06 Feb 2015 NBC’s Brian Williams Scandal Could Have Been Avoided
Comcast Hired Outside Legal Counsel to Help it Fight Shareholder Proposal that Merely Asked Comcast to Review Its Accuracy Policies
U.S. Securities and Exchange Commission Ruled Shareholders May Not Ask Management of Public Companies to Make Certain Employees Are Making Accurate Public Statements
“It seems illogical for the federal government to prohibit shareholders of public companies from telling management it should tell the truth, but that’s the SEC’s policy. When bigshots at high-profile companies feel comfortable telling lies, you end up with scandals like this one with Brian Williams.”
Washington, D.C. – “NBC’s Brian Williams scandal may have been avoided had Comcast’s upper management not fought a 2013 shareholder proposal intended to help the Company identify accuracy problems and correct them before they became legal problems, and had the Securities and Exchange Commission not ruled that Company shareholders have no right to inquire about accuracy policies at publicly-held media companies,” said Amy Ridenour, chairman of the National Center for Public Policy Research and the Comcast shareholder who submitted the proposal.
In 2012 Ridenour submitted a shareholder proposal for consideration at Comcast’s 2013 shareholder meeting that would have required Comcast’s management to review its standards for accuracy.
“Comcast took our proposal to the Securities and Exchange Commission and fought it tooth and nail,” said Ridenour, “but had it accepted the proposal and done the requested internal review of its accuracy standards and procedures, it might have prevented the Brian Williams scandal it is involved in now that is going to be very, very costly to NBC, and thus to Comcast and its shareholders.
“Comcast brought in the outside law firm of Davis, Polk and Wardwell to help it fight the proposal,” continued Ridenour, “and eventually got the SEC to rule that our simple request that the Company review its policies to make certain its employees were making only accurate statements in public was inappropriate because it dealt with, in the SEC’s term, ‘legal compliance.’
“Essentially,” said Ridenour, “not lying in public is ‘legal compliance,’ and the SEC does not want shareholders involved in legal compliance, so shareholders at publicly-held companies are not allowed to ask management to have policies in place to make certain their employees tell the truth.
“It seems illogical for the federal government to prohibit shareholders of public companies from telling management it should tell the truth, but that’s the SEC’s policy,” said Ridenour. “When bigshots at high-profile companies feel comfortable telling lies, you end up with scandals like this one with Brian Williams.
“Since Comcast’s management spent so much money to fight our proposal, they no doubt were happy when they beat us,” said Ridenour, “but I wonder if they are happy now. Had management reviewed its policies for making certain employees were not lying in public it might have realized it had big problems in the truthfulness area and taken actions that might have nipped the current Brian Williams scandal in the bud before it ever happened.”
Documents laying out our proposal, the Company’s opposition to it and our rebuttal, as well as the SEC’s final decision not to allow shareholders to request an accuracy review, can be found online on the SEC’s website here.
“I submitted my proposal after a Comcast employee, Rachel Maddow, falsely said on MSNBC on April 23, 2012 that my employer, the National Center for Public Policy Research, repeatedly ‘funnel[ed] cash and perks… to Members of Congress’ to influence legislation, which, if true, would have been a felony. Maddow also used the phrase ‘bribe[d] Members of Congress.’ At the 2012 shareholder meeting we asked Comcast CEO Brian Roberts for a correction and/or apology,” said Ridenour, “thinking we’d easily get one, as even high school-level journalists know better than to accuse people falsely of felonies in news reports. Instead, to our surprise, we received a long letter filled with irrelevant insults from MSNBC President Phil Griffin, and Maddow called us ‘cretins’ – among other things – in a broadcast.
“It was then that we realized Comcast had a serious problem,” added Ridenour, “as very top management did not appear to care about accuracy – at all. That can lead to all kinds of problems for media companies. I admit I thought the problem would be expensive libel suits against Comcast from people who did not like, as we did not like, being falsely accused of felonies, rather than the company’s #1 public face being brought down in an unnecessary, foolish and – for Comcast – expensive scandal, but it hardly matters. All these problems are expensive, they all were unnecessary, and they all could have been prevented just by making even a minimal effort to be accurate.”
Neither Ridenour nor the National Center for Public Policy Research ultimately sued Comcast for its libel, citing the time and expense such a lawsuit would have required, but National Center personnel, including Amy Ridenour’s husband, National Center President David Ridenour, and Free Enterprise Project Director Justin Danhof, have continued attending Comcast’s annual shareholder meetings and have continued to encourage management to impose accuracy standards internally, for the Company’s own sake.
Ridenour’s proposal for the 2013 shareholder meeting asked Comcast management to submit a report to shareholders that would:
- Disclose the policies and procedures by which the Company minimizes the risk of libel, slander and defamation lawsuits and its policies regarding the training of Company employees regarding the importance of fact-checking written and spoken statements;
- Disclose the Company’s policy for issuing corrective statements regarding statements by Company employees that carry a reasonable risk of being legally actionable;
- Describe the means by which the Company objectively evaluates employee statements for accuracy and legal exposure.
“This Brian Williams scandal is a big, expensive headache for Comcast,” concluded Ridenour. “A culture encouraging and enforcing accuracy could have prevented this headache. We again urge Comcast management to impose policies internally to make accuracy a high priority in all statements, written and spoken, by Comcast employees. This will benefit Comcast greatly.”
Press releases from 2013 describing the proposal contemporaneously as well as the exchanges of the National Center’s David Ridenour and Justin Danhof with Comcast CEO Brian Roberts at the 2013 shareholder meeting are available here and here, and a Washington Free Beacon story by Andrew Evans about that meeting is available here. A Newsbusters story by Jack Coleman about the 2012 Comcast meeting in which the National Center first asked for a correction/apology is available here.
The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, less than four percent from foundations, and less than two percent from corporations. It receives over 350,000 individual contributions a year from over 96,000 active recent contributors. Contributions to the National Center are tax-deductible and greatly appreciated.
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