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Civil rights group's FCC positions reflect industry funding, critics say

Stand on media ownership questioned by consumer groups

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When the chairman of the Federal Communications Commission pitched a plan to allow more media mergers earlier this year, he received support from a curious source: the Minority Media and Telecommunications Council, once an ardent critic of industry consolidation.

Julius Genachowski wanted backing for a proposed loosening of a rule that bars the same company from owning a newspaper and a radio or television broadcast station in a top media market.

MMTC and its executive director, David Honig, have historically opposed relaxing ownership restrictions, saying they protect minority interests. Yet last week, the group released a key study arguing the opposite position.

So why the change of heart?

Critics say MMTC’s position may have something to do with its extensive industry funding. This includes more than $440,000 in luncheon sponsorships since 2010 from broadcast giants who favor the rule change.

In an 18-page response to questions for this article, Honig says the support does not influence the group’s positions.

“The most valuable asset that a nonprofit organization has is its integrity, and to imply that donations and fees influence our positions on issues is to suggest that we lack integrity, something we do not take lightly,” he wrote.

MMTC, which acts as a pro bono law firm on FCC issues for civil rights groups like the National Association for the Advancement of Colored People, was vital if Genachowski was to get his plan approved.

Two previous attempts to change the rule were slapped down by the courts, in part because of concern that greater media consolidation would reduce the number of minority media owners.

MMTC offered to commission the study in February, after voicing its support for Genachowski’s proposal.

Once a shoestring operation dependent almost solely on the volunteer efforts of Honig, MMTC has evolved in recent years into a potent organization that exercises much influence on the commission through its ability to shape the positions of large civil rights organizations on relatively obscure FCC issues.

The media ownership rules passed in the 1970s stemmed in part from the FCC’s failure to take action against TV stations in the South that blacked out coverage of the civil rights movement. They were also inspired by the perceived failures of large media outlets to report on grievances of inner cities that led to the race riots of the late 1960s.

It was believed that restrictions on ownership would lead to greater competition, more locally focused programming and more opportunities for minority ownership.

Consolidation has long been favored by many large broadcasters and newspaper companies, which seek savings by combining advertising and newsroom operations.

After years of defending the rules, Honig, wrote in a blog post in December that the cross-ownership ban should be relaxed, citing concern in minority communities about the decline of newspapers.

What he didn't disclose was the hundreds of thousands of dollars his group had received from CBS Corp., radio giant Clear Channel Communications Inc., Rupert Murdoch's News Corp. and the National Association of Broadcasters, an industry lobby group. All four have previously gone to court in an effort to end the ban. News Corp., which Los Angeles Times and a rule-change would clear the way for such a deal.

Clear Channel and News Corp. did not respond to questions for this article. Spokesmen for the NAB and CBS say their organization’s donations weren’t intended to change MMTC’s positions on cross-ownership or other matters.

Honig said the Center’s calculation of sponsorship totals — which were taken from MMTC materials — were “inaccurate.” He said the group may bump up the level of sponsorship of donors “for good will purposes.”

He did not provide alternate figures.

MMTC took in just under $2 million in 2011. Of that, $1.7 million was derived from sponsorships, donations and fees from companies, lobbyists, lawyers and religious broadcasters with interests before the FCC, according to an IRS filing.

“It is important to look at David’s source of funding to determine who David really represents,” says Mark Lloyd, a former associate general counsel and chief diversity officer at the FCC from 2009 until last year. “I think that would tell you a great deal.”

The MMTC ownership study, released last week, concluded the impact of greater consolidation in media ownership on women and minority ownership can’t be a “material justification for tightening or retaining the rules.”

Critics argue that other studies have shown that more media concentration harms small broadcasters, and that most women- and minority-owned broadcasting companies control just a few stations each.

Net neutrality position raises eyebrows

MMTC has also received support from telecommunications and cable firms and its position on broadband regulation and other issues has dovetailed with theirs.

“He’s making arguments that are no different than those made by the big companies and yet they’re presented as those of the civil rights community,” says Craig Aaron, the executive director of Free Press, a group that opposes media consolidation. “Those are his views, but it’s curious how often they’re in line with the filings of Comcast and AT&T.”

Honig says MMTC aims to promote equal opportunity in broadcasting, telecommunications and broadband and that its positions are often in conflict with those of its donors. He pointed to a letter accompanying the ownership study which noted there was "an indication that an especially extensive" cross-media merger could hurt minority ownership in smaller markets."

MMTC’s position on “network neutrality” early in President Barack Obama’s first term angered consumer groups and many technology companies that wanted the government to force Internet service providers to treat all traffic equally.

Proponents of an open Web were concerned that without strong network neutrality rules, broadband providers would be free to offer preferential treatment to deep-pocketed media outlets.

Honig sided with the Internet service providers, arguing that new rules would hurt the ability of cable and telecommunications companies to expand broadband in poor, minority neighborhoods.

