An FCC insider on Kimmel, TV and free speech

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0:34When Disney pulled late-night comedian Jimmy Kimmel off the air last week, they did it after the head of the federal agency that regulates them seemingly threatened to take action against his show. I mean, look, we can do this the easy way or the hard way. And then the president of the United States called to take entire broadcast networks off the air. They're getting a license. I would think maybe their license should be taken away. But when Kimmel was brought back on Tuesday, the president threatened even more punishment. With pressures like this, how are broadcasters supposed to navigate what goes on the air?

1:19This is Swamp Notes, the weekly podcast from the Financial Times, where we talk about all the things happening in U.S. politics, finance, and the economy. I'm Mark Filippino, and this week we're asking, how will media executives navigate increased government pressure? Here with me to discuss is Gigi Sohn. She served as a counselor to the former chairman of the Federal Communications Commission during the Obama administration and is now the Benton Institute's senior fellow and public advocate. Gigi, welcome to the program. Great to be here. And we've also got Chris Grimes, the FT's Los Angeles Bureau Chief, who's been covering the story.

1:52Hey, Chris. Hi there. All right. So I'm going to just get us up to speed really quick. Chris, Chris, you've been reporting on this for a few days. This all starts after Charlie Kirk, the conservative activist and founder of Turning Point USA, was killed two weeks ago. Jimmy Kimmel, in one of his late night stand-up routines, suggested that Kirk's killer was aligned with supporters of the president, which upset conservatives, the Federal Communications Commission, the president, you name it. What do you think those conversations inside Disney sounded like as they decided to take Jimmy Kimmel off the air?

2:27Right. So this is, from my understanding, this is a very tight circle of people having this discussion inside Disney. It was led by Bob Iger, the longtime CEO of Disney, and Dana Walden, who runs TV and streaming and therefore oversees ABC. My understanding is they believe that they could win a First Amendment case, even if it went to this very conservative Supreme Court. But they were watching this backlash that was happening against what Kimmel had said. They were worried about fanning the flames some more. And they've said this publicly. And so they decided to suspend him after some conversations with Kimmel.

3:10As Kimmel said the other night on television, he didn't agree with that decision. And Disney called this an indefinite suspension, which I think made things even worse. It sounded worse than saying, hey, we're going to take a break for a few days and let things settle down. Right. It made it sound more permanent than it may have actually they were considering. Yeah. And so this prompted protests in the streets. There was criticism from Meryl Streep. You know, you're in trouble if Meryl Streep is on. And Tom Hanks is angry at you. You've got a big problem. People were accusing Iger and Disney of corporate cowardice.

3:45The unions in Hollywood were upset and issued strongly worded statements. So it was a, you know, turned into a big thing very quickly for Disney. Gigi, I think it's important for us to back up a little bit and talk about the FCC. What action by the Federal Communications Commission was Disney trying to avoid by taking Kimmel off the air? So let me say first that I'm highly dubious of Disney's professed reason for taking Jimmy Kimmel off the air because they did so just hours after Brendan Carr threatened them on the Benny Johnson podcast. So, you know, things were already hot, but it wasn't until Brendan Carr came in and said, we could do this the easy way, we could do this the hard way before that they actually suspended him.

4:33So I think that's kind of behind covering. Let's put it that way. But what can the FCC do? And they have a lot of power. They could revoke Disney's licenses, broadcast licenses. They could deny the renewal of the licenses when those licenses come up for renewal every seven years. They can fine Disney as well. But I'm not so sure. I mean, I think Brendan Carr knows that to revoke a license, particularly over something like this. It would never stand up in court if Brendan Carr tried to revoke or deny the license renewal of Disney's licenses. But this falls in line with a rhetoric that FCC Commissioner Brendan Carr has said over the past several months, which is that he wants to leverage the FCC to put more pressure on broadcasters over content it believes is inaccurate.

5:23I mean, where do Chairman Carr's latest comments fit into that? It fits squarely into that. But let me finish my point, which is Disney does have two transactions in front of the Department of Justice right now. And while it's a different agency, the agencies talk to each other and they're all part of the same administration. So Disney is seeking to buy Fubo TV, a purchase that's been pending now for nine months, which is a long time. and also ESPN is trying to sell a share of its company, of that company to the National Football League. And we can argue whether DOJ has any role, but DOJ could certainly insert itself.

6:04So one of the issues is when these companies get so big and they want to get bigger, they always have a transaction in front of either the FCC or the DOJ or somebody else. And that's the leverage point. So the revocation of the license is not as much the leverage point as the fact that Disney is seeking a transaction, two transactions, and probably will be seeking more transactions in the future. The FCC could essentially stomp out any future business, any consolidation that Disney is trying to do. I mean, Carr's been very good at finding these sorts of pain points with the media companies. Paramount had this long-running sale process with Skydance that dragged on for over a year.

