Who Are These Guys?

BY ALICIA MUNDY It was just one more media ownership hearing — radio, TV, cable, satellite, didn’t matter. There was Gene Kimmelman, the chief watchdog at Consumers Union, testifying before Big John McCain, the irascible chairman of the Senate Commerce Committee. Kimmelman’s smooth delivery only partially masked the direct shots he took at the media industry. McCain deadpanned, “Thank you Mr. Kimmelman for your usual gentle, nonaggressive, kind remarks.” The packed chamber exploded in laughter. They could afford to laugh — the fees for these 60-odd lobbyists to sit through the hearings average $350 per hour. But they did listen, because there is no telling where Kimmelman, along with his cohorts Andy Schwartzman of the Media Access Project, Mark Cooper of the Consumer Federation of America and Jeff Chester of the Center for Digital Democracy, will strike next. Chester describes the quartet as “the four white Jewish horsemen of the Apocalypse.” At any given time, their collective attack on the media plays like Karl Marx meets Chico, Groucho and Harpo — an amusing Kabuki with an undertone of raw socialism. They have been the bane of broadcasters, telephone companies, satellite operators, the TV networks and, most of all, the cable industry. Hell, for years, they’ve called the infamous 1992 Cable Regulation Act the “Kimmelman Act.” But now Kimmelman and Co. have an intriguing — if somewhat bizarre — offer. “If they let us,” says Kimmelman, “we could be the best friends the cable companies ever had.” Say what? Kimmelman, in fact, is looking for allies in his war — and it is a war — with that nemesis of the American Left, one Rupert Murdoch. He knows the cable MSOs and their representatives at the National Cable and Telecommunications Association are terrified of the Murdoch dominion — so scared, they can’t say it on the record. And Kimmelman knows they have backed themselves and their lobbyists at NCTA into a corner — no one can officially even hint they don’t like Murdoch’s coming acquisition of DirecTV from General Motors/Hughes. They can’t oppose any merger, because it could have repercussions for some of their own more acquisitive members. So they hold fire while holding their breath. Kimmelman says he has a radical idea that would address their fear factor with Murdoch — the cost of programming and its accessibility. “They should go to Congress with me and remind everyone that in 1992, when they created must-carry and retransmission consent rules,” says Kimmelman, “they didn’t have in mind an entity like Murdoch’s, where a broadcaster and programmer now has his own distribution system. “Don’t block Murdoch’s merger,” says Kimmelman. “But Congress can block his ability to benefit from the fruits of retrans and must-carry. He shouldn’t have access to them. Congress can act, if not now, a little later…. This is how cable should approach this issue. I can help them deal with their biggest worries using this approach.” He adds, perhaps sardonically, “But I don’t know if they’ll want to come along with me.” Intriguingly, a cable/public interest group alliance wouldn’t just serve cable. At this point, there are many in the telecom world, even among Democrats and liberals, who are wondering if the media ownership rule-making at the FCC and the Murdoch merger represent these groups’ last stand. They could use some new allies and some new issues. Among the questions raised — even by people who have been on their side — are if these groups are at all relevant anymore and whether fighting 40-year-old battles with equally ancient tactics is effective, or even advisable. “I named them the Corduroy Crew because their regulation approach and their wardrobe hasn’t changed since the ’60s,” says cable guru Marc Osgood Smith. It is in fact difficult to find a major success among all four of these groups since the ’92 Cable Act. Surprisingly, even some liberal Democrats such as Rep. Ed Markey (Mass.) have quietly questioned whether some of these guys are stuck in the past. In fact, within the groups, some group activists think that Kimmelman, Schwartzman, Cooper and especially Chester are too eager to fight every change in the media or telecom industry. Another charge against them now is that they won’t work with FCC Chairman Michael Powell and his staff — they just want to let Commissioner Michael Copps front for their issues on the dangers of media consolidation instead of proposing compromises and solutions. And at base, the worst charge against the interest groups, particularly Kimmelman’s, is that they are closet monopolists who prefer a corporate landscape that can be regulated and in which concessions can be forced. “In a deregulated free market, people like Gene don’t get the deals they want. But maybe the consumers do,” says one veteran telecom specialist. One of the running jokes in Butch Cassidy and the Sundance Kid is the heroes’ constant query about the folks chasing them: “Who are those guys?” That’s about the nicest question many of the