gift, as well as gaining relaxation of limits on the number of radio and television stations that one company may own, broadcasters were still hungry. Unhappy with the FCC's plan to make them return their current (also free) analog channels by 2006, they rolled Congress again with a clause inserted into last summer's tax-budget agreement that added so many conditions for returning the channels that many observers believe the stations will never be given up. Station owners in large cities also obtained the eventual right to bid for a second station in the same city, despite a long-standing ban against such duopolies. And as for the creative, entrepreneurial uses to which broadcasters had pledged to put their new spectrum: Within a month of broadcasters receiving this second handout, The Wall Street Journal reported that, instead of gearing up to offer consumers HDTV programming, "networks are now talking about using just a portion of the high-capacity digital spectrum to offer extra channels of standard TV signals that don't look much different from what is already on."

The Power of the Press

How do the media get away with such shenanigans? Their power rests in four basic areas: 1. Their central role as information distributors. 2. Their increasing importance to candidates at election time. 3. Their creative application of the First Amendment right to free speech. 4. The enormous power they wield through lobbying and campaign contributions.

The media's role as information provider to the public puts them in a class apart. One aspect of that power is the media lobby's ability to act in its own interest virtually without fear that it will face much, if any, public scrutiny. For example, in 1995 a number of media outlets, including CBS and The Washington Post, got involved in a Supreme Court case appealing a $2 million punitive damages award granted by a lower court to a BMW buyer whose car had a defective paint job. For nearly two decades, many news organizations have advocated strict limits on court awards for damages due to defective products, mainly because of the potential effects on libel awards. So when the BMW case came before the high court, CBS organized a friend-of-the-court briefing arguing that "even the strictest due process limitations on punitive awards may not be adequate to protect First Amendment values in [libel] cases." But when it came time to exercise their First Amendment duty to educate the public on this issue, the media were selective in what they reported, particularly regarding their own participation in the case. In nine stories run on the subject in The Washington Post while the case was pending in 1995 and 1996 (including editorials in favor of legislation aimed at limiting punitive damages awards), the editors disclosed the company's involvement in the case only once -- after the Supreme Court's ruling (which, incidentally, went in the media's favor, wiping out the award and setting the first national guidelines for handling such cases). Among other organizations joining in the amicus brief were ABC, NBC, the Los Angeles Times, Knight-Ridder, and Dow Jones & Co. Yet a data search of news and commentary in these news outlets showed no mention of company participation.

This role as information provider also gives the media the ability to make or break any public servant with the use -- or non-use -- of news and commentary. Common Cause calls it "the power to shape the news" Although examples of gross unfairness by the media are rare, there are enough instances to make legislators and bureaucrats wary. Many remember what happened to Dan Glickman, the current secretary of agriculture and former congressman from Kansas. His troubles started back in Wichita in 1992 when the local arm of Multimedia Cablevision, apparently enraged by Glickman's vote earlier that year in favor of freezing cable rates, flooded its 53 channels with "editorials" against his reelection bid. The company aired anti-Glickman jabs more than 2,000 times before agreeing a week before election day to run some pro-Glickman spots. Glickman squeaked by with only 52 percent of the vote, compared to the 71 he garnered in 1990.

Then, of course, there is the media lobby's economic clout. It is not only among the biggest spenders on lobbying services, but also among the biggest contributors to federal candidates. According to the Center for Responsive Politics, contributions from communications and electronic sources to federal candidates and parties in the 1995-6 election cycle totaled $53,179,278, divided almost evenly between Republicans and Democrats. The four networks alone contributed $4 million. (Not included in these figures was a last minute contribution of $1 million given to the California Republican party by Rupert Murdoch) Not surprisingly, the largest recipients in the Senate and House were the heads of the telecommunications subcommittees, Sen. Larry Pressler (R-S.D.), who received $515,499 and Rep. Jack Fields (R-Tex.), who got $221,228. Seats on these committees and their parent "commerce" panels, also known as "cash cow" committees, are among the most sought after in Congress.

