Did McCain have a conflict of interest on cable pricing?

Deseret News (Salt Lake City), Mar 8, 2005 by Sharon Theimer Associated Press

WASHINGTON -- Sen. John McCain pressed a cable company's case for pricing changes with regulators at the same time a tax-exempt group that he has worked with since its founding solicited $200,000 in contributions from the company.

Help from McCain, who argues for ridding politics of big money, included giving the CEO of Cablevision Systems Corp. the opportunity to testify before his Senate committee, writing a letter of support to the Federal Communication Commission and asking other cable companies to support so-called a la carte pricing.

McCain had expressed interest in exploring the a la carte option for years before Cablevision advocated it but did not take a formal position with regulators until after the company's first donation came in. Cablevision is the eighth largest cable provider, serving about 3 million customers in the New York area.

The pricing plan is opposed by most of the cable industry. It would let customers pick the channels they want rather than buy fixed-price packages. Supporters, like McCain and Cablevision, say it would lower prices for consumers, but recent congressional and private studies concluded it could make cable more expensive.

McCain's assistance in 2003 and 2004 was sandwiched around two donations of $100,000 each from Cablevision to The Reform Institute, the tax-exempt group that touts McCain's views and has showcased him at events since his unsuccessful 2000 presidential campaign.

The group also pays $110,000 a year to McCain's chief political adviser, Rick Davis, who ran the senator's 2000 presidential campaign. Cablevision's money accounted for 15 percent of the institute's fund-raising in 2003, according to its most recent tax filing.

The Arizona Republican said he saw nothing wrong with the group raising money from a company whose issue he championed, because the donations didn't go to his re-election campaign. McCain and documents provided by his office show he has supported a la carte pricing since at least 1998, well before Cablevision advocated it.

"If it was a PAC (political action committee) or if it was somehow connected to any campaign of mine, I would say to you, that's a legitimate appearance of conflict of interest. But it's not," McCain told The Associated Press.

"There's not a conflict of interest when you're involved in an organization that is nonpartisan, nonprofit, nonpolitical."

Specialists on political ethics, who usually applaud McCain's efforts to overhaul the campaign finance system, said they didn't see any distinction.

"I think there is an appearance issue any time you have a company or an interest giving large donations to any organization associated with a member (of Congress)," said Larry Noble, the former chief lawyer for federal election enforcement who now heads the Center for Responsive Politics.

Charles Lewis, a longtime ethics watchdog, said McCain's case shows "there are different ways for purveyors of influence to show their gratitude and express their friendliness. And it's not just PACs, it's not just campaign committees."

Davis acknowledged he went to New York and personally asked for the donation from Cablevision chief Charles Dolan after hearing from another donor that Dolan might be willing to give. The solicitation occurred one week after Dolan testified before McCain's Senate Commerce Committee in May 2003 in favor of the a la carte pricing. The company made its first $100,000 donation in July 2003.

The senator wrote a letter to the Federal Communications Commission chairman advocating Cablevision's position in May 2004 and quoting the company's chief. McCain also sent letters to other cable companies, urging them to follow Cablevision's lead and support a la carte pricing.

Cablevision gave a second $100,000 donation in August 2004. Twelve days later, McCain wrote Dolan about the pricing issue, urging him to "feel free to contact me to discuss these issues further."

"Thank you for sharing your views on potential reforms to address rising cable rates, including the merits of an a la carte pricing option for consumers," McCain wrote Dolan on Aug. 18.

McCain said he was involved in the issue well before Cablevision started pushing a la carte pricing, and that his goal was to help consumers.

"I have been fighting the cable companies for years on the issue of cable rates, and I, after numerous hearings, came to the conclusion that we should not force people to pay for programs that they don't want to see, and that's why I supported a la carte."

McCain continued pushing the FCC to adopt the policy favored by Cablevision even after the Government Accountability Office, Congress' main auditing arm, concluded such a system might lead to higher prices.

McCain, who requested the study, said he considered its methodology flawed because the audit looked at a la carte pricing in isolation rather than as one of several options.

Craig Moffett, a cable analyst at Sanford C. Bernstein & Co. in New York, said his firm also studied the plan.