two dozen lobbyists, FCC people and politicians who were interviewed for this story had. “Who the heck do they really represent?” asked one top lawyer at the FCC. “Where do they get off saying they represent the public interest? When was the last time they polled the public and asked if they were doing what the public wanted them to do?” It’s a good question — and the answer lies in the rather clever way the four have constructed their relationship. “We are like a well-oiled machine,” says Schwartzman, who joined the Media Access Project in 1978. In essence, they all have their genesis with Ralph Nader. Here’s how they created their performance art: Gene Kimmelman, senior director of the Consumers Union since 1995, is “Mr. Inside.” He works the Hill, and his contacts are legion and legend on both sides of the aisle. He’s a smooth operator who has dealt with an unlikely array of allies over the years. “Mr. Outside” is Mark Cooper of the Consumer Federation of America — he draws on its 250 member organizations to drum up grassroots thunder at the local level and to generate complaints to Congress from members’ home districts — the scariest thing on earth to a politician. He also builds coalitions using those groups, which is how so many pro-EchoStar organizations suddenly sprouted up during Charlie Ergen’s attempt to buy DirecTV. His economic studies give the groups an issue to hang their fight on. “When I joined Gene, people didn’t think we could work together — you know, we have two very big egos. But we’ve never had a fight.” Schwartzman, the 55-year-old civil rights lawyer who’s a classic, says up front, “Stop calling us the corduroy crew. I’m wearing a $600 suit right now, and I’ve never seen Gene go up to the Hill in anything resembling corduroy.” Schwartzman cut his teeth on the landmark segregation case that eventually allowed communities to have a say in whether a local broadcaster could get his license renewed. At the time he worked for the United Church of Christ, and frequently got mail addressed to the “Rev. Schwartzman.” Now the group represents Consumers Union, the Consumer Federation of American, the Center for Digital Democracy (and others) at the FCC and in court. He’s one smart lawyer “and he knows it; and he acts like he knows it,” sniffs a telecom attorney who’s had to respond to Schwartzman’s volumes of filings over the past two decades. When not being an imperious attorney, Schwartzman is a teddy bear with one-liners. And then, there’s Jeff Chester, the “human soundbite” as one former FCC person says. Chester came here in 1991, first with Nader, then he started his Center for Media Education and now his reconstituted Center for Digital Democracy. “What does he do? Why is he a part of this?,” sighs a frustrated telecom lobbyist for a network. Well, Chester does the foursome’s PR. But he’s more than he seems, and there’s a point to his constant annoying, provocative and frequently nasty, personalized attacks on FCC folks. Chester is “The Tummler,” according to Schwartzman. The tummler was the guy at the Catskills who went around “stirring things up,” making wild jokes and rude comments if necessary to get a rise out of sleepy guests and prepare them for the main event. “We have a prickly relationship,” Chester says of the foursome. “I don’t want to play the inside game.” Chester drives almost everyone, including reporters, nuts. But we can’t ignore him, and in the end, we quote him. “We all know our place in this scheme,” says Kimmelman. “We all have a role here and we work together,” agrees Cooper. “There’s a perfect division of labor,” says Schwartzman. “Not that we always agree,” adds Chester. Ahh, but there is one place at which these minds have always met. That would be cable TV. The mission statement of Consumers Union says its purpose is to “advance the interests of consumers by providing information about products and services and advocating a consumer point of view.” But one could be forgiven for assuming their mission statement read: to make life hell for cable companies. However, the perpetual gentleman, Michael Willner, CEO of Insight Communications and chairman of the National Cable and Telecommunications Association’s board, says it nicer: “Gene’s a formidable opponent. A very thoughtful guy. We disagree more often than we agree — but he’s not out to be contrarian to every business interest on this planet.” Some of Willner’s members, off the record, would violently disagree. Kimmelman was with the Consumer Federation from 1983 to 1993, which, as Forbes wrote in 1990, was one of St. Ralph’s many sideshows. CFA’s members include the military’s credit unions, auto workers and lots of do-gooders. Their job is to lobby, though that’s a gray area of activity spread widely. In 1995, after a stint with the Senate Antitrust Committee, Kimmelman went to Consumers Union. The two organizations were considered “Frontier Groups” of the Nader empire in the Forbes investigation. When Kimmelman calls Sen. Fritz Hollings (D-S.C.), he