Mr. Smith Goes to NewsMax

... and NewsMax is giving the New Hampshire senator a huge pre-election push. But is it legal?

By Terry Krepel
Posted 8/30/2002

Is NewsMax breaking campaign laws in its heavy promotion of New Hampshire Sen. Bob Smith's re-election bid?

It's not a question of NewsMax's credibility as a journalism source -- there isn't much of that in the first place. It's a question of legality.

At issue here are three NewsMax items: An Aug. 23 letter-style article by John LeBoutillier, an Aug. 27 "urgent message from Rudy Giuliani" -- both of which are endorsements of Smith -- and a NewsMax page on which donations to Smith's campaign can be made. (It's worth mentioning that a mere 2 1/2 months ago, NewsMax was denouncing Giuliani as a "Judas" and, more to the point, "no Reagan Republican" who "can’t be trusted by either Washington Republicans or conservative voters.") Our source for campaign regulations is the April 1999 edition of the "Campaign Guide for Congressional Candidates and Committees" issued by the Federal Election Commission (the most recent edition linked to on the FEC web site), which provides an general overview of the legal way to run for Congress.

NewsMax is a for-profit corporation (not that it's actually made one yet), which restricts its behavior in regard to campaigns. Among other things, corporations are "prohibited from using their treasury funds to make contributions and expenditures in connection with federal elections" (p. 23). Certain other services and communications are permitted.

We define the Guiliani and LeBoutillier letters as "express advocacy" as defined by the "reasonable person" test on page 70 of the manual ("a communication that, when taken as a whole and with limited reference to external events, can only be interpreted by a 'reasonable person' as advocating the election or defeat of one or more clearing identified candidate(s)") because they are so clearly beyond what would normally be thought of as an "endorsement" by a news organization. Giuliani is not a NewsMax employee, and though LeBoutillier has written regular columns for NewsMax in the past, he does not write regularly for it now and is, as near as we can tell, not a full-time NewsMax employee. If neither of them are full-time NewsMax employees, how can they be speaking for it?

They are clearly not "news" articles, at least as most news organizations would define it. Reproduction of a letter is not journalism, and that's exactly what these are; they are not presented in any sort of journalistic context. While newspapers, for instance, run letters to the editor, they almost always appear in a section of the paper reserved for opinions; NewsMax, on the other hand, makes no effort to differentiate or segregate fact and opinion on its site. In fact, links to the letters can be found in NewsMax's "news exclusives" archive, demonstrating NewsMax's confusion of news and opinion which it offers to the public.

Among the communications permitted are communications to a corporation's "restricted class," defined by the FEC as a corporation's "executive administrative personnel, its stockholders and their families of those two groups") that contain express advocacy, and sponsorship of "certain election-related communications to other employees and/or the general public as long as they do not contain express advocacy" (p.23).

Not only are the Giuliani and LeBoutillier letters freely available on the NewsMax web site and were prominently featured on NewsMax's front page, they were also e-mailed to subscribers of NewsMax's mailing list. Despite the clear appearance of being political advertisements, neither the online or e-mail versions of either letter contain any notification that it is a paid political advertisement. Thus it appears to violate the regulation against corporate communications to the public containing express advocacy. An mailing list appears not to meet the "restricted class" definition.

Additionally, both letters contain links to the NewsMax page on which donations to the Smith campaign can be made. (LeBoutillier's column contains six links to it.) The donation page does state at the bottom, "Paid For By Bob Smith for US Senate," but the mailing address for donations is a post office box in West Palm Beach, Fla., where NewsMax is located, far away from New Hampshire. This may fall under the category of "certain free legal and accounting services to a campaign" which corporations are permitted to provide, but one has to wonder if NewsMax's solicitation of money for Smith to be sent to NewsMax instead of directly to the Smith campaign qualifies as "accounting."

I don't claim to be an expert on campaign finance law, but as the FEC manual demonstrates, these sure look like violations on the face of them.

Neither NewsMax nor the Smith campaign responded to an e-mail from ConWebWatch requesting their views of the legality of the dissemination of these documents on NewsMax. But the link to the Giuliani letter featured prominently near the top on NewsMax's front page, complete with photo of Giuliani, disappeared after the e-mail's receipt.