6:51Sherry Redstone was really eager to sell her company to David and Larry Ellison. And Trump had filed this, what everyone considered to be a very flimsy lawsuit against 60 minutes over the editing of this Kamala Harris interview. But Sherry Redstone ended up paying$15 million to Trump's presidential library. So, of course, good. He finds where the point of leverage is and he applies maximum pressure. Yeah, I think one other thing about that Paramount Skydance merger was not only did Carr wait until Paramount settled with the president, they also required, the FCC required the combined entity to have an ombudsman to basically review their programming.

7:41And they've picked the, I don't know the guy's name, but he's a conservative policy expert from the Hudson Institute. So it has a direct effect on what CBS does going forward. And that is really dangerous. I want to pivot back to Jimmy Kimmel for a second, because I think a lot of people might be confused, both inside and outside the country, that when Jimmy Kimmel came back on the air, you could watch him in New York, parts of New York, but not here in Washington, D.C. Why was that? So there's some people, most people probably know this, but let me just say it anyway. There are the broadcast networks that provide a lot of programming, including primetime programming and the late night shows, and they also own TV stations.

8:28But then there are also broadcast groups of just local broadcasters who affiliate with different networks. So Sinclair and Nextar, which are the two biggest group broadcast TV owners who both preempted the Kimmel Show and continue to do so, they have affiliates with all the different networks. Okay, so they do have the right to preempt the Kimmel Show based on, really for whatever reason, but I'll give you an example from 30 years ago. So there was a station in Alabama that didn't like the Ellen DeGeneres show, the Ellen show, not the talk show, but the Ellen show where she came out. It was called the puppy episode, and they preempted it.

9:14But that's usually based on the mores of the community. Now, Nexstar and Sinclair have affiliates. So Nexstar has 200 stations, including, I believe 32 ABC affiliates. The Moors in those communities are all different kinds of communities. So I live in Washington, DC. I could not see Jimmy Kimmel. Trust me, the vast majority of people in the Washington, DC area would have liked to have seen Jimmy Kimmel. But so this says two things. They kind of did it as a very broad brush. And again, it is their right, but they usually do it based on community Moors. But the fact that they are so big, both companies are so big and can preempt the show does damage to the network because it removes advertising.

10:01I think combined, they control 25 % of all the ABC affiliates in the country. That is quite a hit to ABC. Yeah. Sinclair is traditionally, it's known as a pretty conservative group, right? But in this case, Nextstar is seeking FCC approval for a$6 billion merger with Tinga. We were talking earlier about Brendan Carr and pain points. I think there's a deal pending that needs regulatory approval, and Carr had signaled his displeasure with this programming. So it's part of a wider discussion, I think, about speech and dissent in the United States right now. So guys, Trump has really kept up his pressure on broadcasters over the past two weeks.

10:54I think this is what we're building to here. He's threatened more lawsuits against TV networks, taking away broadcast licenses. Disney's a big company and can flex its muscle because it is one of the largest media companies in the world. But what are other broadcasters supposed to do? What are they seeing here in this instance? and taking away from it? I think they're seeing a lack of courage. I mean, we've already seen two of the big four networks bend the knee very quickly and at a very great expense. So they're not setting a terrific example. It did take, I think, many, many people, myself included, canceling Disney Plus and actually eating into their profits for them to say, okay, we're going to reinstate Kimmel.

11:39Do you think that protest, canceling Hulu subscriptions and Disney Plus made the difference? It was one of the things that made the difference. And this is the good news, right? I mean, I talked to so many people who feel so helpless. And this was an instance where, you know, people actually had power to make change. Now, granted, the change they made was pressuring a corporation to stand up to the government. But it's still, it's something. So I think it was a combination of some very, very famous voices. And also, there were some Republicans that came out. I mean, far be it from me to ever agree with Ted Cruz.

12:15And I got to say, that's right out of Goodfellas. That's right out of a mafioso coming into a bar going, nice bar you have here. It'd be a shame if something happened to it. But he said the right thing. And Rand Paul said the right thing. And, you know, and some conservative commentators said, OK, this really crosses the line. And not that they love Jimmy Kimmel, but that Brendan Carr, the FCC chair, everybody but Disney really kind of said out loud what I believe, which is the reason Disney did what it did, suspending Kimmel, was because of the pressure that Carr put on them. Saying this is like a mafioso saying it's a nice bar, it'd be a bad thing if it burned down one day.