doesn’t stay on hold. Mike DeWine (R-Ohio) calls on him frequently to testify, and DeWine’s staff speaks highly of his analysis. McCain’s former telecom guru, Lauren “Pete” Belvin, said “Gene and the senator respect each other. And John likes him a lot…. Gene is the steady-ender for consumer perspectives, and McCain would take an unusual degree of care, listening, testing his view and frequently including his viewpoint in what he said.” Even the NAB has nice things to say about him. Attorney Jeff Bauman says, “Gene is a brilliant guy, and it’s better when he’s on your side. And these guys definitely don’t do this for the money.” (Interestingly, the NCTA, which had indicated that a comment about these groups would be forthcoming, eventually declined to say a word.) It was in 1992, as CFA’s legislative director, that Kimmelman worked with Ed Markey (D-Mass.), Billy Tauzin (then a Democrat from Louisiana) to create and pass the Cable Regulation Bill that even President George Bush I couldn’t veto. Like some taller, silver haired Obi-Wan Kenobi, he had quietly absorbed the ways of his enemies, watching carefully how the telecom folks worked the Hill. After cable was deregulated in the mid-1980s, Kimmelman bided his time, waiting for cable rates to rise and service to drop, and for a groundswell to build. The wave of consumer resentment swept up then-Sen. John Danforth, a conservative Republican from Missouri. The day Danforth complained about cable rates in 1989, Kimmelman says he saw his opening. With Cooper doing research and coalition building, the two worked with Schwartzman and newcomer Chester to turn grassroots complaints from small groups back home, such as teachers and civic associations, into a tsunami of calls and letters to their members of Congress. For added amusement, the CFA publicly endorsed ads for the re-reg bill paid for by the National Association of Broadcasters. “We’d had an unholy alliance with cable over the phone companies,” says Kimmelman, “and then an unholy alliance with the broadcasters over cable.” All, he says, to protect his clients — consumers. But even so, there was division among them — to this day Chester says Kimmelman made a mistake pushing for retrans. “And consumers and others are paying for it now.” Ironically, Nader himself wasn’t thrilled with his protégé, Kimmelman, and complained to The New York Times in 1992 that Kimmelman was too clever by half. Pointing out that retransmission consent could add as much as $1 billion to cable operators’ costs and push up cable rates, Nader said, “This is what happens when you outmaneuver yourself.” St. Ralph went on to call Kimmelman a “hybrid” consumer advocate. Rather presciently, Nader explained that as cable raised its rates to pay for retrans, “The more money cable gets, the more revenue the broadcasters can demand.” The permanent dealer, Kimmelman shocked everyone last year when he came to the aid of former high school classmate Charlie Ergen and pushed hard to support the EchoStar-DirecTV merger. DeWine even noted at a hearing that in all the times he’d had Kimmelman testify, he’d never heard him support a merger before. Kimmelman, Schwartzman explained, hates the cable companies raising rates, and if it took a monopoly of Ergen and EchoStar to stop them, he’d support it. A less sanguine view is that Kimmelman secretly prefers large monopolies that can be regulated and controlled, and forced to concede various agreements for his consumers. Another running riff is that Kimmelman has turned up at FCC hearings with his pancake makeup on, ready for his close-up. But, says a supporter, that’s part of his job. Schwartzman’s bona fides at the United Church of Christ make him less vulnerable to complaints about his principles. The UCC case against the segregationist broadcaster was a tough battle, as was the 1992 act — perhaps the last great victory. But there was SHVIA, the Satellite Home Viewer Improvement Act, notes Kimmelman. And Schwartzman is still alive with an Appeals Court case over his bid last year to make AOL Time Warner reveal its access agreement with Comcast — he lost at the FCC but has hopes for the court, which is expediting the matter. In addition, Schwartzman helped stop the Federal Trade Commission from losing its role in media mergers when Hollings was still in power — in fact, one version of an FTC commissioner’s statement in 2002 bore the clear marks of Schwartzman and Chester’s draft. “That we lose more than we win these days is a true and fair comment,” says Schwartzman. “But some of our greatest accomplishments are not visible, such as the things we keep from happening. I wouldn’t keep doing this if it were a total waste of time.” “When I retire I want to be Andy Schwartzman’s assistant, because he is having more fun than anyone in this industry,” says Preston Padden, Disney’s chief Washington lobbyist. Padden, and other media types such as Tribune’s Shaun Sheehan, say that public interest groups are necessary, and that Schwartzman is a brilliant