CHART: What They Spent and Who They Used
The arrival of the Obama administration was greeted with cautious optimism and relief in many quarters of the media industry. After a Bush presidency that offered a two-headed approach to policy—thanks to the administration and FCC Chairman Kevin Martin often pushing different agendas during Martin's three years in charge—an Obama White House seemed to promise greater certainty.
But at least one government edict has provided media execs with something of a landscape hurdle: the administration's stricter view of lobbying.
On the surface, the new chief executive appears to have a warm relationship with the media. In early February, Jeffrey Immelt, CEO of General Electric, was named to join President Obama's economic recovery advisory board; among GE's assets are NBC and MSNBC. The media-focused resume of Julius Genachowski, the president's choice for new FCC chairman, has also been reason for cheer.
But the president's position on generally keeping lobbyists at arm's length has many industry leaders wondering how best to make themselves heard on issues, and what to do with existing lobby operations.
Some lobbyists are reconsidering their roles in light of their profession's recent tarring with a broad brush by the administration—even while the business of lobbying Congress continues unabated. Sources on the Hill suggest that one popular option is working in government relations, which would then allow lobbyists greater freedom to move between business and politics.
Media companies' government operations are, for the moment, taking a wait-and-see stance on much of their activity, with the stimulus package currently occupying most of the president's attention. Says one executive at Viacom, “Everybody's being a little cautious, and no one knows for certain what to expect. The president has so many bigger fish to fry with the economy. We want to make sure our industry is protected in terms of economic relief.”
During the campaign, Obama was already including lobbyists as part of an overall ethics plan. New rules now prevent members of his staff from working on policy they once lobbied on, and former presidential associates from trying to influence the administration. In addition, anyone leaving the administration will be banned from trying to influence colleagues for at least two years.
“The new rules on lobbying alone, no matter how tough, are not enough to fix a broken system in Washington,” Obama says. “That's why I'm also setting rules that govern not just lobbyists but all those who have been selected to serve in my administration.”
The gray areas, however, come up regularly. When the Obama administration named a new acting head for the National Telecommunications and Information Administration, it tapped former Verizon government affairs executive Anna Gomez. But the NTIA was quick to point out that while Gomez had indeed been VP for state and federal regulator government affairs, “advocating on behalf of Sprint Nextel,” she was not a registered lobbyist.
One major cable executive, who did not wish to be named, says the definition of a lobbyist has changed over time, adding that “the pendulum has swung back to, let's have as few people registered as necessary.” Cable operators have traditionally had to spend big to get their voices heard on issues, from a la carte channel options to broadband regulations affecting data services.
Having a new party in power may result in media companies hiring more Democratic-friendly executives. “Most corporations were smart to see the writing on the wall,” says Mike McCurry, former press secretary to President Clinton and principal at Public Strategies Washington, a government and lobbying firm. McCurry says he observed companies hiring more Democratic-leaning influencers just before the 2006 election, and “I think this trend has only amplified and accelerated since President Obama's election. I am gratified to see some of the corporations I work with trying to do the right things to create a good impression.”
Obama's choices to head up the FCC and the FTC—Jon Leibowitz, an FTC commission member and former lobbyist for the Motion Picture Association of America—will largely determine whether media companies raise or cut their spending on lobbyists in the coming months. As one senior executive at Viacom puts it, “The media industry has had stronger connections to the Democrats than the Republicans, so you have some interesting things going on where maybe people don't need as much outside help.”
Time Warner expects to see spending on government relations activities cut in half. In 2008, the media giant spent some $6 million, with the Time Warner Cable unit accounting for around half that figure. Membership in organizations such as the National Cable & Telecommunications Association and the Magazine Publishers of America cost the company another $1.5 million.
One big reason for the company downsizing its spending is the imminent separation of Time Warner Cable from the mother ship. The FCC recently gave its approval for the split. Time Warner is working with five government relations agencies in 2009, down from 13 in 2008.
Adonis Hoffman, a Washington-based strategist for the American Association of Advertising Agencies, observes that media companies are looking at the presumptive choice of Genachowski for the FCC with optimism. “The Obama administration has teamed with the media,” Hoffman says. “There is a familiarity and shared knowledge base between those in the media and those in government that will make the dialogue easier. There's not the kind of chasm that existed in previous administrations.”
Murdoch the optimist
News Corp. Chairman and CEO Rupert Murdoch was asked about his view of Genachowski on a recent earnings call. “We look forward to working with him positively,” Murdoch said. “We are not expecting any numerous changes, but we do expect a more decisive and better-run FCC.”
Still, there are traditional fault lines between more regulatory-heavy Democratic policies and Republican theories of open markets and level playing fields that may require lobbyists, or unregistered advocates, to work the phones and press the points for media companies. In a downward-spiraling economy, large companies don't want the added costs or diminished revenue opportunities that can result from new regulations.
More, not less, lobbying
Ken Gross, a partner with Skadden, Arps' Washington-based government relations agency, believes media companies are likely to need more, not less, lobbying help in navigating the current political scene, given stricter ethics laws and new personnel at the regulatory bodies. Skadden, Arps just hiredDavid Sussman, former executive VP and general counsel for MTV Networks, to work in its New York office.
“The predominant landscape will continue to put new issues on the table,” says another Washington chief of a major media company. “It will be heavily dominated by broadband technology, IP protection and piracy.” But even he says there is little visibility about the specifics or orientation of the issues at hand.
Business as usual?
Some lobbyists think the profession is being unfairly characterized and that the business of pushing a point of view with Congress will go on as before, but clearly some strategies are, by necessity, changing. Said one lobbyist who identified himself as a liberal Democrat, “My hope is that guys like me running around lobbying are doing it because we believe in the cause that we represent, and we think we are helping policy-makers get to the right answer by having good information, not because I slipped some Mickey to a member at a party.”
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