AT&T Buys Nonprofit Support for its Anticompetitive Merger

Politico and the Washington Post follow the money

It ought to raise eyebrows when groups like the NAACP, GLAAD, and the nation’s largest teachers union lobby to approve a cellphone company merger.

Fortunately it does at Politico, which has a good story looking at how AT&T’s monopoly bid is getting public support from nonprofits that have nothing to do with telecom.

Well, that last bit’s not quite right. I should say that the only thing they have to do with telecom is that they get big grants from AT&T. And Politico’s Eliza Krigman reports that AT&T’s money talks.

Here’s how GLAAD, the Gay & Lesbian Alliance Against Defamation, explained why it came out (so to speak) in favor of an AT&T/Verizon duopoly in cellphone service:

GLAAD — which has received $50,000 from AT&T — recently backed the deal as well, saying it had “the understanding that the merger will increase functionality and speed, thus growing engagement and improving the effectiveness of the online advocacy work that is advancing equality for all,” a GLAAD spokesman said.

And here’s a good example of a grant recipient regurgitating AT&T talking points:

The Columbia Urban League received a $25,000 grant from the AT&T Foundation in 2009 to provide “underserved populations with resources to help their children achieve academic success,” according to the foundation’s IRS Form 990.

On May 27, the group’s president and CEO, James McLawhorn, wrote to urge the FCC to approve AT&T’s acquisition of T-Mobile.

“In our work, we are often witness to the obstacles minority Americans face when trying to access mobile broadband and its associated benefits. This deal would help extricate the barriers keeping our members from attaining these benefits, working towards the end of the digital divide,” he wrote.

This story builds off a Washington Post story from a week ago, and it also had reported some cringeworthy quotes:

AT&T-sponsored Virginia Asian Chamber of Commerce urged the FCC to quickly approve the deal, saying that as a group “striving to create bridges between cultures, we look forward to the foundation that this merger will create and the opportunities that it will give the public.”

The Post reported much of the same stuff but it was unfocused and really could have used some better editing. Here was its “no kidding” headline:

AT&T ramps up lobby for proposed T-Mobile merger

And the lede was all wrong, starting off with a basically irrelevant fact about AT&T opponents and following it with unspecific dullness:

Opponents of AT&T’s proposed merger with T-Mobile filed last-minute petitions to federal regulators Tuesday in hopes of blocking the $39 billion mega-deal. But they are going up against a deep-pocketed telecom giant that’s just getting started on its own campaign to influence the decision.

Compare that to Politico’s headline:

AT&T gave cash to merger backers

And its lede:

AT&T is lining up support for its acquisition of T-Mobile from a slew of liberal groups with no obvious interest in telecom deals — except that they’ve received big piles of AT&T’s cash.

No contest.

Politico’s focus is much sharper here and its headline and lede make you actually want to read the piece, unlike the Post’s. The nonprofit-donations issue is the bulk of the Post’s story—eight of its fourteen grafs—but the paper doesn’t get around to focusing on the nonprofit-donations issue until the fifth paragraph, and even that is problematic:

Aside from money spent directly on lobbying government officials, industry observers say, AT&T is receiving support from several political leaders, trade groups and organizations such as the NAACP and at least one affiliate of the National Urban League. All have direct financial ties to the telecom giant.

This should have been the lede, but it shouldn’t have been sourced to “industry observers.” The facts are the facts.

While Politico does a better job of getting to the heart of the story, it does a little burying of its own. This is good reporting and it should have been up higher than the 22nd and 23rd paragraphs:

To build support, AT&T employees and consultants have been making personal visits and calls as well as holding luncheons.

Out of about a dozen supporters interviewed by POLITICO, the vast majority said they decided to issue a statement supporting the AT&T/T-Mobile deal after being approached this way.

Politico also has some interesting analysis on where AT&T is focusing its attention:

The company has put much of its efforts into winning support from left-leaning groups like labor unions, environmentalists and minorities. Support from these groups may give pause to Washington Democrats who might otherwise rail against wireless industry consolidation.

And it is good to point out that AT&T has some odd nonprofit supporters that aren’t getting checks from them (at least not yet, anyway), including the National Black Farmers Association, which says it just wants “expanded service,” and the Sierra Club, which says that it views mobile broadband, which AT&T is promising to expand, “as core to the green-energy economy.” Whatever you say, Sierra Club.

While the nonprofits are craven, AT&T is cynical. Politico reports that its foundation, which doles out $62 million a year, is actually headed by its chief lobbyist.

Look, just because an organization gets money from somebody doesn’t mean it’s a mouthpiece of its donors. CJR is a nonprofit and The Audit wouldn’t be here without donations from rich people and organizations that have their own interests (and it goes without saying that newspapers and magazines wouldn’t be here without advertisers who have their own interests). I think we handle those conflicts well.

But no one thinks this is ideal. In journalism we say “follow the money” for a good reason, and that’s why it’s important to see stories like this, particularly considering the concentration of wealth and corporate power that’s occurred over the last three or four decades. It’s worth noting that this anti-competitive merger is emblematic of these trends, particularly the latter, and would concentrate three-fourths of an enormous and critical market in the hands of two companies.

These nonprofit groups may think that writing in support of something that doesn’t affect their core mission isn’t really selling out. But it sure is, and it affects their credibility on the issues that really matter to them.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,