12:58Right. That's what Ted Hughes said. So it was a combination, I think, of financial reasons, high profile protest, and also Republicans actually coming and speaking out. Last question, guys. This whole conversation about broadcast television is very interesting, but it's no secret that more people are watching less TV. They're moving to streaming services. As you mentioned, Gigi, you canceled your Disney Plus subscription. Why should we care about how Disney is handling this administration? and generally the power of the FCC? So I'll take that first. So Disney obviously is much more than a broadcaster, right?

13:38I mean, they only have eight stations in the grand scheme of broadcasting. That's a little, even though they're huge stations and they cover a lot of the population. Just because this is in the broadcasting realm doesn't mean it couldn't stretch into all its other realms. They have theme parks. I mean, who knows where this stretch is next? The pressure point has been with broadcasting because you do have this regulatory agency. Broadcasters are licensed to the public interest. That's where I agree with Brendan Carr. That doesn't mean he should be able to censor them, but they are licensed. And it's a free license, and you don't automatically get it.

14:15That's why the pressure point has started here. But who's to say it doesn't stretch to its other properties? But, you know, when I hear people say, well, nobody watches broadcast TV anymore and everything's going to streaming, just see what candidates pay to get their ads during election season. They spend millions of dollars to get on TV because everybody has it. So I'm not quite ready to write the obituary for broadcast TV yet. Sure. Chris? I think it's interesting. There is one person that we know is obsessed with broadcast television, and that's Donald Trump. I mean, he is commenting on it all the time.

15:01He's sued two of them. He tweeted recently that he should go after NBC as well. So, you know, there is a very particular individual who's an important member of that broadcast TV audience. And Gigi, you mentioned theme parks. I mean, Iger went through this a couple years ago in the battle over the Don't Say Gay thing in Florida. And DeSantis threatened the theme park business and their ability to govern it. So they are vulnerable to this kind of pressure because it touches their biggest businesses. Well, and it's because they are so big that you can apply those pressure points. When you have five or six companies that own all the mass media in the United States, it becomes much easier for an authoritarian government to threaten them and threaten them successfully for the reasons we talked about.

16:00I want to thank our guests. Gigi Sohn was counselor to the former chairman of the FCC and is now the Benton Institute's senior fellow and public advocate. Gigi, thank you so much. My pleasure. And Chris Grimes, he's our LA Bureau Chief. Thanks, Chris. Thank you. All right, we're going to take a quick break. And when we come back, we're going to do exit poll. This week is all about the US giving out more foreign aid.

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18:00We are back with Exit Poll, where we ask an FT journalist one of your questions. This week, we have Kira Nugent, the FT's Southern Cone correspondent with us. Hey, Kira. Hi, Mark. This week's submission is from Tony in Arizona. He's got a question about the proposed$20 billion swap line the U.S. is considering giving to Argentina. And he wants to know who would benefit most from that kind of deal. So, Kira, give me some background here. Why is the U.S. considering the swap line? And to Tony's point, who benefits here? Yeah, so Argentina's libertarian president, Javier Millet, is Trump's only ally in Latin America leading a major economy.

18:38Millet has fallen into the worst crisis of his presidency in the last month. Investors who had been very enthusiastic about his free market reforms have started to get nervous that he's not going to be able to complete them. That caused a run on the peso, forced Argentina's central bank to use up some of its very scarce hard currency reserves and created kind of this investor panic that Argentina doesn't have enough dollars to pay its debts and keep the currency afloat. A U.S. swap line would give Argentina a really liquid source of U.S. dollars to borrow, allowing it to pay its debts and protect the peso and pay for imports.

19:12So Argentina's government would benefit massively from that, from having that stability. Argentine debt holders would be very happy about it too, because it would boost prices. And, you know, Trump would be happy to have his main ally in Latin America much more powerful. And by the way, we should just say that, you know, this is not a done deal. The U.S. hasn't actually given Argentina access to any dollars. So far, this announcement is kind of about giving a shock of market confidence. And we'll see how far the U.S. actually goes to support Argentina. That's the FT's Southern Cone correspondent, Kira Nugent.

19:43Thanks, Kira. Thanks, Mark. And Tony, I hope that answers your question. If you listening right now have a question about U.S. politics and the economy, send me a message at the email in the show notes. Make sure to include your name and where you're from. And if you send us a voice memo, which by the way, we absolutely love, we may even play it on the show.

20:08This was Swamp Notes, the US politics show from the FT. If you want to sign up for the Swamp Notes newsletter, we have a link to that in the show notes. Our show was produced by Henry Larson. It was mixed by Sam Giovinco. We had help this week from Lauren Fedor. And as always, special thanks to Pierre Nicholson. I'm your host, Mark Filippino. Our acting co-head of audio is Topher Forges. Original music by Hannes Brown. Check back next week for more U.S. political analysis from the Financial Times.