OPINION: Jesse Jackson Outrage Strategy: No Dough, No Go?

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By by David Almasi and Justin Danhof

Remember when Jesse Jackson challenged XM Satellite Radio for its racist advertising? Probably not, since it never happened. Why he didn't is the question.

In 2006 and 2007, XM ran television commercials that were blatantly racist, at least under a definition set by Mr. Jackson five years earlier. In the commercials, cartoon characters' musical tastes were personified by the radio waves featured in the XM logo. For example, they formed a Beethoven-like mane for a classical music aficionado and the long, bushy moustache of a country-western fan. At the end, as the music of rapper Snoop Dogg plays, a character smiles to show an XM logo as a gold tooth.

Back in 2001, Toyota ran a postcard campaign in which a smiling black face featured a gold tooth with the silhouette of a Toyota RAV 4 SUV. Mr. Jackson then accused Toyota and the Saatchi & Saatchi ad agency of racial insensitivity, saying, "[t]he only thing missing is the watermelon."

Toyota, fearing a threatened boycott, agreed to implement a $7.8 billion diversity program. The company "pledged to make $700 million in contracts and business opportunities available to minority firms each year for a period of ten years."

One would expect Mr. Jackson might now want to use the proposed merger of XM and Sirius Satellite Radio - imminently awaiting approval from the FCC - to exact justice for those hurt by the XM's apparent insensitivity.

But over 20 months have passed since XM's gold tooth commercial first aired. Looking at the Jackson record, one might suspect the lack of motivation is because of money - or, to be more precise, a lack of it.

It's not that XM's radio waves aren't on Mr. Jackson's radar. Mr. Jackson opposes the XM-Sirius merger. He claims "[the merger] will eliminate diversity of content and meaningful opportunities for minority partnership in media ownership. This cannot happen."

Mr. Jackson met with FCC chairman Kevin Martin in January of 2008 to demand that the merged broadcasters lease at least 20 percent of its channels to minority-owned companies. A Jackson-affiliated investment company that was represented at the meeting, Georgetown Partners, has also filed papers with the FCC opposing the merger.

This is just part of a long history of Jackson intervention in the broadcasting industry. In 1997, Mr. Jackson opposed the sale of ten Viacom-owned radio stations. After Viacom created a $2 million dollar minority ownership broadcasting fund, however, Mr. Jackson blessed the sale. The fund, run by Mr. Jackson's friend Warner Session, subsequently funneled $680,000 to Mr. Jackson's Citizen Education Fund (CEF).

Also in the late 1990s, Mr. Jackson opposed the merger of SBC and Ameritech, citing concerns for low-income consumers. Mr. Jackson later changed his mind and supported the merger after his friends at Georgetown Partners - who had no prior telecom experience - became partners in the sale of part of Ameritech's wireless business to GTE. After GTE and Bell Atlantic merged shortly thereafter, Mr. Jackson's CEF benefited from approximately $1 million in donations from the two companies.

What's the difference this time? One thing is undoubtedly money. The Wall Street Journal recently reported that the growth of the satellite radio industry is below expectations and the current state of the economy is expected to slow it further. New car sales, where radios come factory-installed, are slumping and in-store radio sales are down 35 percent against predictions.

At last year's annual meeting, Sirius CEO Mel Karmazin told investors he was "real unhappy" with his company's falling stock value, but assured them "we suck less" in comparison to XM. Motley Fool's Philip Durrell cited XM as his pick for "worst stock" for both 2007 and 2008.

It is a far cry from 2001, when Mr. Jackson helped officiate a meeting in which distributing the bounty of Toyota's "21st Century Diversity Strategy" was discussed.

As the XM-Sirius merger enters its critical final stages, the silence from Jesse Jackson about the questionable XM commercials is deafening. Then again, it is not wholly unexpected. It all seems to be a matter of dollars and cents to him.

David Almasi and Justin Danhof are the staff director and research associate, respectively, of the Project 21 black leadership network.