As City Councilman Bill Greenlee recently fought to pass a bill mandating that some companies offer employees paid sick leave, he got a lesson in how Philly’s largest businesses feel about such regulations. One lobbyist, says Greenlee, broke it down for him: The lobbyist “said to me, in a frustrated manner, ‘Dammit, we don’t want you to tell us what to do,’” Greenlee recalls. “I think that’s really what [the resistance to paid sick leave] is all about.”
Leading the charge under that banner was Philly’s highest-grossing company, Comcast. Last year Comcast spent $108,429.36 on Philly lobbyists, primarily targeting paid sick leave. Since Comcast is believed to already provide paid sick leave to most of its employees, critics theorize that the company wants to make another point — that it can do what it pleases.
And it often does, flexing its political might at all levels of government, from City Council to Pennsylvania’s General Assembly to the United States Congress. These tactics have won Comcast millions of dollars’ worth of government largesse and soft-touch regulation, and supplied supportive politicians with generous campaign contributions. But consumer advocates say we’re getting the short end of this deal.
They point, in particular, to 2011, when the Federal Communications Commission (FCC) approved Comcast’s mammoth and controversial merger with NBC-Universal. Critics argued that the combination of Comcast, the country’s largest cable and Internet-service provider, and NBCU, a major content producer, would allow the company to shut out rival content producers and distributors.
“Telecommunications policy in this country is the story of monopoly, concentrating power and wealth in the hands of a few. Ultimately, consumers lose,” says Todd O’Boyle, of the good-government group Common Cause. “Comcast, as the nation’s largest cable provider, holds the cards. They name their own terms with consumers and, too often, with regulators.”
Nowhere was merger support stronger than in Philadelphia, where then-Gov. Ed Rendell said it would bring “prestige” to the city and Mayor Michael Nutter gushed that “any announcement that shines a positive national spotlight on Philadelphia can only be good news for this city and for all Philadelphians.”
U.S. Rep. Bob Brady led 15 of Pennsylvania’s 18 House members in signing a letter to the FCC, drafted by Comcast lobbyist (and former chief of staff to Sen. Arlen Specter) David Urban, promoting the deal. It would be, Brady’s chief of staff suggested to the Inquirer, “congressional malpractice to not help a major employer and taxpayer [in the state].” Rep. Allyson Schwartz signed, as did Rep. Chaka Fattah, who also joined a group of black and Hispanic lawmakers urging approval.
But the company’s longstanding opposition to an open Internet made consumer advocates wary. In 2009, Brady, whom the Sunlight Foundation calls the “Congressman from Comcast,” circulated a letter, also signed by Fattah and Schwartz, criticizing the FCC’s attempt to enforce net neutrality, the principle that Internet providers should treat all information passing through their pipes equally. In 2008, the FCC sanctioned Comcast for blocking access to applications like the file-sharing site BitTorrent, though its decision was overturned after Comcast sued.
The political pressure to approve the merger was strong. Comcast spent $19.6 million on federal lobbying in 2011 and its employees and PACs made $5.1 million in contributions to PACs, parties, candidates and third-party groups during the 2011-2012 election cycle, according to the Center for Responsive Politics. In 2009, Comcast also made $400 million in politically savvy (and tax-deductible) charity donations to win the support of nonprofits and politicians, according to communications-law expert Susan Crawford’s new book Captive Audience, which chronicles the rise of telecommunications monopolies.
In 2011, the FCC voted to approve the merger by a four-to-one vote. Comcast soon hired one of those “yes” votes — Republican Commissioner Meredith Attwell Baker — as senior vice president of government affairs. When Seattle-based Reel Grrls criticized the move on Twitter, Comcast terminated donations to their teen film camp. The company later apologized.
Commissioner Michael Copps, who cast the sole dissenting vote, complained the deal would not only prompt the harmful “cableization of the open Internet” but further undermine American journalism. Copps failed to secure a condition to “beef up the news operation at NBC,” and argued that there is “nothing in this deal to address the fundamental damage that has been inflicted by years of outrageous consolidation and newsroom cuts. … Investigative journalism is not even a shell of its former self. All of this means it’s more difficult for citizens to hold the powerful accountable.”
Merger critics’ fears were soon realized. In 2012, Comcast was accused of privileging its own Xfinity video-streaming service over competitors like Netflix, by exempting Xfinity use on the Xbox console from Comcast customers’ 250-gigabyte monthly data cap.
In February, Comcast’s profits and share price soared after the company announced it would pay $16.7 billion to buy the final 49 percent of NBC-Universal from General Electric.
