News

Cable Ponies Up Big For Strategic Defense

7/22/2001 8:00 PM Eastern

Washington— Like the generals in the Pentagon, cable-industry leaders understand that a strong defense requires not just eternal vigilance but also platoons of money.

Over the last few years, cable has been playing defense in the nation's capital, refusing to push Congress to write new laws or the Federal Communications Commission to draft new regulations.

Instead, the National Cable & Telecommunications Association has deployed a small army of well-heeled lobbyists to convince Washington decision-makers to resist awarding competitors a slew of legal and regulatory favors at the expense of marketplace solutions.

Although cable has suffered no major setbacks, the NCTA has paid a high price to keep would-be punitive government actions bottled up in bureaus and committees.

In 2000, NCTA spent $3.9 million on Washington lawyers and lobbyists, a 25 percent increase over the prior year, according to congressional records and the Center for Responsive Politics, a nonprofit research group. Since 1997, NCTA has spent a total of $15.2 million to cover its lobbying bills.

As best as could be determined from available records, the NCTA last year allocated $1.3 million to specific firms, both to help it keep tabs on moves at the FCC and to track nearly 90 bills in the House and Senate.

The remaining $2.6 million was not itemized, but probably funded the activities of the 13 NCTA employees registered to lobby segments of the federal government.

NCTA has not released its 2000 budget. In 1999, the trade group spent $30.5 million overall and allocated 10 percent of its budget — $3.1 million — to lobbying expenses.

In Washington, it's a commonplace notion that it's easier to stop laws and regulations than to pass them. So in that sense, NCTA has enjoyed an inherent advantage over its opponents.

But in view of the fact that cable enjoys one of the most positive regulatory climates in decades — a point FCC chairman Michael Powell emphasized in his speech last month at the National Show in Chicago — few could argue that the money the NCTA has spent has gone down a rat hole.

"It's important to tell the cable industry's story as effectively as we can in Washington, and one of those ways is to tap the expertise of people in Washington," said NCTA spokesman Marc Osgoode Smith.

Among the NCTA's peers, only broadcasters spent more last year. The National Association of Broadcasters spent $5.2 million, the Motion Picture Association of America $1.3 million, the United States Telecom Association $1.7 million and the Satellite Broadcasting and Communications Association $575,000, according to congressional records.

While NCTA was writing big checks to its lobbying team, cable operators and programmers were branching out on their own to acquire the services of insiders with top government contacts.

According to CRP and congressional reports, major MSOs last year spent at least $2.3 million in addition to the NCTA's spending — $1.1 million by Time Warner Inc.; $800,000 by AT&T; $800,000 by Cox Communications Inc.; $360,000 by Comcast Corp.; $240,000 by Charter Communications Inc.; and $140,000 by Cablevision Systems Corp.

It's unlikely the MSOs devoted all of their lobbying cash to cable issues. AT&T is far more active than the NCTA on a range of telecommunications issues, and the Time Warner empire (now the AOL Time Warner Inc. empire) extends its reach into magazine publishing and movie and television production.

Cable programmers — who also have diverse interests — were lavish in their spending. Viacom Inc., which has to protect cable networks, broadcasting properties, and copyright interests, spent $1 million. Disney, whose portfolio is just as broad as Viacom's, spent a whopping $3.7 million, a big chunk of it going to the law firm that spearheaded Disney's attack on the AOL-Time Warner merger.

Hunting for lobbying expenditures on the Congressional database can be hit-or-miss. But every year, the CRP compiles a comprehensive accounting after exhaustive research. Figures for 2000 were not available, but CRP's 1999 data showed that NCTA's spending, while substantial, pales in comparisons to others operating in the same arena.

Two years ago, the CRP found that SBC Communications Inc. spent a telecommunications-sector leading $9.5 million, while AT&T Corp. shelled out $8.5 million, Sprint $7.4 million, Ameritech Corp. $5.2 million and BellSouth Corp. $4.1 million. EchoStar Communications Corp., which has a reputation for being tight-fisted, spent $1.1 million.

The Bells likely spent their cash to gain entry into the long-distance business and support deregulatory legislation sponsored by Reps. Billy Tauzin (R-La.) and John Dingell (D-Mich.). AT&T's cash was probably consumed in fighting the Bells every step of the way.

EchoStar's spending came as Congress was working to pass the Satellite Home Viewer Improvement Act, which became law in November 1999. That measure allows direct-broadcast satellite carriers to offer local TV signals to subscribers.

Lobbying in Washington is as old as the First Amendment, which specifically protects the practice. In 1999, the CRP estimated that about 12,000 individuals were engaged as professional lobbyists, 129 of them former members of Congress. The price tag to keep them all gainfully employed was $1.45 billion.

A few years ago, Congress eliminated the tax deduction for lobbying expenses.

"Business wouldn't spend money on lobbyists if they didn't think it was worth it," said Bill Shingleton, the CRP's lobbyist researcher. "CEOs just don't throw money around for no reason whatsoever. It's a very good investment for them."

