What does advocating for gay rights or the environment or civil rights have to do with AT&T Inc.'s proposed $39 billion merger with T-Mobile USA Inc.? As letters praising the deal poured into the Federal Communications Commission from groups having nothing to do with telecommunications or antitrust, more and more of their members have begun asking that question.
Though both sides usually deny it, corporations frequently ask recipients of their philanthropic largess to weigh in on pet issues or mergers. The trend intensified last year during Comcast Corp.'s successful acquisition of NBC Universal Inc., and it's reaching new heights as hundreds of organizations answered the call for AT&T. Now the members of these groups are becoming more unhappy about it.
When the Gay & Lesbian Alliance Against Defamation, or GLAAD, submitted its letter of support to the FCC, critics pounced almost immediately. "What is a gay rights organization doing weighing in on a phone company merger?" John Aravosis of Washington wrote on AmericaBlog Gay one day after GLAAD's letter became public. "My sexual orientation has exactly zero to do with my phone service. Well, that's not entirely true ..."
The rest of the post, which more than 200 people "recommended" via Facebook, gets to the heart of critics' complaints: that GLAAD and others are engaging in quid pro quo. "There's a lot of talk already that this is happening because AT&T underwrites the GLAAD awards, because the company has made monetary grants to GLAAD and has a member on GLAAD's board," he continued. "It certainly looks that way." GLAAD did not respond to a request seeking comment.
The monetary connection between most of these groups and AT&T -- like Comcast before it -- is strong. Almost all of the groups' websites bear AT&T's logo and list AT&T as a funder or have an AT&T executive on the board. But how companies use these ties has become more sophisticated, say nonprofit leaders and lobbyists.
Known as third-party outreach, companies have forged partnerships with organizations advocating for minorities, the disabled, the poor or other disadvantaged communities for decades. The interaction helps build brands with specific demographics, bolsters their philanthropic bona fides and fulfills their civic engagement principles. But until five or six years ago, it ended there, according to one former nonprofit executive.
The telecom companies were the first to realize that they could seek more return on their investment, and they started asking organizations they fund to support them in the fight over net neutrality. "It established the benchmark for the business model going forward," the source says.
That created a rift among minority organizations, and between them and consumer groups. The divisions grew with the Comcast and AT&T deals.
AT&T has been meeting with leaders of influential minority nonprofits, one ethnic group at a time. For example, on May 3 at the "AT&T innovation center" in Washington, AT&T conducted an "Asian-American executive briefing" that included a PowerPoint presentation touting the merger's "benefits to [the] Asian-American community" and the company's diversity and labor track record: "40% of our workforce is female and 39% are people of color -- we have been acknowledged ... for our commitment to diversity," one of the slides read.
The presentation was followed by lunch and remarks from Anne Chow, a senior vice president who sits on the boards of two prominent Asian-American groups: the Asian American Justice Center (which has not commented on the merger) and the Asian & Pacific Islander American Scholarship Fund (which supports it).
Only one of the approximately 20 Asian-American groups that filed comments with the FCC opposed the merger. Most cited AT&T's commitment to diversity and ethnic communities as supporting factors. We "applaud the strong partnerships AT&T has formed with the Asian American community," the Japanese American Citizens League wrote. "It is our belief that the combined company would expand and enrich economic, educational and civic engagement opportunities in the Asian Pacific American community through expanded wireless coverage."
The letters from scores of Latino and African-American groups followed the same pattern.
AT&T, like many corporations, is smart about its lobbying, says Harold Feld of Public Knowledge, a consumer group opposed to the deal. "They spread the money around and understand that the messenger matters," which is why they send certain people who they think will be well received by a particular group to address it, he says.
Although minority groups have embraced the deal, almost all of their natural allies on Capitol Hill have so far kept their powder dry. In terms of lobbying and campaign donations, AT&T is a "heavy hitter," according to the Center for Responsive Politics, a watchdog group that tracks money in politics. The telecom has spent at least $14.7 million on lobbying every year since 2005 and has donated $46 million to federal campaigns since 1989.
It donates to key members of Congress, charities associated with those members and the Congressional Hispanic and Black caucuses. Nonetheless, members have not rushed to endorse the deal. In fact, three key African-American lawmakers asked AT&T some of the toughest questions when the House Judiciary Committee held a hearing on the deal in May. Michigan's John Conyers Jr., the ranking Democrat on the panel and a senior member of the Congressional Black Caucus, held a press conference blasting the deal a day before the hearing.
Brent Wilkes, executive director of the League of United Latin American Citizens, says he understands why most Latino members of Congress have not immediately weighed in. Many civil rights organizations that endorsed the deal focused on job creation and broadband expansion in minority communities. Congress has bigger issues to examine about this merger and a wider constituency to represent than groups such as his, he says.
"Telecommunications companies have been financially supportive of these organizations [for many years], as they should be," says Joe Torres of Free Press, a media reform group. "A lot of the money they give to these organizations of color really does good work. The donations are a factor for some groups. And a lot of groups don't really understand the issues. The companies say, 'This will be good for the community,' and they have no reason not to believe them."
Ellen Miller, executive director of the Sunlight Foundation, a government watchdog group, says these nonprofits blindly support their corporate donors at their peril. "The reputational risk is huge," she says.
Furthermore, it is debatable how effective the strategy of demonstrating wide and diverse "community support" for a merger will be in this case now that the public, the FCC and the Department of Justice have seen it deployed numerous times before.
"You get seemingly random groups that would have no particular interest in the issue suddenly appearing in written comments for AT&T," she says. "That the money doesn't influence them -- it doesn't pass the straight-face test."