Fairness in Media

Fairness in Media (FIM) was a committee based in Raleigh, North Carolina, organized by Thomas F. Ellis, Carter Wrenn and James Palmer Cain, political associates of Senator Jesse Helms, to urge conservatives to buy stock in CBS. Its first mailing, signed by Helms, said the committee was "launching a nationwide campaign, very much like a presidential campaign, to end the liberal bias at CBS by urging conservatives to purchase enough CBS stock" and, "if necessary," to control the network.¹ CBS sued the committee in federal court in New York in February 1985, Ted Turner filed an exchange offer for CBS in April, and CBS announced in July an offer to repurchase about a fifth of its own shares.² The committee later petitioned the Federal Communications Commission over Laurence Tisch's purchases of CBS stock, and the Supreme Court of the United States denied its petition for certiorari in October 1988.³⁴

Formation and Officers

On January 10, 1985, FIM filed a document with the Securities and Exchange Commission stating its intent, and the Raleigh News and Observer reported the planned mailing that morning. Three political associates of Helms formed the group. Ellis was "president and director of the National Congressional Club," a political action committee that "has helped finance Helms' campaigns."⁵ The three founding directors were Ellis, Wrenn, who was executive director of the Congressional Club, and Cain, a Raleigh lawyer then twenty-eight years old. The committee was headquartered in the suburban Raleigh office building that housed the Congressional Club and other Helms-related groups.⁶

Ellis said that he, Wrenn and Helms had agreed on the plan a few days after Ronald Reagan's reelection and Helms's reelection in November 1984.⁶ Cain said in March 1985 that "it was actually Tom Ellis who came up with the idea of trying to do something about the media," and that Ellis and Wrenn had decided the three major networks were the target. Cain had been senior director of the National Congressional Club in 1980 and 1981.⁷ FIM decided to press its campaign "on or about Nov 13," after the November 15 deadline for submitting shareholder proposals for CBS's spring proxy statement.⁸

Broadcasting's "Cronies" item of February 11, 1985, said that the impression that FIM was at arm's length from Helms "may be misleading," because Ellis had been a key adviser to Helms's reelection campaign and had been pushed by Helms the previous year for appointment to the Board for International Broadcasting, from which he withdrew his name after opposition from the NAACP and some senators. The item added that FIM's spokesman, Claude Allen, had been hired as press spokesman for the Senate Foreign Relations Committee, on which Helms was the ranking member.⁹

The Mailing

The mailing began on January 21, 1985, to nearly one million people described as conservatives. Broadcasting wrote that the letter was signed by Helms "on what has the look of official Senate stationery." It asked recipients to "switch a portion of your savings or investments into stock in CBS Inc." and gave as reasons a 1983 TV Guide article finding CBS "the most anti-Reagan network," a 1982 Bill Moyers documentary, and CBS coverage of the Tet Offensive.¹⁰ The letter opened: "For years good Americans like you have asked President Reagan and me what can be done to combat the flagrant bias in the liberal news media. At last there's an answer to that question." Recipients were to vote the CBS stock they bought or already owned "to take control of that network . . . to elect a new Board of Directors . . . committed to ending liberal media bias."¹¹ Another passage read: "FIM is counting on you to become Dan Rather's boss," followed by the request that recipients switch "a portion of your investments to CBS stock."¹ Helms signed three mass mailings.⁶

CBS's reply, issued by Mary Boies, vice president for corporate information, read: "CBS News reports the news as accurately and fairly as it can, independent of any political point of view. Its sole purpose is journalism; its goal is total objectivity. To seek control of a corporation for the sole purpose of subjecting its news operations to political influence contradicts the traditions of a free and independent press."⁵

A majority of CBS's 29.7 million shares would cost slightly over one billion dollars, by Broadcasting's estimate.⁵ Broadcasting reported that CBS stock closed at 75 on Friday, January 11.⁵ Thomas B. Edsall and David A. Vise of the Washington Post reported that CBS stock closed at 72 on January 10, the day of FIM's first SEC filing, and at 109 3/4 on the Friday before March 31 (the clipping prints the fractions imperfectly; the 1,450 dollar cost and 745 dollar gain it states for twenty shares imply 72 1/2 and 109 3/4), a gain of 745 dollars, or 51 percent, excluding brokerage fees, for an investor who bought the twenty shares the letter recommended on January 10. They attributed part of the rise to speculation after the March 18 announcement that American Broadcasting Companies had agreed to be acquired by Capital Cities Communications.¹²

