Thursday, September 13, 2007

The In-Kindest Cut

By now everyone knows that the New York Times published a full-page ad Monday from the political action committee attacking Gen. David Petraeus in McCarthyite terms. Now the New York Post has confirmed what blogger Bob Owens suspected. Reports the Post:

A spokesman for confirmed to The Post that the liberal activist group had paid only $65,000 for the ad. . . .

A Post reporter who called the Times advertising department yesterday without identifying himself was quoted a price of $167,000 for a full-page black-and-white ad on a Monday.

[Times PR director Abbe] Serphos declined to confirm the price and refused to offer any inkling for why the paper would give such a discounted price.

The Times advertising rate card (see page 5) lists a full-page weekday political ad as costing $167,000 and change. An unidentified "Republican aide on Capitol Hill" quipped that MoveOn got the "family discount." But this got us to wondering: Would that be legal?

We consulted the Federal Elections Commission's Campaign Guide for Corporations and Labor Organizations, updated in January, and here's what it has to say about in-kind contributions (see page 14):

Services (such as advertising, printing or consulting) are valued at the prevailing commercial rate at the time the services are rendered (i.e., the amount that was paid or would have been paid for the services).

Discounts are valued at the amount discounted (i.e., the difference between the usual and normal charge and the amount paid by the committee).

If a company sells an ad worth $167,000 for $65,000, then, that would be an in-kind contribution of $102,000. Corporate contributions to PACs are illegal under the campaign finance laws the Times itself has long championed: "Corporations and labor organizations are prohibited from making contributions in connection with federal elections," according to the FEC. (A corporation may set up and administer a "separate segregated fund," or a corporate PAC, which receives contributions from people associated with the company, but it may not contribute to its own SSF or any other federally registered PAC.)

There may be an explanation here that does not implicate campaign finance laws. Perhaps the "prevailing commercial rate" for an ad in the Times is lower than that in the rate card; maybe such deep "discounts" are routine and thus not really discounts for the FEC's purposes. In either case, we can understand why the Times's spokesmen are not eager to discuss the matter.

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