When you consider how reliant politicians are on the media for both access and campaign donations, it's hardly surprising that, when it comes to personal contacts, nobody has a greater ability to open doors than newspaper publishers and broadcasters. Few successful politicians can afford not to be on cordial, if not close, terms with the media when elections roll around. (See "The Washington Buddy System," page 12) Nowhere are such personal ties more important or more finely tuned than in Washington, where the flourishing cocktail and dinner circuit includes all sides of the influence business: the favor seekers; favor givers; and the principal conduits, media figures and lawyer/lobbyists. Two 1997 books, one by Katherine Graham, chair of the executive committee of The Washington Post, and the other by Sally Quinn, writer and wife of Ben Bradlee, vice president-at-large for the Post, richly illustrate the camaraderie among such movers and shakers. So do the guest lists for White House dinners. And the guest books of Rupert Murdoch and Bill Gates. They recently played host to Rep. Billy Tauzin (R-La.), chair of the House Telecommunications Subcommittee; Senator McCain, chair of Senate Commerce; and other legislators, according to Broadcasting & Cable. Such friendships help pave the way for the media lobby to gain the ear of policy makers the next time an issue comes up affecting its interests. In fact, the situation has reached the point where broadcasters are becoming downright arrogant, say regulators at the FCC. According to one official, they don't even try to argue policy, rather they come in with the attitude: "If you don't do what we want, we'll kill you on the Hill"

Finally, long among the media's favorite lobbying weapons has been the First Amendment. Though an invaluable guarantee of journalistic freedoms, the First has been increasingly wielded by media interests to gain competitive advantages and improve the industry's bottom line. For more than a half-century, newspapers have relied on constitutional arguments to win exemptions from laws applying to other businesses, including paying retail sales taxes in many areas and observing bans on monopolistic practices and on the use of child labor. (For decades, underage deliverers were called "little merchants") The First Amendment has even been trotted out by publishers and broadcasters to fight attempts to restrict cigarette ads in order to protect the health of youngsters. In 1971, broadcasters went to court to block a ban that Congress had directed to begin that year over the airwaves. They argued that the ads constituted commercial speech, and were thus protected by the First Amendment. The Supreme Court rejected their plea, handing the media lobby one of its rare defeats. In his book Democracy, and the Problem of Free Speech, University of Chicago law professor Cass Sunstein effectively debunks the notion that commercial and political speech merit equal protection under the law. Political speech is at the "core" of the First Amendment, argues Sunstein, because "[r]estrictions on political speech have the distinctive feature of impairing the ordinary channels for political change" The same dangers do not apply to, and thus the same degree of protection is not appropriate for, commercial speech. Nonetheless, 16 years later, when Congress began considering bills to extend the ban to print media, publishers dusted off the same free-speech argument. And at a thinly covered Senate hearing in March on the proposed tobacco settlement, the White House sided with publishers' claims that curbs on tobacco ads would be unconstitutional.

On another front, publishers managed to get an obscure clause tucked into the 1996 minimum wage increase allowing them to stop paying benefits and taxes for certain carriers and distributors, now mostly adult "independent contractors." (A similar request by other types of business failed to make it through Congress.) In a glowing victory statement, John F. Sturm, president of the Newspaper Association of America, heaped praise on many publishers and their law firms, adding that "this is going to save a lot of newspapers a lot of money in the future"

But perhaps the granddaddy of First Amendment-based lobbying efforts by publishers is their century-long battle for deep discounts on postal rates. It was publishers who launched the national crusade against "junk mail," mainly in order to increase their own substantial cost advantages over other sources of advertising. Their principal argument has been that Congress originally set up preferential rates for subscription periodicals to recognize their "educational, cultural, scientific, and informational" value, an indirect reference to press privileges.

Broadcasters like to ride the free-speech argument too. They invoked it to kill the Fairness Doctrine, and cable companies have attempted to use it (unsuccessfully so far) to keep from carrying local television programs without charging broadcasters. NBC, for example, is counting on it to keep from adopting the program rating system accepted by other networks. The First Amendment also has been a prominent tool in the demolition of proposals to reform campaign finance laws. Although a few publishers and broadcasters have backed plans for giving candidates free air time, broadcasters were credited with killing the provision in the McCain-Feingold bill before the ill-fated legislation even made it to the floor. An aide to Senator McCain explained that the issue was "too contentious" In March, McCain went a step further, introducing legislation to kill talk at the FCC about ordering free airtime -- an idea deemed "unconstitutional" by NAB chief Fritts. McCain was seeking to end the administration's attempts to get broadcasters to offer such a service in exchange for digital channels. McCain's move coincided with a march on Congress and a new national campaign by broadcasters to convince the public that they are already up to their ears in good works, such as collecting toys for tots and raising funds for charities.