Securities Filings

The January 10 filing stated that FIM was "not presently soliciting proxies or requesting the withholding of proxies." It listed possible actions that included having FIM's nominees appointed to the board, encouraging a tender offer for CBS stock, selling CBS assets or subsidiaries, and "substantial changes in the company's personnel."⁵ A filing received by the SEC on February 8 stated that CBS chairman Thomas Wyman had proposed that FIM meet other CBS officers instead of himself, which FIM called "unacceptable." The filing continued: "FIM has concluded that the company does not intend to respond satisfactorily to FIM's concerns. Accordingly, FIM has decided to seek to affect a change in control of the company." It named a possible proxy campaign for "either one or two directors" and stated that FIM was "conducting discussions" with an unidentified "third person" about proxy solicitations and tender offers.¹³ In March, FIM filed a lengthy preliminary proxy statement with the SEC while stating that it was not committed to mailing it.⁷

CBS Inc. v. Fairness in Media

CBS filed suit in the United States District Court for the Southern District of New York on February 14, 1985, and amended the complaint on February 27. The complaint alleged that FIM's SEC filings were false and misleading, did not disclose lawsuits filed against Cain by the Federal Election Commission and by the Democratic Committee of North Carolina over allegedly unlawful campaign contributions, and did not disclose that other organizations at FIM's address, including the National Congressional Club and the Educational Support Foundation, had contributed to the campaign. It also alleged that the defendants had not registered as investment advisers and had not told recipients of the January 21 letter that FCC policy prohibits willful distortion of news.¹³¹⁴ CBS charged in the suit that FIM was "attempting to manipulate the market in CBS stock."¹²

Edsall and Vise wrote that the confrontation was "providing a look at some legal liabilities within the conservative political machine now under scrutiny by both government prosecutors and CBS lawyers."¹² Wrenn called the suit "intimidation."¹³ FIM's counsel was the New York firm of Olwine, Connelly, Chase, O'Donnell & Weyher; Jack O'Donnell, a partner, argued before Judge Conner at pretrial hearings in March. The same firm represented Hoover Adams, a CBS shareholder and FIM supporter who published a newspaper in Dunn, North Carolina, in a motion filed in New York state court on February 22 to compel CBS to give him its list of shareholders. Adams had requested the list on February 8.⁶⁷¹⁴ The firm's name includes that of Harry Weyher. CBS was represented by Cravath, Swaine & Moore, through Paul M. Dodyk.¹⁴

CBS's requests for pretrial discovery, which O'Donnell described as covering "89 categories of documents," included FIM's financial statements, communications with the FCC and other agencies, communications with reporters and securities analysts, and "records of any visits by defendants to the Republic of South Africa, or funds received from that government." Broadcasting wrote that the last two requests "seem to point to some business that FIM director Thomas Ellis may have had with the South African government." Judge Conner limited discovery for the time being to depositions of Adams and Ellis on the intended use of the list.¹⁴ Cain was deposed in New York on March 14.⁷ CBS later extended its requests to the trading records of six brokerage firms for February 28 and March 1, when CBS stock rose four dollars on heavy volume after news of a Turner inquiry at the FCC. CBS reported its direct costs of responding to FIM as 175,000 dollars as of March 11.⁷

Wyman wrote to shareholders that FIM's "campaign is but an attempt to change the content of CBS News reporting to reflect FIM's own partisan views." At a meeting with financial analysts on March 13 he said CBS had "not identified any stock in their [FIM] hands."⁷ In the last week of March CBS gave its shareholder list to FIM after FIM agreed to restrict its use, and FIM said it would not use the list to mail stockholders or begin a proxy fight before the April 17 annual meeting.¹²

Ted Turner

Turner told Broadcasting in late January 1985: "I have not talked to Jesse Helms about this, have not offered any support, nor have I been asked." On February 28 it became known that Charles Ferris, a former chairman of the FCC and Turner Broadcasting System's communications counsel, had asked the commissioners about the procedural requirements for a hostile bid for a company holding broadcast licenses. A spokesman for FIM declined to confirm or deny that Turner had been talking with the group.¹⁵ CBS served Turner with a deposition notice in its suit against FIM.¹⁴ Turner indicated that he met a FIM representative on Friday, March 1, and the Atlanta Journal, quoting his deposition, reported that he told FIM he would consider joining the group, with his support conditioned on an option to run the network and its news operation.¹⁶

