Comcast may be harming its reputation by failing to reveal all of its lobbying activities, including its involvement in trade associations and lobbying at the state level, a group of shareholders says in a proposal that asks for more lobbying disclosures.
Comcast’s disclosures for its lobbying of state governments “are often cursory or non-existent,” and Comcast’s failure to disclose its involvement in trade associations means that “investors have neither an accurate picture of the company’s total lobbying expenditures nor an understanding of its priorities, interests, or potential risks from memberships,” the proposal said.
“Comcast’s lack of transparency around its lobbying poses risks to its already troubled reputation, which is concerning in a highly regulated industry, especially given the rise of public Internet alternatives.”
The proposal is on the ballot for Comcast’s June 5 annual shareholder meeting and was filed by Friends Fiduciary, which “invest[s] based on Quaker values” and says it “actively screen[s] companies for social responsibility.” Friends Fiduciary and other investors who joined the proposal collectively hold “over 1 million shares of Comcast stock,” they said.
The shareholder resolution would be non-binding even if it passed. It asks for an annual report disclosing, among other things, “Payments by Comcast used for (a) direct or indirect lobbying or (b) grassroots lobbying communications” and information on “Comcast’s membership in and payments to any tax-exempt organization that writes and endorses model legislation.”
Comcast has been active in lobbying against state net neutrality laws and municipal broadband, which is restricted by laws passed in many US states. The Friends Fiduciary proposal pressures Comcast to disclose more of its state-level lobbying activity.
Comcast’s board unanimously recommended that shareholders vote against the Friends Fiduciary resolution, saying that Comcast “already disclose[s] most of our government lobbying interactions” as required by law. “[O]ur Board believes that the requirements in this proposal are burdensome and an unproductive use of our resources and are not in the best interests of our shareholders,” Comcast said in a rebuttal included in its proxy statement.
Friends Fiduciary acknowledged that its proposal is unlikely to pass. It needs a majority, but “CEO Brian Roberts holds 33.3 percent of the voting shares,” a Friends Fiduciary spokesperson told Ars. Friends Fiduciary has filed similar proposals the past few years and received 19.1 percent of the vote in 2018, up from 16.6 percent in 2017, the group said.
Excluding Roberts’ shares, the proposal received 32 percent of the vote in 2018, the group also said. “We see even proposals that don’t pass as an important barometer of shareholder perspective, and over 30 percent of outside shareholders requesting more transparency from Comcast on their lobbying as a strong statement to the company,” Friends Fiduciary told Ars.
Net neutrality and municipal broadband
The Friends Fiduciary proposal argued that more lobbying disclosures are necessary in part because “Comcast’s lobbying spending is perceived to go counter to its public statements, a sentiment which has only grown given recent debates over net neutrality.” As evidence, the group pointed to a November 2017 Slate article titled “Comcast wants you to think it supports net neutrality while it pushes for net neutrality to be destroyed.”
Separately, Comcast should say how much it gives to Broadband for America, a “group which has been subpoenaed by the New York attorney general in the course of an investigation into the potential fraudulence of some of the 22 million comments submitted to the Federal Communication Commission” during the net neutrality repeal proceeding, Friends Fiduciary said. Comcast is a member of the group.
Friends Fiduciary also argued that Comcast’s secrecy around lobbying could contribute to the rise of municipal broadband networks that compete against Comcast broadband. The shareholder proposal said:
Comcast’s lack of lobbying transparency perpetuates its negative public image and could fuel regulatory backlash or contribute to the rise of municipal broadband, potentially threatening company profitability. In a highly regulated industry providing essential services such as telecommunications, we maintain that careful consideration of reputational risk becomes even more crucial. Municipal broadband has drawn bipartisan support, especially in conservative areas. More than 750 communities in the US have decided to operate their own networks. As one article puts it, “Our desire for better broadband, and our collective disdain for Comcast, tends to be one of the few things capable of bridging the partisan divide.” Comcast’s consistent low rankings in the areas of trust and citizenship speak to the potential for its lack of transparency to impact its future prospects.
State disclosures lag behind federal ones
While Comcast faces strict rules for disclosing federal lobbying activity, its lobbying disclosures are not sufficient at the state level, Friends Fiduciary said.
“Comcast expends significant company resources on lobbying at both the state and federal level in comparison with other companies,” the Friends Fiduciary proposal also said. “Although required at the federal level, state and other disclosures are often cursory or non-existent—meaning that investors have no way of knowing how much the company is spending beyond the federal level.”
Additionally, the group argues that Comcast’s “board oversight structures are insufficient given the volume of Comcast’s lobbying spending.”
By contrast, AT&T “does comprehensively disclose its lobbying expenditures,” the proposal said.
Comcast spent $30.3 million on lobbying at the federal level in 2017 and 2018, “the highest sum in the telecommunications sector and 4th highest sum of all reporting US companies,” the proposal said. Comcast’s spending on lobbying at the state level is also likely significant, given that “Comcast hired 241 lobbyists in 35 states in 2017,” Friends Fiduciary said. But the full extent of Comcast’s state lobbying is unknown, as “[l]obbying disclosure requirements are currently close to nonexistent in 22 states,” the group said.
The shareholder proposal applauded Comcast’s decision to leave the controversial American Legislative Exchange Council (ALEC), but said Comcast should also “disclos[e] the names of and amounts paid to trade associations and other tax-exempt organizations which lobby on the company’s behalf.”
Comcast: Expanding disclosures is too hard
As evidence that it sufficiently discloses political activity, Comcast pointed to a webpage with information on its political contributions—though the page only lists political contributions from 2014 to 2017.
“Because the information that this proposal seeks to be disclosed is generally publicly available in appropriate detail, implementing this proposal would require us to incur unnecessary expense, would divert management attention away from our primary business activities and would raise potential competitive concerns,” Comcast said.
Comcast noted that it files quarterly reports with Congress about its federal lobbying activities and that it follows state disclosure laws.
Friends Fiduciary countered that public availability of Comcast’s federal lobbying spending isn’t enough and that “our proposal asks for more information about state level, trade association, and grassroots spending, all of which are not covered under federal disclosures.”
Comcast’s response also defends its lobbying activities. “For a company in highly regulated industries such as ours, providing information to legislators and regulators and their respective staffs and making sure they fully understand the implications of their policy decisions is a necessary cost of doing business and an extension of our right to petition our government,” Comcast said. “Requiring a company to go through the unnecessary burden of gathering and disclosing such costs—particularly when much of this information is already publicly available either through our own filings or those of any trade associations of which we are members—would be a waste of resources.”