Biz eyes pol positions

Change coming with elections

It's a week before Election Day, and it seems everyone here is playing a version of a hot new game show called "What If?"

Contestants in the game try to figure out the answer to three questions: What if the Democrats take control of the House? What if the Democrats take control of the Senate? What if the Republicans hold on?

The game will go on until sometime after Nov. 7, when all the ballots are counted and the election challenges on the closest races are settled. Until then, the only thing that is guaranteed is that there will be changes, and those changes will affect the entertainment industry as its lobbyists and allies in Congress attempt to gain an edge and enact new policy.

Under the conventional rules of the game, a Democratic win in either chamber is good for the entertainment industry. It is a perception that entertainment industry executives say is somewhat misplaced.

"The overlay on the issues we deal with tends to be more bipartisan," MPAA chairman and CEO Dan Glickman said. "We have friends on all the committees and subcommittees. I manage to maintain friendships on both sides of the aisle."

No matter what next week's election brings, Glickman said he hopes to expand the major studios' agenda beyond the House and Senate Judiciary and Commerce committees. He plans to mount a push in the tax-writing Ways and Means Committee; because all revenue bills are constitutionally required to begin in the House, that panel is key.

Ways and Means Committee chairman Rep. Bill Thomas, R-Calif., is retiring. Although Thomas was a Californian, he refused to go along with a tax benefit that some studios badly wanted as part of a 2004 bill, in which Hollywood's lobby wanted each movie, DVD or videotape treated as a separate line of business. The favorable tax break was turned back in part because other business wanted the same thing. Glickman wants to renew the push.

"We plan to spend a lot of time and focus on federal tax policy," he said. "For whatever reason, even though he was a Californian, we saw some things differently than Chairman Thomas."

Rep. Jim McCrery, R-La., is Thomas' likely successor if the Republicans hold the House. If the Democrats win, Rep. Charles Rangel, D-N.Y., is the most likely new chairman. Glickman said he has a good relationship with both lawmakers.

While many opponents of the entertainment industry like to paint it as a monolithic monster, that might be a simplistic view. Glickman's credentials are solidly Democratic, but that is counter-balanced by other high-profile lobbyists in the business — most notably RIAA chairman and CEO Mitch Bainwol, a Republican and former top aide to Senate majority leader Bill Frist, R-Tenn. Frist, a possible presidential contender, is retiring this year.

Bainwol, like Glickman, contends that partisan differences are overrated.

"Life is more complicated than this binary notion of who's up and who's down," Bainwol said. "There are individual relationships, and there are the merits of the case."

In the Senate, Sen. Patrick Leahy, D-Vt., likely would become chairman of the powerful Judiciary Committee if Democrats squeak out a majority there. Leahy, an unabashed Grateful Dead fan, has generally been a strong supporter of the copyright industries. His support has been tempered at times because he also is a techno geek. While current Judiciary chairman Sen. Arlen Specter, R-Pa., hasn't exactly been anti-Hollywood, he did put into deep-freeze legislation sought by the record labels that would have required satellite, cable and Internet broadcasters to pay fair market value for digitally transmitting music. The delay effectively killed the Perform Act legislation.

In the Commerce Committee, Sen. Dan Inouye, D-Hawaii, likely would take over. Inouye has been amenable to entertainment industry entreaties in the past. His son, Ken, works for the MPAA.

Dan Inouye might seem closer to the entertainment industry, but in fact he and current Commerce chairman Sen. Ted Stevens, R-Alaska, are close friends. The committee has been run as much as a partnership as possible in the current polarized world, with Inouye being named co-chairman.

One change that is assured no matter the outcome of the election is the new blood on the House Judiciary Committee. The panel responsible for writing the nation's copyright laws and overseeing their implementation will get new leadership as Rep. F. James Sensenbrenner, R-Wis., will have to relinquish the chairmanship.

If Republicans hold the House, his likely successor is Rep. Lamar Smith, R-Texas. Because Smith chairs the panel's intellectual property subcommittee, that duty likely will go to Rep. Howard Coble, R-N.C., who would get a second stint at the helm of the important body. Both lawmakers have a history with the entertainment industry. Last year, Smith unsuccessfully pushed for legislation that would reform the archaic music-licensing system. As chairman, he would be in a more powerful position to push the legislation. Coble helped shepherd through the Digital Millennium Copyright Act and the Sonny Bono Copyright Term Extension Act in his first stint as chairman.

