Genachowski Invested in Several Dozen Web Firms
President Barack Obama’s nominee to run the FCC has extensive investments in Internet companies and has advised a wide array of publicly and privately held firms, according to his financial records filed last month. Julius Genachowski has had investmentsApril 7, 2009 in several dozen Web firms, said the report, a copy of which we obtained from the federal Office of Government Ethics.
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Genachowski has stakes in social networking, advertising and videogaming companies focused on Internet applications and has advised some of them or sat on their boards, it said. Two former FCC members said such stakes and advisory work will help him understand how the Web affects industries that are overseen by the agency.
Genachowski had about $1 million in 2008 annual income, mostly from private equity and corporate advising work, our analysis found. He started venture capital firm Rock Creek Venture (CD Jan 14 p1), and has a stake of $250,001 to $500,000 in it, showed the disclosure form. Through the firm, he had investments in Gizmoz, which lets people make avatars for use on social networks, and, in turn through LaunchBox Digital, stakes in online content company Heekya, Web music and game company JamLegend, online academic information sharing company Koofers.com, mobile game company Mpowerplayer, online social networking company MyGameMug, Web contact management firm ShareMeme and Zadby, an online marketer.
Much of Genachowski’s income came from working with Internet companies. He got $130,000 in advisor fees from Bandwidth.com, a business communications provider, $50,000 from Rapt Inc., an online ad software company, $46,500 in director fees from the Motley Fool financial Web site and $39,000 in director fees from Web.com. Rapt has been purchased by Microsoft. He got $40,000 in director fees from Ticketmaster Entertainment. Last month he left the board of that company, Genachowski’s report showed. Ticketmaster is attracting considerable attention on Capitol Hill for its deal to merge with entertainment promoter Live Nation. Genachowski got $214,055 in consulting fees from Jana Partners, a private investment company, and $23,704 in consulting fees from Mark Ecko Enterprises, described as a “clothing/lifestyle company.” The nominee is an investor in Karmaloop, which Genachowski’s report described as “focused on underground streetwear culture.”
Should Genachowski need to divest any holdings, he gets some time to do so after joining the FCC, said a former commissioner. His Web investments may not pose a conflict of interest, but if he held stakes in companies that were affected by a particular proceeding he'd have to recuse himself, the ex-official said. Genachowski’s investments reflect the fact that venture capital companies “look for lots of startup opportunities” and invest in many smaller firms, the person said. “That is a normal business strategy when you're in that space, as opposed to someone who is an investor in just the publicly traded market.” Genachowski may not have to divest very many assets, said Campaign Legal Center Policy Director Meredith McGehee.
Genachowski’s investments show a “varied and impressive background,” said Richard Wiley, a Republican who was chairman of the FCC in the 1970s. “His background in Internet-related activities is certainly relevant to some of his commission duties,” Wiley said. “It doesn’t regulate the Internet, but the Internet is certainly a tremendous information and entertainment source.”
Genachowski held stakes in Scripps Network Interactive and Barry Diller’s IAC/InterActiveCorp, his former employer, through a stake of $100,001 to $250,000 in Longacre’s special equity fund, the disclosure form showed. As of March, he was a director of publicly traded companies including the Motley Fool and Web.com. He advised privately held firms including fora.tv, Hillcrest Labs, Rearden Commerce and Viewpoints Network and sits on the advisory board of Bandwidth.com.
Genachowski had at least $5.4 million in assets, including a home worth between $1 million and $5 million, our analysis found. The disclosure document, as is standard, lists ranges but not precise dollar-figures for various assets and income. Our analysis used the lower end of all ranges and excluded all assets listed as held by his wife.
The disclosure form likely took a lot of time to complete, said a former FCC member. Nominees to agencies who must file the forms don’t want to make any mistakes such as not listing an investment, the former official said. “You have to accept that a lot of information that was previously in your private life becomes public.”