Ashcroft Group defends contacting opposing sides

The Ashcroft Group’s decision to lobby both sides in the merger between the country’s only two satellite-radio companies is nothing unusual, lobbyists unconnected to the issue said this week.

They described the Ashcroft Group’s decision to contact XM Satellite Radio and the National Association of Broadcasters (NAB), which opposes the merger, to see if either was interested in hiring the former attorney general is a standard business practice in the world of Washington lobbying.
“People do it every day,” one of these lobbyists, who asked to speak anonymously, said. “You see a merger going on, and you contact both sides.”

XM Satellite Radio, which spurned Ashcroft’s advances, publicly has criticized the Ashcroft Group and said it raises questions about the Ashcroft Group’s credibility on the issue. “It looks like he was prepared to be for the merger until he was against it,” a spokesman for XM, Nathaniel Brown, said.
A lobbyist looking in from the outside, however, described the move as one other lobbying firms, along with law firms and investment banks, also would make unless they had a commitment or a historic relationship with one of the parties. “The real deal is, they went after business and they went after the one that went ahead,” he said.

A second lobbying source contrasted a lobbying firm that approaches two sides in a business deal about representation with a lobbying firm that historically has taken a certain philosophic side on a policy issue.

“I think there are two types of lobbyists here,” the source said of Washington, “those invested with an issue who are on one side, and those who say they can open doors and … don’t care about the substance.”

In the case of the XM merger with Sirius Satellite Radio, it is fair game for Ashcroft to try to sell his services, the source said.

A spokeswoman for Ashcroft, Juliana Glover Weiss, explained how the Ashcroft Group went from contacting XM about representing it in the merger announced on Feb. 19 to publicly opposing the deal a little more than a week later.

The Ashcroft Group’s representative in charge of bringing in new business had friends at the NAB and XM, and contacted both within five minutes, asking them if they believed their team was “strong enough” for the upcoming fight in Washington, according to Glover Weiss.

“We had a very good idea where we would be most useful within two and a half hours,” she said.
She described this as a standard practice of the Ashcroft Group, which typically is in contact with several potential clients when a major corporate announcement is made. If XM and the Ashcroft Group had reached a mutual agreement to work together, Glover Weiss said the group hypothetically would have been able to “pick up the pieces” if the deal had fallen apart. Another lobbyist put it differently, saying the Ashcroft group would have done what other lobbying firms hired by Sirius and XM will now try to do: Put the deal together in a way that will pass regulatory muster.

After NAB retained the services of the Ashcroft Group, Ashcroft sent a letter to his successor, Attorney General Alberto Gonzales, criticizing the deal as raising serious competitive concerns.

Both the Department of Justice and the Federal Communications Commission must sign on to the deal before it may be approved. Congress has no direct role to play, although sources said lobbyists on both sides of the issue will be active in pushing members to take public positions on the deal, which is likely to turn on how the administration defines the market of satellite radio.

If the market includes satellite and terrestrial radio as well as other devices, such as iPods, that play music, the government might allow the merger to go forward, sources said. If they determine the satellite-radio market consists of the two companies offering satellite-radio services, they are unlikely to give the merger the go-ahead.

“Our examination of this deal will consider whether emerging technologies such as the iPod and Internet radio are competitors to satellite radio, or whether it represents a merger to monopoly which will injure customers,” Sen. Herb Kohl (D-Wis.) said in a statement shortly after the merger. Kohl has signaled that his Senate Judiciary subcommittee on antitrust, competition policy and consumer rights will hold a hearing on the subject.

The House Energy and Commerce subcommittee on telecommunications is set to hold a hearing on the merger today. This follows last week’s hearing by a antitrust task force set up by House Judiciary Committee Chairman John Conyers Jr. (D-Mich.).