Campaign Finance Laws and the Rupert Murdoch Problem
Richard L. Hasen
University of California, Irvine School of Law
Texas Law Review, June 1999
Current federal law prohibits corporations from spending corporate funds directly to promote or oppose a candidate for federal office. Instead, a corporation can set up an indirect funding mechanism subject to a number of restrictions on the source, use, and disclosure of funds. The prohibition on direct corporate spending, however, does not always apply to media corporations. If the New York Times Corporation, that prints the New York Times, or Time-Warner, through Time or CNN, endorses or opposes a candidate for federal office, federal law does not consider this a corporate campaign-related expenditure. A number of states have a similar "media exception" to their campaign finance laws. Recent campaign finance reform proposals aimed at promoting political equality have similar media exceptions.
Skeptics and critics of campaign finance reform point to the media exception as a potent argument against equality-based reform and even against current campaign finance laws. They argue that: (1) equality cannot be achieved when the media are given an even more preeminent place than they already have in shaping public attitudes toward federal candidates, especially, as some argue, given the media's supposed "liberal bias" and (2) the media exception cannot be eliminated without violating the First Amendment. This Article argues (contrary to my earlier and more cursory examination of the issue) that a media exception to campaign finance laws is unjustifiable, though current Supreme Court doctrine permits, and may even require, such an exception.
Part I briefly sets forth current federal campaign finance law and explains how it would apply to news media in the absence of a media exception. It also discusses media exceptions found in some proposed reform plans and campaign finance legislation. Part II uses a public choice/egalitarian pluralist model to argue against a media exception to otherwise applicable campaign finance laws. It posits and examines the evidence indicating that media owners are profit or influence maximizers who use their news outlets' endorsement decisions to rationally further their own interests, including as a means to secure access to public officials. Part II argues that equality is somewhat undermined by the current media exception, and equality would be greatly undermined by a media exception to a more comprehensive equality-based campaign finance reform plan like my voucher plan. Eliminating the media exception likely would not have a significant effect on the outcome of federal elections. It may, however, have a significant effect on some federal policy outcomes, and an end to the exception would be an important symbolic measure to eliminate perceived inequality of political capital under a more comprehensive equality-based campaign finance reform plan.
Part III examines two major objections to repeal of the media exception. The first is a constitutional argument that a campaign finance law without a media exception violates the First Amendment. I examine this issue both under current campaign finance jurisprudence and in a post-Buckley era where the Supreme Court has upheld the constitutionality of broader, equality-based campaign finance reform. The Supreme Court in Austin v. Michigan Chamber of Commerce upheld the permissibility of a media exception, and if the Court followed current doctrine it likely would hold that the exception is not only permissible, but required by the First Amendment. But if the Supreme Court rethinks its approach to campaign finance generally to allow promotion of political equality, an equality-promoting law lacking a media exception stands a fair chance of being upheld under the First Amendment. Part III also examines a second objection, that eliminating the media exception would do little to promote political equality because the law would not regulate the real source of media power: subtle bias in news coverage of political candidates. Though there is some merit to this objection, the evidence of systematic bias in news reporting in favor of or against Democratic or Republican candidates for federal office is weak, probably due to increased norms of professional objectivity internalized by journalists.
Finally, Part IV briefly argues against repeal of the current media exception for corporate media. Though narrowing the media exception to non-corporate media companies may be constitutional, I argue against enactment of such a law given the already strong inequalities in our campaign finance system and the costs associated with its repeal. I conclude that the media exception should be eliminated only as part of a comprehensive campaign finance reform plan aimed at promoting political equality.
Date posted: December 15, 1998