dude. In fact, former FCC Chairman Bill Kennard recently joined Schwartzman’s board of directors. “Andy is more effective because of his willingness to involve himself in industry groups and work for a compromise,” says Kennard. He notes that Schwartzman helped draft some of the FCC’s briefs to the Appeals Court. However, Schwartzman’s former assistant lawyer, Gigi Sohn, who now has her own organization, Public Knowledge, says these groups “need a new paradigm to deal with the changing media landscape if they’re going to have enough impact.” For instance, she notes that CU is ready to oppose the broadcast flag plan to thwart digital piracy because it may not work. “Show me a real problem first, before you attack it.” Kimmelman and Chester constantly attacked Kennard, even on issues on which one would have assumed they were in sync. Kimmelman says Kennard reached for too little, attempted “little” projects that mattered politically to Kennard but didn’t deal with huge issues of telecom consolidation. But Kennard says Kimmelman’s agenda wasn’t with the poor and disadvantaged. “Gene Kimmelman represents middle class consumers, the people who read Consumer Reports and want to save money on refrigerators, cameras and cable rates. “Whenever I fought battles for the forgotten consumers of America — my efforts to bring the Internet to kids in inner city schools or to provide basic phone service to Indian reservations,” says Kennard, “Gene not only wasn’t there, he was an adversary. It is a missed opportunity for Consumers Union.” And he notes, “Had we listened to Gene and regulated cable rates, we would still be waiting for the cable television industry to invest in residential broadband.” What of the latest charge that the foursome are refusing to work with another chairman, Michael Powell, because they have Powell’s ankle-biter, Commissioner Michael Copps, on their side? Schwartzman answers, “We’ve had our suggestions blown off by Ken Ferree [head of the Media Bureau]. We’ve asked for a meeting with Powell.” The people close to Powell think they no longer want to really compromise but just do a public jihad against the Powell ownership actions. Copps is said to be quite happy with their efforts to publicize his push to hold more media ownership public hearings, and he says they are “indispensable — 95% of the views you hear at the FCC are those of industry. These views are absolutely critical. But without CU, CFA, MAP and the rest, the vast majority of Americans who aren’t telecommunications and media executives would have virtually no voice here…. Their commitment to the public interest can only be questioned by those who are frustrated with their effectiveness.” Meanwhile, back to Kimmelman’s modest proposal for hobbling Murdoch: Five telecom lawyers with retrans knowledge had the same reaction. Congress won’t act. But, said one after a pause, “You know, that’s a hell of an idea. If he gets the cable people on board, Congress might have to think about it.” And if he gets them on board, it will be just one more night of sleeping with the enemies of his enemy. Thank God for king-sized beds. Where does these guys’ money come from? It’s not much of a secret and, contrary to the mullings of media moguls, it’s no conspiracy either. Consumers Union had a revenue of roughly $151 million in 2001 — much of it from its magazine Consumer Reports; the rest came from foundation grants and investments. It says it accepts zero corporate funds — though NCTA folks say their organization has, in the past, contributed to the annual banquet that its sister group, the CFA, holds. Kimmelman’s salary is not disclosed, as he’s not the highest paid at CU, but he said, “Trust me, it’s way under $200,000.” CFA’s revenue in 2001 totaled about $1,008,276. Most came from dues and contributions from its 250 member groups, which includes a diverse mixture of the Arizona Credit Union League; AARP; several electricity cooperatives; an assortment of consumer protection bureaus; the Defense Credit Union Council; the Florida Attorney General’s office; the Navy Federal Credit Union; the Pentagon Federal Credit Union; and the United Auto Workers. Mark Cooper is technically only a consultant to CFA, so his salary isn’t public. He says he gets about a fifth of Kimmelman’s salary. However, Cooper is an expert legal witness in demand for many cases involving electricity, utility costs and telephone issues around the nation and that, he says, is where his main income comes from. The Media Access Project took in $526,000 in 2001 but spent about $600,000. It keeps its donors close, but is said to represent some “high rollers.” Schwartzman was paid $113,900 in 2001, or as he puts it, about 33% of what the average telecom attorney fighting him makes. His smaller donors include Disney/ABC and Tribune Corp. And then there’s Jeff Chester of the Center for Digital Democracy (formerly the Center for Media Education). Its minimal budget is about $300,000, almost all from foundations, and he made $82,000 last year.