Thursday, August 11, 2005

Powell's Golden Parachute

Here's the way to look at the news that former FCC chairman Michael (son of Colin) Powell FCC -- who preached the mantra of free markets and money when it came to regulating media ownership -- is joining a big equity operation with media-related holdings. This piece is written by Jeff Chester, executive director for the Center for Digital Democracy CDD whose upcoming book "Digital Destiny" reviews Powell's FCC career. For the record, Chester is one of my favorite media watchdogs and a colorful and combative consumer advocate in an unfriendly world of big media monopolies. (He is also famous for giving great quote.)

"Today's announcement that Michael K. Powell has become a "Senior Advisor" at Providence Equity Partners is evidence once again that the "revolving door" between the FCC and the very industries it oversees should be slammed shut. Powell joins his fellow former chairs Richard Wiley, Mark Fowler, Dennis Patrick, Reed Hundt, and William Kennard who went from the FCC to work in the media and telecommunications industries. With lucrative industry employment ahead of them, FCC chair's (and most Commissioners) have a built-in conflict of interest. They simply can't take the independent positions necessary to fulfill their responsibilities to the public-and to the public interest. One of Powell's new duties, according to Providence, is to "advise the firm onŠregulatory issues in the media" industries.

Powell's `golden parachute' into the "preeminent private equity firm in the global media, communications, and information industries" comes as no real surprise. Throughout his tenure, Powell was an avid believer in the mystical forces of the commercial marketplace. He would spend more of his time quoting economist Joseph Schumpeter (who developed the theory of "creative destruction") than taking an honest hard look at the public interest consequences of media business trends. During his watch at the FCC, he relied on market forces as his primary touchstone, supporting further consolidation in the broadcast, cable, and telephone industries. Powell ignored growing public concern about media consolidation, including its negative impact on journalism and content diversity.

But the public paid dearly for Powell's term at the FCC. Aside from setting the stage for more media mergers and broadband consolidation, his uncritical faith in the market blinded him to major problems with some of the largest companies under his purview, such as with Adelphia, WorldCom and Enron (recall its fiber optic subsidiary).

In the "free market" economy of Washington DC and Wall Street, being a political `quick change' artist and quickly going to work for an industry one once oversaw is considered a mark of success. But the practice does a disservice to the public, including workers, investors and competitors. Michael Powell helped spark one of the largest public protests against the FCC. Perhaps his example of a former public official cashing-in will inspire much needed reforms. Chairs and Commissioners should pledge that they will work in the nonprofit sector for a reasonable period after the serve in office. Otherwise, there will always be the concern that-like Michael K. Powell-his so-called high-minded pro-big Media philosophy was simply part of his resume for a highly-paid post-Chairman's gig

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