Comcast, which contended that the merger would give consumers greater access to content, asked City Paper to submit written questions and then declined to answer them.
The Comcast Center became the city’s tallest building when it opened in 2008, its 58 stories hailed by then-Gov. Ed Rendell as a “wonderful shot in the arm for Pennsylvania and for Philadelphia.” The benefit, he said, of “being home to one of the world’s leading technology, communications, entertainment and media companies” is “incalculable.”
This boon wasn’t free. The state gave $42.75 million in grants and other assistance, while the city’s 10-year-property-tax-abatement program resulted in a tax break of $28.8 million from 2008 to 2013. In 2008, Rendell and Comcast Center owner Liberty Property Trust also (unsuccessfully) lobbied the Republican-controlled state legislature to make the Comcast Center a Keystone Opportunity Improvement Zone, which would have exempted the property from many state and city taxes.
Comcast may also benefit from evading the corporate state income tax. More than 1,000 Comcast subsidiaries and holding companies are registered in Delaware, the United States’ most popular on-shore tax haven. Though Pennsylvania corporate-tax payments are not public, Comcast paid an average nationwide corporate-income-tax rate of just 3.4 percent from 2008 to 2010, according to a 2011 study by the Institute on Taxation and Economic Policy. The average state corporate-income-tax rate is 6 percent, and Pennsylvania’s rate is 9.99 percent.
Though business leaders complain about Pennsylvania’s second-highest-in-the-nation corporate-income tax, 73 percent of corporations operating in the state paid no corporate-income tax in 2010, according to Department of Revenue data. Harrisburg Republicans have resisted efforts to close the “Delaware Loophole” like mandating combined reporting of subsidiaries.
Comcast has opposed combined reporting legislation in Pennsylvania and Maryland, and has spent $455,635 lobbying in Harrisburg since 2007, including on matters related to “taxation.” According to the National Institute on Money in State Politics, Comcast hired 46 Harrisburg lobbyists during 2011-’12 alone. “The fact that Comcast has been so prominent in seeking to prevent the state from enacting combined reporting is a strong indicator to me that they’re engaging in some kind of tax-sheltering activity that would be nullified by combined reporting,” says Michael Mazerov of the left-leaning Center for Budget and Policy Priorities.
Asked about the grants and tax credits the company received, a Comcast spokesperson referred CP to a June 2008 Econsult study, which found that the company and Comcast Center made more than $2 billion in total expenditures within Pennsylvania during construction, and paid $56 million in local and state taxes. The project created $1.6 billion in ongoing annual expenditures, and $70 million in state and local tax payments. The commonwealth, according to the study, reaped “more than six times its initial investment” in tax revenues.
As a point of comparison: In 2011, chief executive Brian Roberts made $26.9 million. The majority of trips taken by one $40 million company jet over six months in 2010, according to a 2011 Wall Street Journal investigation, were to Martha’s Vineyard and Palm Beach, where Roberts has homes, and to other resorts.
Comcast executive vice president David Cohen has parlayed local influence into national power. He began as the disciplined superego chief of staff to Mayor Rendell’s dangerously free-spirited id in the 1990s, and now serves as self-described “consigliere” to Brian Roberts and co-founder Ralph Roberts.
Cohen, who according to the Washington Post makes $15 million per year (not including all stock holdings), makes the public case for leaving a benevolent Comcast unregulated and unaccountable — and it’s a tough case to make.
The company has long had a reputation for sharp elbows, and currently faces a class-action federal lawsuit accusing it of employing anti-competitive practices to force small competitors like cable company RCN out of the Philadelphia market, including by denying access to lucrative Comcast-owned sports programs. RCN also accused then-Mayor Rendell and City Council of delaying approval of its plan.
[UPDATE: On Wednesday after CP went to press, the Supreme Court denied Philadelphia Comcast customers the right to proceed in their class-action suit in a politically divided 5-4 decision, a ruling that will more broadly limit plaintiffs' access to the courts.]
“You will have to search long and hard in this city to find anyone who will say anything bad about Comcast or the Robertses,” Rendell, who counted on the family’s support for his first mayoral campaign, told the Los Angeles Times in 2001. This is perhaps not true among its customers.
Comcast and Time Warner Cable each have near-monopoly control over cable television and broadband Internet in their respective U.S. markets, and thus have little incentive to lower the price of Internet service or bundled cable television packages, or to expand the fast-but-expensive-to-build fiber-optics networks common in Europe. Low-income Americans on the losing edge of the digital divide get the rawest deal. In Philadelphia, four of every 10 people have no Internet access at home.
