A lobby the media won't touch.

• Author: Rowse, Arthur E.
• Position: The media lobby itself - Cover Story - Industry Overview

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...