Under federal lobbying laws, the NCTA is required to document its aggregate lobbying spending, and its clients are required to identify their employers and their compensation semiannually.

Last year, NCTA placed 10 law firms or lobbying groups on retainer. Those doing the trade group's bidding included high-profile lobbying shops, as well as low-key law firms known more for their technical expertise than their ability to access the powerful.

For example, NCTA paid $40,000 to The Duberstein Group, headed by Kenneth M. Duberstein — President Reagan's last chief of staff and a player within GOP circles. Duberstein also employs Daniel Meyer, who was a top aide to former House Speaker Newt Gingrich.

NCTA hired Duberstein to lobby on five House bills and one Senate bill. Some of the measures related to Internet-access issues; one concerned cable rate regulation. None of the bills became law.

The NCTA also turned to Patton Boggs, which was the second-largest lobbying firm in 1999, with $17.7 million in revenue. Patton Boggs is headed by Thomas H. Boggs, son of former House Majority Leader Thomas H. Boggs (R-La.).

It paid the firm $40,000 to lobby the FCC on digital must-carry issues.

Although the FCC declined to require cable carriage of both analog and digital local TV signals in January, the agency has not ruled out that possibility.

TOP TICKETED FIRM

Some of NCTA's best-paid clients do not include lobbying superstars whose salaries and political and social exploits end up in the pages of The Washington Post.

NCTA's most expensive lobbyist is the firm Ryan, Phillips, Utrecht & MacKinnon, which earned $360,000. Ryan, Phillips — whose members include former top congressional aides — helped the NCTA to keep cable open-access provisions out of House legislation and to smother a pair of House bills designed to inflict antitrust penalties on cable operators that fail to offer consumers a choice of Internet-service providers.

The second-highest paid NCTA lobbyist was the firm William & Jensen, which collected $220,000 to lobby on four issues, including cable-ownership issues (possibly at the FCC, with Congress or at both) and cable-TV rate regulation. Williams & Jensen, the No. 7 lobbyist in 1999 with $8.8 million in billings, includes lawyer Bertram W. Carp, a former NCTA executive and the former top lobbyist for Turner Broadcasting System Inc.

CRP's Shingleton said it was common for trade groups to spread the wealth among the stars and supporting actors.

"There is kind of a class system in the lobbying world. You've got the really flashy guys like Tommy Boggs who can do stuff for you, and then you've got your foot soldiers," he said.

EchoStar — which is trying to block a spectrum-sharing plan at the FCC and perhaps saddling up to bid on DirecTV Inc. — last month turned to a lobbying luminary for help by hiring former House Telecommunications Subcommittee chairman Rep. Jack Fields (R-Texas).

Fields, who retired in 1997 after helping to pass the Telecommunications Act of 1996, filed a lobbying registration report with the Congress on June 13 along with longtime aide Cynthia Wilkinson.

Although Fields did not have to disclose his compensation, he said his company, Washington D.C.-based Twenty-First Century Group Inc., would assist EchoStar in connection with "Direct TV & satellite."

EchoStar, along with DirecTV and the SBCA, is trying to stop the FCC from issuing licenses to Northpoint Technology Ltd. to share DBS spectrum for the terrestrial delivery of video programming and high-speed Internet access.

EchoStar is also reportedly formulating plans to bid to take over DBS rival DirecTV in a merger battle with Rupert Murdoch's News Corp. A DirecTV buy would require the approval of the FCC and the Justice Department or the Federal Trade Commission.

For its part, DirecTV has also turned to lobbying heavyweights for help. The DBS firm last year paid $240,000 to the firm Quinn Gillespie & Associates LLC. Senior partner Jack Quinn was White House counsel for President Clinton and as a private citizen persuaded the president to grant a pardon to controversial fugitive commodities trader Marc Rich on his last day in office.

Northpoint, which last year paid lobbyists $260,000, used some of that to retain the services of a person who is little known in Washington today but appears to be the kind of insider a company needs to get its message delivered to the right people.

Northpoint hired Texas lawyer M. Diane Allbaugh, paying her $60,000. She is the wife of Joe Allbaugh, director of the Federal Emergency Management Agency. More important, he was manager of the Bush-Cheney presidential campaign.

A Northpoint official said Diane Allbaugh is a close friend of another Northpoint executive.

NCTA Lobbying: 2000
Source: U.S. Congress
NCTA Total Lobbying Expenses: $3.9 million
Payments to Lobbyists: 1.3 million
Ryan, Phillips, Utrecht & MacKinnon 360,000
Williams & Jensen PC 220,000
Brownstein Hyatt & Farber PC 220,000
Hooper Owen & Winburn 190,000
Bracewell & Patterson LLP 100,000
Mintz Levin Cohn Ferris Glovsky and Popeo PC 100,000
The Duberstein Group 40,000
Patton Boggs LLP 40,000
Fleischman and Walsh LLP 19,000
Downey McGrath Group Inc. 10,000

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