Cohen, however, has called broadband access “the civil-rights issue of our time,” and touts Internet Essentials, a program initiated as a condition of the merger that provides reduced-price Internet and computers to the parents of low-income children, as a gesture of corporate goodwill.
But in November, Cohen let it slip to the Washington Post that Comcast had come up with Internet Essentials prior to the merger and then held it back to preserve a bargaining chip with the FCC.
Consumer advocates criticized Internet Essentials’ slow roll-out in Philadelphia, and some call it a ploy to abuse privileged access to schools and community groups as a way to lure in new customers. Though Comcast says staff and volunteers are separated from the company’s main sales staff, applicants with past-due Comcast bills and even current or recent Comcast customers are not eligible.
“For more than 80 percent of Americans, the only choice for quasi-world-class Internet access is their local cable monopoly. We’re getting second-class service at very high prices with no real oversight,” says author Susan Crawford, a former special assistant to President Obama on tech policy who consumer advocates want nominated to the FCC. “Within our borders we’re creating two Americas: a world in which some people can get access to world-class educational resources and health care and new jobs, [while] … a third of Americans don’t even have a wired connection at home.”
Verizon, which provides a FiOS fiber-optic Internet service in Philadelphia and a few other markets, is a paper tiger of a competitor. In 2011, the company announced that it would stop building out its fiber infrastructure just as it struck a deal whereby it and leading cable providers will market each other’s services: Verizon selling Comcast cable, Comcast selling Verizon’s wireless. By 2015, Comcast will even be able to sell its own branded mobile service as part of the deal.
In September 2012, Philadelphia television viewers were treated to a half-million-dollar advertising campaign funded by the Republican State Leadership Committee accusing Democratic state attorney general candidate Kathleen Kane of being “soft” on rapists during her time as assistant district attorney in Lackawanna County.
The cases cited, however, were not actually handled by Kane, and Republican candidate David Freed hurried to distance himself from what Factcheck.org called “one of the most blatantly false attack ads of the political season.”
But Comcast, like other corporations that fund the RSLC, received less scrutiny. The company has donated $730,531 to the group since 2008, according to the Center for Responsive Politics.
In July 2012, Gov. Tom Corbett headlined a fundraiser for the RSLC held at the Comcast Center, according to the Daily News. The RSLC had long since become a central cash nexus between state Republican politicians and interested corporations. Eight years earlier, the group donated $480,000 to Corbett’s campaign for attorney general, most of it from Aubrey McClendon, who was then chief executive of Chesapeake Energy Co. and would grow into a titan of natural-gas drilling in the state.
Comcast is also active in American Legislative Exchange Council (ALEC), a conservative alliance of legislators and corporations that advances legislation in state capitols nationwide. According to the liberal Center for Media and Democracy, the company sits on ALEC’s Communications and Technology Task Force, which has opposed federal broadband funding. Comcast has been accused of thwarting federal broadband investments in cities nationwide in order to stifle competition.
In 2009, Philly’s grassroots Media Mobilizing Project protested Comcast’s filing of comments with the National Telecommunications and Information Administration ragarding the city’s Digital Philadelphia bid for a stimulus-funded broadband grant. Comcast also filed comments with regard to other cities’ applications.
Comcast denied charges that it was advocating against the applications, but Cohen had told Bloomberg News that they would oppose “applications to provide service in areas where there is already broadband service.”
Ultimately, Rendell decided not to endorse the broadband infrastructure portion of the grant, drawing speculation that Cohen, one of Philadelphia’s most powerful Democrats, had carried the day.
Earlier this year, Cohen endorsed Corbett for re-election and held a fundraiser for him at the same Mount Airy home where he had hosted Obama in 2011. Some wondered whether the surprise endorsement signaled a lack of Democratic donor enthusiasm. In reality, it simply made the raw political calculus that dictates corporate power unambiguous. Cohen, according to the Inquirer, raised $200,000 for Corbett, nearly half the sum he raised for the president.
Cohen has extended his support to politicians on both sides of the aisle, donating to Republican state Senate Majority Leader Domenic Pileggi as early as 2007, and to Republican House Speaker Sam Smith since 2004. From 2003 to 2012, Comcast has given $11 million to state-level candidates nationwide, including $1.26 million in Pennsylvania, according to the National Institute on Money in State Politics.
Comcast, of course, is a very successful business. And for Philadelphia’s most outsize corporate citizen, politics is just a continuation of business by other means.
Follow him on Twitter: @danieldenvir
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