Small-town firm enters the political big leagues | Blogh


Friday, October 26, 2012

Small-town firm enters the political big leagues

Posted By on Fri, Oct 26, 2012 at 2:16 PM

The Armstrong Group is based in small-town Pennsylvania. But it may offer a template for how big-league politics will be played in the near future.

As I wrote here last week, the Butler-based firm's cable operation -- which serves Pittsburgh's hinterlands and markets in several other states -- recently began offering the controversial "documentary" 2016: Obama's America to its viewers for free. But while the company maintained that the giveaway wasn't part of a political agenda, it may be just the beginning of Armstrong's donations to the conservative cause.

Earlier this week, the Sunlight Foundation identified Armstrong as one of the most generous recent donors to GOP-related "Super PACS" -- PACs that are not directly tied to a political candidate, but that can spend unlimited funds on politically themed advertising. In September alone, the Sunlight Foundation reported, Armstong donated $1.3 million to American Crossroads, the super PAC cofounded by conservative powerbroker Karl Rove. Records indicate that the donation took the form of "in-kind cable access" -- suggesting that in a single month, American Crossroads received $1.3 million in free time to run ads like those viewable here.

Armstrong spokesman Dave Wittmann, who spoke with me last week, did not return calls for comment. (I'll add any response from the company to this blog post.) But given that cable-only ads tend to be cheaper than those running on a major network, "That is a lot of ads," says Kathy Kiely, who co-reported the Sunlight Foundation story. And unlike the free screening of 2016, which subscribers had to choose to view on Armstrong's "on demand" channel, these would be spots viewers didn't intend to see. What's more, their reach extends well beyond Pittsburgh's backwoods. As Think Progress has noted, Armstrong's reach extends into the key battleground state of Ohio, among other places.

Armstrong had never shown up on Sunlight's radar before this month. "I'm from Pittsburgh originally, but I never heard of this group," says Kiely, a Point Breeze native. "What popped out at us was that all the sudden, they had donated more than $1.3 million in a month. They went from zero-to-60 in a flash."

The fact that Armstrong's support came in the form of free ads -- rather than through the direct cash donation most other contributors gave -- also intrigued her.

"It's possible that other organizations have done it, but we haven't seen it," Kiely says. "It seems like a new wrinkle -- at least at this scale. When media executives give, it's usually the traditional way -- by writing checks. Rupert Murdoch has given a lot of money to campaigns, but I don't recall News Corp giving away free airtime like that."

Part of the reason, Kiely surmises, is that News Corporation is a publicly traded company. Stockholders might not mind investing in a business that traffics in right-of-center viewpoints. A company that sacrifices revenue by giving away free ads, however, could be a different matter. But Armstrong, which is privately held, doesn't have those pressures.

(Armstrong execs do support conservatives the old-fashioned way. Since I noted their backing of national-level Republicans in last week's blog post, I've documented tens of thousands of dollars in support to conservatives at the state level. According to state contribution reports, Jay and Dru Sedwick, two of Armstrong's top executives, gave $17,500 to Gov. Tom Corbett in 2010, for example. Along with Jay Sedwick's wife, Linda, they've also contributed more than $37,000 to the state Republican committee since 2008, and $6,600 to state Rep. Daryl Metcalfe. Linda Sedwick has also given $90,000 to the PA Family PAC, a political fund tied to the "family values"-backing Pennsylvania Family Institute. Linda Sedwick appears to be one of the PAC's largest supporters; her $50,000 gift to it this year accounts for almost all of its 2012 revenue thus far.)

Also notable is the fact that Armstrong donated the ad time to American Crossroads, rather than to the Romney campaign directly. Ordinarily, if a broadcaster gives free airtime to a political candidate, a federal regulation known as the "equal time rule" comes into play. That regulation obliges a broadcaster to offer a similar amount of free air time to an opposing candidate. But such rules "only apply to candidates," says Tara Malloy, the senior legal counsel at the Campaign Legal Center. And American Crossroads isn't a candidate -- or even a political party. It's an independent committee, whose activities aren't supposed to be coordinated with a candidate at all. As a result, Malloy says, "Priorities USA [a left-leaning independent group] -- can't demand the same access that American Crossroads is getting."

Armstrong's actions, Malloy says, are completely legal -- and in fact reflect the new legal landscape created by the Supreme Court's Citizens United decision. That controversial ruling has arguably opened the floodgates for corporate involvement in politics. While Malloy says Armstrong's free ad blitz is "unusual," she adds, this is just one of "the unexpected ways in which the Citizens United decision is playing out."

Some firms have gotten burned by getting involved in political controversies: Discount-retailer Target's support for a governor with an anti-gay agenda os one example. But Malloy, like Keilly, notes that a private entity has more room to maneuver. "What you're seeing a lot is rich CEOs or closely-held companies doing this, or places who don't have to worry quite as much about their brand," Malloy says. "Target was a very prominent retailer that was very susceptible to consumer pressure. But if you're in an industry that is less susceptible, there may not be the same kind of downside."

Armstrong isn't a nationally recognized brand like Target, of course, but the firm does encompass a variety of businesses, ranging from the Ponderosa steakhouse to a private-security outfit. When Wittmann spoke with me last week, he noted that that the company does listen to its customers, and that he had spoken to one cable subscriber who was upset by the free 2016 showing. I've since heard anecdotal reports that other customers have threatened to cancel their cable over the giveaway, and the company no longer seems to be offering 2016 for free. We'll have to wait and see whether American Crossroads ends up paying for its time, like everyone else.