Sen. Bob Menendez (D., N.J.) attempted years ago to block a merger of two Hispanic media companies that would have hurt financially a major donor and damaged the senator’s own stock holdings.
Menendez fought hard to prevent the merger between Univision and the Hispanic Broadcasting Corporation when he was a representative in Congress. He argued that the merger between the two companies would give Univision unacceptable market power and would hurt other Hispanic media companies, in particular the Florida-based Spanish Broadcasting System, in testimony before the Senate Commerce Committee.
Menendez failed to mention during his testimony that he owned stock in Spanish Broadcasting System (SBS) and that SBS principals were major campaign donors.
Menendez’s financial disclosure forms show he owned Spanish Broadcasting System stock when the hearing took place in 2003. He purchased the stock in 1999 when the company executed its initial public offering, and he valued his stock purchase between $15,000 and $50,000. The stock was priced at $20 a share at the time of its IPO.
This created the appearance of a conflict of interest, watchdog groups said.
“As someone who has examined the financial disclosure reports of hundreds of congressmen over many years, I can tell you that quite a few avoid investing in individual stocks just to avoid such appearances of a conflict of interest,” Ken Boehm, chairman and cofounder of the National Legal and Policy Center, told the Free Beacon by email. “Instead, they tend to invest in mutual funds, government bonds, and other investments.”
“In the Univision case, it appears that Robert Menendez went out of his way to help a company in which he had an investment,” said Boehm. “The fact that a representative went over to a Senate hearing to promote the interests of a company in which he was invested tells me that Mr. Menendez was insensitive to appearances. At the minimum, he should have disclosed his stock holdings.”
Menendez testified that SBS would find it difficult to compete with the new merged company.
“Univision’s only competitor in radio, the Spanish Broadcasting System—the second largest Spanish language radio company with only 16 radio stations nationally and notably the only one owned and operated by Hispanics—will find it difficult to compete with the merged entity,” Menendez said.
Menendez also cosigned a letter to the Federal Communications Commission opposing the merger.
“Our constituents, more than any others, have a huge stake in such a massive consolidation of Spanish-language media companies,” wrote Menendez, former Rep. Silvestre Reyes (D., Texas), and Rep. Xavier Becerra (D., Calif.). “Therefore, we respectfully request that you withhold making any decision on this merger until a complete review of the merger can be done, and CHC has an opportunity to weigh in on behalf of our constituents.”
Reyes could not be reached for comment. Becerra did not return a request for comment after his spokesman asked for questions to be emailed.
Menendez also cosponsored legislation that would prevent such mergers from occurring.
H.R.2052, the Preservation of Localism, Program Diversity, and Competition in Television Broadcast Service Act of 2003, was introduced in May 2003. The legislation would have counteracted the FCC’s action to approve the merger.
The FCC approved the merger in September 2003 despite opposition from Menendez and other Democrats. Menendez sold his stock in 2007, his financial disclosure forms show.
Menendez’s office did not answer a request for comment.
An analysis of records shows the Spanish Broadcasting System principals and relatives have been generous donors to Menendez. The company’s founder, Raul Alarcon Sr., donated $8,200 to Menendez, $15,000 to Menendez’s New Millennium PAC, and $15,500 to the Democratic Senatorial Campaign Committee. His wife, Alma, donated $4,000 to Menendez.
Raul Alarcon Jr., the current chairman and president of SBS, donated $12,800 to Menendez. He also donated $100,000 in September 2012 to the Majority PAC, run by former lieutenants of Senate Majority Leader Harry Reid (D., Nev.). Majority PAC spent lavishly in support of Menendez, who faced token opposition in his reelection fight last year.
Alarcon Jr.’s ex-wife Maria also donated $4,000 to Menendez.
Alarcon Jr. also donated $10,000 in 2011 to Fund to Uphold the Constitution, Menendez’s legal defense fund, which was formed to defend the senator against recall efforts.
Alarcon Jr. was quoted as saying the merger was the “last nail in the coffin of Hispanic media ownership.” His company stood to “lose the most if the merger was approved.”
SBS did not answer the Free Beacon’s requests for comment.
Menendez and at least 20 other Democrats urged the FCC chairman to block the merger.
According to Boehm, Menendez’s past is now catching up to him.
“All too often elected officials lose sight of the fact they are sent to Congress to represent their constituents and not their major donors or their own narrow financial interests,” Boehm said. “It’s no wonder that Menendez’s past practices are now catching up to him.”
Menendez has remained defiant in the face of accusations of impropriety.
“Nobody has bought me, No. 1,” he told Univision last week. “Never, in 20 years that I have been in Congress, never has this been suggested that this has been possible. Never in 40 years of public life.”