"We think that closing the digital divide should be the top priority and that net neutrality should be second," he told the Los Angeles Times.

From 2009 through 2011 MMTC received at least $725,000 in contributions and sponsorships from network neutrality foes including Verizon, Time Warner, and the National Cable and Telecommunications Association, according to MMTC tax filings and sponsorship lists.

MMTC’s relationship with Verizon demonstrates the group’s various methods of obtaining industry revenue. In 2009, at the height of the net neutrality debate, Verizon made a direct $40,000 contribution to MMTC. From 2010 to 2013, MMTC documents list Verizon as funding at least $160,000 in MMTC conference sponsorships.

Additionally, MMTC worked with Verizon on a $189 million sale of wireless spectrum licenses to minority-owned Grain Management this year — a deal announced in conjunction with a larger $1.9 billion license sale to AT&T. A spokesman for Verizon says money paid to MMTC wasn’t intended to influence its policies but to support its mission of promoting inclusion in the industry.

Some saw Honig playing a key role in organizing traditional civil rights groups like the National Urban League and the League of United Latin American Citizens (LULAC) to sign on to anti-network neutrality filings with the FCC.

Honig is “the nerve center for much of the action we've seen on the part of the civil rights groups,” blogged James Rucker, then the executive director of ColorOfChange.org, a technology-oriented civil rights group that supported network neutrality.

“In my opinion, Honig is leading many of the respected civil rights groups he is advising off of the digital cliff,” he added.

Rucker isn’t alone in the view that Honig uses his credibility with civil rights organizations and expertise in communications law to influence them to take positions on complex issues that primarily benefit industry players.

Honig “undermines trust in his organization’s legacy” when he urges groups to join his advocacy campaign and they later find out the issues aren’t quite what they expected, says Cheryl Leanza, co-chairwoman of the Leadership Conference on Civil Rights’ media and telecommunications task force.

“He does a disservice to his past work when other organizations take his advice and they don’t know the consequences or implications of that advice.”

Leanza says her views are her own, not those of the LCCR.

Civil rights activist

Honig began his civil rights activism in the 1960s as a high school student, when he became a youth leader of the Southern Christian Leadership Conference in Rochester, New York.

He earned a law degree from Georgetown in 1983, and after the FCC under President Ronald Reagan suspended key minority broadcast ownership rules, he co-founded MMTC on a shoestring budget.

He mixed MMTC’s advocacy with litigation on behalf of civil rights groups. In the 1990s he led a high profile but unsuccessful legal battle representing the N.A.A.C.P. in its effort to prevent Rupert Murdoch’s News Corp., the parent of Fox Broadcasting Co. and the owner of a New York City television station, from gaining a waiver from the cross-ownership rule to buy the New York Post—the same rule Honig now favors eliminating.

In 1991, on behalf of LULAC, the N.A.A.C.P. and other civil rights groups, his legal work helped spur an FCC investigation and long-running legal fight with the country’s largest Christian television network, Trinity Broadcasting Network (TBN).

Known for its broadcasts of televangelists like Jimmy Swaggart and network founders Paul and Jan Crouch, Honig accused TBN of setting up a sham minority corporation to win additional FCC broadcast licenses.

Honig helped spur the FCC to restore equal employment rules to the cable and broadcast industry in 2002 and pass a 2007 rule preventing advertisers from instructing their agencies not to place spots on radio stations with large black and Hispanic audiences.

By the late 1990s, Honig had also found a way to successfully fund MMTC. In 1998, MMTC began collecting fees from broadcasters in return for helping them sell stations to minority buyers — earning $450,000 that year alone by helping Clear Channel sell a Boston station for $5 million, according to a report in the trade newspaper Broadcasting & Cable. The story noted that Honig was able to begin paying himself a $41,125 salary.

The report also said that rival brokers were complaining that one MMTC client, CBS Corp., did not typically use brokers and had retained Honig “only to curry favor with the diversity-minded FCC.”

In 2002, the group added an annual “Access to Capital” fundraising luncheon, which helped net it $22,806. Honig’s compensation had risen to $161,000, according to tax filings.

By 2006, the luncheon had become so successful at attracting industry interest it had been expanded to two days and was addressed by three of the FCC’s five sitting commissioners — MMTC raised $291,334.

Station donations

Additionally, the non-profit MMTC began accepting donated broadcast properties.

In 2008, Mega Communications, a Spanish radio network owned by New York art collector Adam Lindemann, donated a Tampa Bay area AM station to MMTC. Honig says the station was used to train women and minorities. MMTC sold the station for $1.15 million last year to Christian broadcaster Salem Communications.

In 2010, Trinity Broadcasting Network donated 147 low-power television stations to MMTC. That year MMTC awarded TBN, along with Clear Channel, its “Extraordinary Service Award,” an annual prize given for those “who have far exceeded the call of duty in the service of the civil rights cause,” according to MMTC’s website.

