The Real Problem With Al Gore's $100 Million Payday From Selling Current To Al Jazeera.

All sorts of people are hurling all sorts of criticisms at former Vice President Al Gore over the $500 million sale of his Current TV network to Al Jazeera. Gore is helping a foreign government spread propaganda in the U.S.! He’s doing business with a network that’s sympathetic to terrorists! He’s taking oil money! He’s trying to avoid paying taxes!

These accusations range from borderline silly to flat-out wrong. The real problem here is that Gore, in pocketing an estimated $100 million from the sale, provides a textbook reminder of the conflicts of interest that arise when politicians hopscotch between high office and the private sector.

For a channel available in 60 million households, Current has a tiny audience, a fact reflected in the paltriness of its advertising revenues (less than $20 million annually, according to SNL Kagan).

Almost all of its value, therefore, was tied up in its reach. That distribution to 60 million homes was what underlay Al Jazeera’s willingness to spend a half billion dollars. (This even though some 9 million homes fell out of the deal after Time Warner Cable, which controlled them, balked at carrying a new Al Jazeera channel.)

Distribution is dear because it’s hard to build. So how did Current succeed in building so much so fast? Through “a combination of personal lobbying and arm-twisting of industry giants” by Gore himself, according to Brian Stelter of The New York Times. Gore “leaned on” Rupert Murdoch, then in control of DirecTV, and other operators of cable and satellite systems, not only to carry Current but to pay it a carriage fee out of proportion to its actual viewership.

If Murdoch et al didn’t push back too hard, it’s because they knew they could simply pass the carriage fee along to their subscribers. That’s been standard operating procedure for pay TV operators since 1999, when a provision of the Telecommunications Act of 1996 removed price controls that had previously governed the rates they could change for expanded basic services.

The results have been dramatic. According to theFCC, between 1995 and 2010, the average cost of expanded basic services rose from $22.35 to $54.44. That’s a 6.1% compound average annual increase, versus 2.5% for inflation over that period.

That’s a lot of extra money flowing into the coffers of pay TV operators. And whom do they have to thank for it? Among others, Al Gore, who, at the ceremony marking the signing of the bill into law, “stressed how public interest was central to the telecommunications revolution,” according to Salon.

This is exactly the kind of conflict of interest Congress was hoping to prevent when, in 1958, it passed the Former Presidents Act, which established a pension in order to ensure that no ex-Commander in Chief would be tempted to “demean the office he has held or capitalize upon it in any way deemed improper.” Gore, of course, was vice president, not president, but the principle holds.

There’s no conspiracy here, no dark secret. All of this has unfolded in plain sight over a period of years. But when it looked like Gore was truly in it to build a durable, independent, public-minded news institution, it was hard to be too critical of him for leveraging the prestige and connections of the office he once held to achieve that aim. Now that he’s decided the mission is worth less than the windfall to be made from abandoning it, the whole thing takes on a somewhat different tint, doesn’t it?
http://www.forbes.com/sites/jeffbercovici/2013/01/04/the-real-problem-with-al-gores-100-million-payday-from-selling-current-to-al-jazeera/