Not even the Supreme Court is immune from lobbying by media groups on First Amendment grounds. As in the BMW punitive damages case, media organizations often jump into the fray with friend-of-the-court briefs and related editorials when they see an issue that may affect their own commercial operations. The Newspaper Association of America saw such a need in a case involving the prices set by an independent oil dealer because the decision might affect pricing practices of newspapers. The court agreed with the publishers.

It Just Keeps Growing and Growing...

Now for the payoff Mergers and new technologies have rapidly extended the term "media" to include not only broadcasters and publishers but firms specializing in cable, satellites, telephones, movies, music and, of course, computers and the Internet, bringing such financial heavy hitters as Microsoft into the fray. Such consolidation has added considerably to the lobby's economic clout. According to scorekeepers at J.P. Morgan Securities Inc., stock prices of publicly traded radio and television companies doubled in the past two years. And despite a freeze on rates of larger systems, cable company stocks grew by 60 percent, while newspapers jumped 80 percent (this, compared to a mere 24 percent rise in the Dow Jones average). Last year alone, cable topped all 62 other industry groups in stock growth, as measured by Morgan, while broadcasting and newspapers ranked third and sixth, respectively.

Although journalistic functions are only peripheral in some of the resulting organizations, they seem to be enough of a unifying factor to suggest a future megalobby of communication, entertainment, and content firms that will make today's media force look like Mickey Mouse. With all the potential conflicts from in-house theme parks, retail stores, sports teams, sheep ranches, distilleries, and nuclear reactors, there is a growing fear that this extended mediapoly will further diminish the already fading integrity of journalism. Already, the next push by the media elephants has started at the FCC, pressuring the agency to relax its long-standing limits on cross-ownership of broadcast properties. And no matter what happens there, the battle is sure to switch to the more media-friendly climes of Capitol Hill, where influential legislators have already introduced bills to break the ban.

Paging Tom, Dan, Peter.

RELATED ARTICLE: The Washington Buddy System

(Key persuaders for media interest and their ties to those in power)

Howard Baker, AT&T -- former Senate colleague of Lott, Dole, and others.

Peggy Binzel, Fox and other networks -- ex-legislative assistant to Rep. Jack Fields, former chair of House Telecommunications Subcommittee.

Tommy Boggs, MCI and newspapers -- friends in Congress too numerous to name.

Jack Clough, News Corp. -- ex-staff chief of House Energy and Commerce when headed by Rep. John Dingell (D-Mich.), now ranking member.

Bob Dole, Microsoft competitors -- former Senate Majority Leader.

Thomas J. Downey, Time Warner, Microsoft, cable TV -- former House Democrat and close friend of Vice President Gore and key legislators.

Ralph Everett, regional telephone companies -- former aide to Sen. Fritz Hollings (D-N.C.), key Democrat on Senate Commerce.

Martin Franks, senior vice president of CBS -- former director of Democratic Congressional Campaign Committee.

Eddie Fritts, president of National Association of Broadcasters -- ex-college classmate at Ole Miss of Senate Majority Leader Trent Lott (R-La.).

Terry Haines, AT&T -- chief of staff to former FCC Chair Alfred Sikes.

Vernon Jordan, director of Dow Jones and senior partner at Akin, Gump, Strauss, Hauer & Feld, whose clients include AT&T, Time Warner, and CBS parent Westinghouse -- close confidant of President Clinton.

Grover Norquist, head of Americans for Tax Reform, GOP's chief direct-mail arm, and representative of Microsoft -- close adviser to House Speaker Newt Gingrich and other Republican leaders.

Tony Podesta, head of Podesta Associates, representing newspapers and broadcasters -- brother of John Podesta, staff secretary of President Clinton.

Thomas Tauke, regional phone companies -- former member of House Telecommunications Subcommittee.

Kimberly Tauzin, administrator, NAB government relations -- daughter of Rep. Billy Tauzin (R-La.), chair of House Telecommunications Subcommittee.

Vin Weber, AT&T -- former Republican congressman and close friend of Newt Gingrich.

Ward White, vice president for government affairs, Bell South -- hometown pal of Bob Dole.

Thomas (T.C.) Williams, AT&T -- ex-classmate at Georgetown of Rep. Thomas Bliley (R-Va.), chair of House Commerce Committee, and longtime friend of Sen. Ernest F. Hollings (S.C.), key Democrat on Senate Commerce Committee.

Sources: Legal Times, National Journal, Congressional Quarterly, Ken Silverstein, and others.

ARTHUR A. ROWSE is a Washington journalist formerly with The Washington Post and World Report.