Turner had given Helms and Philip Crane two and a half hours of broadcast time on his superstation on August 28, 1982, for a documentary, "KGB: The Lie and the Truth," produced by the Coalition for Freedom.¹² In June 1984 he was the keynote speaker at a Washington conference, "The Conservative Movement and the Media," sponsored by the National Conservative Foundation, an offshoot of the National Conservative Political Action Committee, where he told the audience that the networks were "the greatest enemies America ever had" and called broadcast executives "guilty of treason."¹¹

Charles Babington of the Raleigh News and Observer wrote in July 1985 that the investor Ivan Boesky had bought 2.6 million CBS shares since the campaign began and that Helms and Ellis had both met recently with Turner; Ellis, he wrote, had praised Turner for donating prime time on his Atlanta superstation in 1982 for the documentary.⁶

Turner Broadcasting System filed a registration statement with the SEC on April 18, 1985, for an exchange offer for all CBS common stock and sued CBS the same day in the United States District Court for the Northern District of Georgia.²

The Outcome in 1985

Judge Robert L. Vining Jr. found that CBS's board had removed, on April 4, 1985, a by-law allowing holders of ten percent of the stock to call a special meeting "in response to an effort by Ivan Boesky, an arbitrager," who had obtained 8.7 percent of the outstanding shares and "had approached CBS about purchasing his shares at a premium." On July 3 CBS announced an offer to repurchase about 21 percent of its stock at 150 dollars a share, 40 dollars in cash and a senior note with a face value of 110 dollars due in 1995. Turner Broadcasting alleged in its second amended complaint that the offer included a private placement of preferred stock with five institutional investors and a right for William S. Paley to sell part of his shares to CBS for 150 dollars in cash. Vining announced on July 30 that he was denying Turner's motion for a preliminary injunction and filed his opinion on August 16.²

According to CBS, Loews Corporation bought about 9.9 percent of CBS common stock after the July 3 announcement. The exchange offer was completed on August 1, and Turner withdrew soon afterward. In October Loews's chairman Laurence Tisch told Wyman that Loews intended to buy up to 25 percent of CBS stock, and Tisch was invited to join the CBS board on October 16, 1985.¹⁷

The FCC Petitions

FIM filed several programming complaints against WTVD, the CBS affiliate in Durham, North Carolina, and complained to the FCC about CBS news.⁴ On September 12, 1986, after Loews had bought about 25 percent of CBS stock, FIM asked the FCC to investigate whether Tisch had acquired de facto control of CBS without approval under section 310(d) of the Communications Act. The FCC wrote to CBS on September 17, CBS answered on October 1 with a letter from Paley denying a transfer of control, and the commission ruled on October 20, 1986, that none had occurred.⁴ According to FIM's petition for certiorari, three CBS officers, including Newton Minow, and the former FCC chairman Richard E. Wiley, a CBS lawyer, lobbied the full commission ex parte against an investigation before CBS responded. The petition cites the Wall Street Journal of September 25, 1986, and quotes Lawrence Secrest, a CBS lawyer: "it would be astounding if the Commission found anything other than that there was no transfer of control." Tisch became president and chief executive officer of CBS on January 14, 1987.⁴

The commission denied reconsideration in 1987. FIM petitioned the United States Court of Appeals for the District of Columbia Circuit on May 18, 1987 (No. 87-1217), and the court affirmed the commission in an unpublished per curiam opinion on June 8, 1988, assuming without deciding that FIM was positioned to seek review.¹⁷ The petition for certiorari was filed through Bruce Fein of Great Falls, Virginia, and described FIM as "supported by 15,000 active contributors who are automatic members."⁴ CBS's opposition, filed on October 3, 1988, by George Vradenburg III, Ellen Oran Kaden and Wiley of Wiley, Rein & Fielding, described FIM as "a group led by U.S. Senator Jesse Helms."¹⁷ The Supreme Court denied certiorari on October 11, 1988.³

Federal Election Commission Records

The OpenFEC committee, schedule A and schedule B searches return no record for the name Fairness in Media. The commission lists the National Congressional Club, under its later name National Conservative Club, with Wrenn as treasurer, an address at 8305 Falls of Neuse Road in Raleigh, and the Jesse Helms Legal Defense Fund as an affiliated committee. It records receipts and disbursements, by election cycle, of 7,873,974 and 7,212,754 dollars for 1980, 9,742,494 and 10,404,521 for 1982, 17,473,546 and 16,924,987 for 1984, 16,587,485 and 17,053,138 for 1986, and 4,150,677 and 4,140,237 for 1988. The committee's first filing was dated June 1, 1979, and its last September 29, 2006.¹⁸