The FCC soon reclaimed the licenses of many of the TBN stations, but in 2011 MMTC sold 78 of the stations for $390,000 to a Tennessee company run by broadcast entrepreneur Henry Luken, whose holdings include The Nashville Network and the male-oriented Tuff TV.

TBN declined to comment on the donation. Honig says MMTC did not solicit the donation from TBN, and that Luken has pledged to enact a training program for women and minorities as part of the deal.

By the time of the sale of the former TBN stations, MMTC had grown substantially. In 2011, the last year for which tax forms are available, it reported almost $2.8 million in net assets.

Honig’s salary had also increased to $212,072. His addresses included a waterfront home on Maryland’s Eastern Shore assessed at $856,700, according to Maryland property records.

Today its website lists eight lawyers, two researchers and a communications director. Its brokerage team includes three others, two of whom are former Clear Channel staffers. MMTC ranked as the seventh-largest broadcast broker in the U.S. in 2011, and has worked on deals valued at $1.8 billion over the past 15 years. Honig, 63, says he plans to semi-retire next year.

Comcast and AT&T

Among the group’s most generous donors is cable giant Comcast, which, according to MMTC documents has spent at least $375,000 on fundraising luncheons and conferences in Washington hosted by MMTC between 2009 and this year.

In addition to taking Comcast's side on Net Neutrality, Honig publicly hailed its 2011 buyout of NBC Universal.

Honig publicly hailed Comcast’s 2011 buyout of NBC Universal saying the $16.7 billion merger was “a win for all Americans, especially minority and low-income consumers who have largely been left out of the digital equation.” The deal required Comcast to expand broadband to low-income Americans and create 10 new television channels in partnership with minorities.

NBC Universal contributed $150,000 to MMTC in 2010, and retained MMTC’s brokerage arm to help it sell a Los Angeles TV station as required under terms of the deal.

“We supported MMTC's work for years prior to the NBC Universal transaction,” said Sena Fitzmaurice, a spokeswoman for Comcast, in an email response to questions about the relationship. “We support a wide variety of organizations and they don't always support all of our policy positions just as we don't always support all of their policy positions.”

MMTC also supported a failed attempt by AT&T to buy T-Mobile in 2011 for $39 billion, the group’s first endorsement of a media and telecom merger in its 25-year history. The combination would benefit minority broadband consumers by allowing AT&T to expand service to more than 97 percent of consumers, Honig wrote in a brief to the FCC.

Groups such as the National Hispanic Media Center and the Center for Media Justice disagreed, arguing that T-Mobile was the low-cost carrier and that its elimination would not only harm consumers but disproportionately affect minority customers.

In 2010 and 2011, AT&T and T-Mobile provided $240,000 in sponsorships to MMTC fundraising events, according to MMTC documents. A number of other civil rights groups such as the NAACP and Gay and Lesbian Alliance Against Defamation also backed the proposed merger and also received AT&T funding.

At the time the chairman of MMTC’s board, former FCC Commissioner Henry Rivera, worked at law firm Wiley Rein, which represented T-Mobile in the merger. Julia Johnson, then MMTC’s treasurer and its current board president, runs a public relations firm whose clients have included AT&T, according to the Tampa Bay Times.

Ari Fitzgerald, a communications lawyer at Hogan Lovells and secretary of the board at MMTC, has done FCC work for T-Mobile both before and after the failed merger proposal.

AT&T relayed questions about the relationship to Honig, who defends MMTC’s stance in the merger, citing AT&T’s record of hiring minority staff and suppliers. Johnson, Fitzgerald and Rivera recused themselves from voting on MMTC’s position on the merger, he said.

“MMTC’s officers and directors are highly skilled, experienced individuals, and they all serve pro bono,” said Honig, adding: “No MMTC officer or director would tolerate attempts at ‘purse-string advocacy.’”

Growing Entity

Long-time public interest lawyer and MMTC board member Andrew Schwartzman says a turning point for the group came when it entered telecom advocacy. He says Honig is “well-motivated” but on some telecom issues “misguided rather than improperly influenced.”

Schwartzman’s own organization, the Media Access Project, closed its doors last year due to a lack of funds. He does not see MMTC’s positions as being “dictated by specific corporate contributions.”

“I don’t see these as a sudden transactional relationship but something longstanding,” he added, in reference to the donations.

Alex Nogales, the director of the National Hispanic Media Coalition, is less forgiving.

"We're disappointed in David," said Nogales. "He's gotten a bit too chummy with the industry and he's tried to drag us into those machinations and I don't appreciate it."

He says he resigned his spot as a member of MMTC’s board because of concerns about its growing corporate ties.

Whether the MMTC’s cross-media ownership study will lead to a relaxation of media ownership rules is a matter that will be decided under its next chairman.

Either way, the MMTC is looking to remain a key player at the FCC under the new regime.

President Obama’s pick for the spot, Tom Wheeler, a former cable and wireless industry lobbyist, was endorsed by the group just hours after news of his selection was leaked to the media.

John Dunbar contributed to this report.