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#Leftist FCC nominee Gigi Sohn faces another ‘conflict’ hurdle

#Leftist FCC nominee Gigi Sohn faces another ‘conflict’ hurdle

Gigi Sohn’s journey to the Federal Communications Commission has seen more volatility than the Nasdaq. Expect the fireworks to continue this week as new, troubling details have emerged that could further taint her nomination to one of the country’s most important and powerful regulators of big business. 

As I’ve written in this space, Sohn, a vocal, progressive telecom lawyer and activist who co-founded an advocacy group funded by lefty billionaire ­George ­Soros, is being vehemently opposed by Senate Republicans. She has received at best lukewarm support from moderate Dems in the Senate, making her nomination a tough lift for the Biden administration.

Sohn’s latest confirmation hurdle: Her name appearing on a settlement agreement between a little-known outfit named Locast and some of the nation’s biggest broadcasters. 

Sohn’s role in the deal — or lack of it — and the conflicts it may pose, varies depending on whom you speak to. But how these facts shake out will likely decide the fate of Sohn’s up-again down-again nomination, telecom insiders tell me.

Locast was created in 2018 by a progressive telecom exec named David Goodfriend to do something pretty innovative: Giving people who can’t afford cable access high-quality local programming by siphoning and streaming broadcast signals of the big media companies. The service was billed as a freebie, but Locast welcomed $5 monthly donations.

‘Nonprofit’ donations

The whole operation was legal, ­Locast contended, because it was a nonprofit, which could under law take those signals and distribute them to customers as long as the entity doesn’t make any money.

Sounds legit, right? Well, not so fast. What Locast was doing understandably irked the big networks, NBC, ABC, CBS and Fox. They sued, stating that Locast violated copyright laws, essentially stealing their content. Moreover, Locast’s ask of that $5 donation meant it was looking to make money.

A router and internet switch are displayed.
FCC nominee Gigi Sohn helped push for net neutrality laws during the Obama administration.
AP

Locast was run by a nonprofit named Sports Fans Coalition of New York. The outfit had some smart legal minds advising it, including Sohn, a Georgetown law professor with a deep résumé in telecom law. She even played a key role in crafting the “net neutrality” rules pushed during the Obama years that placed heavy regulatory burdens on cable companies and Internet service providers, essentially treating them as utilities when it comes to distributing their content.

Both sides went to court confident of the path to victory, but in September of last year, Southern District Judge Louis Stanton sided with the big broadcasters. Locast was forced to shut down; the judge said the company wasn’t a nonprofit — those donations in his view went beyond what is “necessary to defray the actual and reasonable costs of maintaining and operating.”

The terms seemed steep: Locast appeared to owe $32 million in damages. Goodfriend and Sohn both signed the settlement and that was supposed to be the end of the story.

President and CEO of Public Knowledge Gigi Sohn testifies during a hearing before the Antitrust, Competition Policy and Consumer Rights Subcommittee of Senate Judiciary Committee June 21, 2012 on Capitol Hill in Washington, DC.
Sohn’s nomination has been opposed by Senate Republicans.
Getty Images

But Sohn’s nomination to the FCC — a key business regulator since it oversees big media and big tech — gave the Locast saga new life. Confidential documents recently obtained by GOP members of the Senate and reviewed by The Post show Locast paid a fraction of that $32 million, and the deal was officially cut with an interesting degree of timing.

Curious timing

Parties, including Sohn, signed the paperwork a day after she was nominated by Biden to the FCC, which means it appears that the broadcasters and Locast were negotiating the seemingly light terms knowing full well she was on her way possibly becoming their regulator.

The backstory on all of this could derail Sohn’s nomination as it makes it way to a vote in the Commerce Committee this Wednesday, telecom insiders tell me. Roger Wicker, the ranking Republican on the committee, questioned Sohn during her Dec. 1 hearing. He then asked her in writing how ­Locast came up with the full $32 million payment to the broadcasters — a seemingly big chunk of change for an outfit billed as a not-for-profit.

Sohn’s answer: “The settlement funds come from the amount collected to fund [Locast’s] operation after [Locast] pays its vendors.”

Since then, Wicker has reviewed the same documents seen by me, including the timing of the deal and its monetary terms: $700,000 plus whatever Locast’s equipment and infrastructure is valued at, a total figure estimated to be far less than $1 million. Sohn didn’t mention the actual settlement number during her testimony. 

A senior GOP committee aide told the Post “discrepancies between [Sohn’s] testimony at the hearing and the details of the settlement … are driving Wicker to call for a new hearing.” Wicker has previously stated: “My initial review of the confidential settlement raises several troubling questions about Ms. Sohn’s nomination. “

Grasping for problems?

Sohn and Goodfriend, for their parts, declined to comment. A person close to both with knowledge of the settlement says, however, that Wicker is grasping for conflicts that don’t exist and certainly shouldn’t disqualify Sohn from the FCC.

First, Sohn didn’t negotiate the settlement; she was a board member of Locast, not an officer. The deal was done by solely by Goodfriend’s attorneys and the broadcasters’ reps.

Mississippi Sen. Roger Wicker
Sen. Roger Wicker has also reviewed the documents about the Locast settlement.
Shutterstock

The judge, this person said, set the monetary liability at no more than $32 million — it was a ceiling, not a mandate. The broadcasters would have to show damages to collect that much, which would have been difficult given the smallish scale of Locast’s business.

That’s why the broadcasters settled for so little in monetary damages. They also got something even more valuable: A stake through the heart of Locast. Sohn signed the deal to negate her and the rest of Locast from creating a Locast 2.0 in the future. Her signature had nothing to do with the terms, which were negotiated separately.

Compelling arguments, but others believe appearances do matter. Wouldn’t it have been easier for Sohn to resign from Locast as the two sides were negotiating the settlement and avoid looking like she’s getting something from people she could be regulating? Certainly everyone knew she was poised for the FCC post; her name even leaked as a possible chair of the regulatory body before the deal was cut.

“I have never seen anything like this,” said one veteran industry insider. “Gigi may have no substantive conflicts, but the whole thing looks bad. You would think the Biden White House would have told her to resign from Locast.”

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