If Democrats win, Rep. John Conyers, D-Mich., would become chairman. He has long had a comfortable relationship with the entertainment industry but is seen as being more favorable to the guilds in intramural fights within the sector.

Rep. Howard Berman, D-Calif., likely would take over the intellectual property subcommittee. He is considered one of Hollywood's best friends in Congress and was intimately involved in the music-licensing bill that died last year. Having people who care about the music business at the head of the committee is just as likely to drive a deal among the players outside of the Capitol.

"This has the possibility of forcing the private-sector parties to make a deal," one entertainment industry executive said.

"Intellectual property isn't really partisan," another said. "What generally happens is that the parties are forced to make a deal, and then they come forward and have the committee bless it."

The House Commerce Committee could see a personality makeover if Democrats grab the gavel next year. Committee chairman Rep. Joe Barton, R-Texas, hasn't seen eye-to-eye with the entertainment industry as he championed legislation that increased fines to $500,000 for broadcasters who violated indecency regulations. The bill also would have removed an FCC provision that gave individuals a warning before issuing a fine and forced a broadcaster to defend his license before the FCC after three indecency fines. A watered-down version of the legislation without the "three strikes" provision and the fine for individuals and a top fine of $350,000 per incident was signed into law in June by President Bush.

Rep. Fred Upton, R-Mich., the chairman of the telecommunications subcommittee, also championed the stiffer indecency fines. Although he is an indecency hawk, Upton also has been a champion of deregulating the media industry, pushing for lifting the general ban on media companies owning newspapers and broadcast outlets in the same market.

If the House switches, the Commerce Committee chairmanship likely will go to Rep. John Dingell, D-Mich. He held the committee chairmanship until the Republicans wrested control in 1994 and is known as one of Congress' toughest cookies with a flair for investigation.

"I don't think the FCC will be able to get away with the shenanigans that it does now," a broadcast industry executive said. "Dingell knows what oversight really means."

No matter which side wins, it is unlikely that the fight over content will go away. It has become a staple for both parties, though Democrats tend to focus on the rise of violent content while Republicans worry about sex.

"I think that ship has already sailed," one broadcast industry executive said. "It's a red state issue for Democrats, and all these consultants are running around the Hill telling them that it polls well with conservative voters in their districts."

National Association of Broadcasters president and CEO David Rehr said that he expects to be able to protect his industry no matter which party holds a majority. Rehr is a long-term Republican who heads a Republican-leaning organization.

"It doesn't come down to Republican or Democrat, conservative or liberal. If you're a friend of broadcasters, I'm your friend. If you're not, then I'm not your friend," he said. "The strength of the NAB is that we live with the lawmakers in their districts. Whether you're a Republican, an Independent or a Democrat, you have (broadcasters) in the local districts. You, frankly, have to work with them there."

But that doesn't mean it will be easy. As much as anything, Rehr and other lobbyists will be called upon to fight each other as much as Congress. Broadcasters, the consumer electronics industry and the copyright industries all have different and conflicting agendas.

The consumer electronics industry is hoping to begin turning around what they see as years of copyright-industry hegemony in Congress. Consumer Electronics Association of America president and CEO Gary Shapiro thinks that either a Democratic- or Republican-led Congress will be amenable to what he calls a new "populist" appeal from people who have been wronged by the copyright industries.

"We're fighting the status quo," he said. "No matter who wins there will be new members, and we're working from the ground up on these issues of technology freedom and consumer rights, and there's a lot of sympathy out there for them."

Network neutrality, an issue that rose to prominence in the current Congress, likely will come back next year no matter who wins. Although the issue has Republican champions like Sen. Olympia Snowe, R-Maine, it largely has been co-opted by Democratic lawmakers from Dingell to Inouye. The network neutrality issue could prove to be a sticky problem for the big cable and phone companies that operate the nation's networks. Although those companies are becoming competitors, they united to fight network neutrality, which involves a fight over establishing rules that would prevent cable and phone companies from being able to charge content providers to access the Internet through their wires.

No matter what the outcome after Election Day, Washington veterans caution that the margin of victory will be extremely small and that the White House will remain President Bush's domicile through the end of 2008.

"If you take the 50,000-foot-view, there will be some members that get elected who will feel the obligation to work together," Bainwol said. "But that could quickly deteriorate into the most Hobbesian political period of our lives, meaning nasty, brutish and short, and setting the stage for the most viscous political fight we've ever seen in 2008."
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