Ted Cruz’s Podcast Deal With iHeartMedia May Violate Ethics Laws, Watchdog Says In New…

Ted Cruz may have violated a federal law barring senators from receiving gifts from registered lobbyists when he accepted podcast production services from iHeartMedia, according to a complaint that government watchdog Campaign Legal Center filed with the Senate Select Committee on Ethics on Wednesday.

The Texas Republican and his co-host announced in the Oct. 7 episode of “Verdict with Ted Cruz” that their three-year-old, bootstrapped podcast—originally recorded in a dingy D.C. basement—had recently received an intriguing offer from iHeartMedia: “iHeart can fund the whole thing, fund production, dump a whole bunch of money into marketing,” said co-host Michael Knowles of the Daily Wire, sitting across from Cruz in a mirrored Las Vegas studio typically used to train showgirls. “This is incredible. It will make this show sustainable, not just for the next few months going into the midterms but for the next years.” The deal also calls for iHeartMedia to market and air the show on some of its 860 radio stations, supply Cruz with a new co-host and increase production from once to three times a week.

“This thing for the podcast is just a big damn deal,” Cruz said. “iHeartRadio is a monster.” Unfortunately for Cruz, iHeartMedia is also a registered lobbyist, which could make the whole arrangement illegal. The Honest Leadership and Open Government Act of 2007 bars lawmakers from “knowingly accept[ing] a gift from a registered lobbyist,” and according to Senate rules, services can qualify as gifts.

In disclosures filed with the Senate, iHeartMedia has reported spending $48 million lobbying members of Congress since 2003, trying to influence federal legislation around issues like data privacy, radio ownership and the Communications Decency Act. Campaign Legal Center’s complaint points out that concerns about conflicts of interest are not just theoretical here: iHeartMedia lobbied on two bills that appeared before one of Cruz’s committees last quarter.

Senators also are barred from accepting honoraria for oral presentations transmitted electronically, according to the chamber’s ethics manual. CLC’s complaint claims that Cruz’s deal with iHeartMedia could not be qualified as a political contribution either, because corporations are banned from donating directly to campaigns, even via in-kind contributions.

Cruz’s office argues that there is nothing wrong with his deal. “Senator Cruz receives no financial benefit from Verdict,” said a campaign spokesperson. “There is no difference between Sen. Cruz appearing on a network television show, a cable news show or a podcast airing on iHeartMedia.” A spokesperson for iHeartMedia confirmed that its Premiere Networks subsidiary is partnering with Cruz and said the senator is volunteering his time but declined to share details about the agreement.

Cruz’s unpaid status does not alleviate the ethics concerns, said Kedric Payne, CLC’s vice president, general counsel and senior director for ethics. “The same way they couldn’t give him a ticket to the Super Bowl and say, ‘He wasn’t paid to go,’ they can’t provide free production services that are invaluable,” Payne said. “He is [now] able to reach an audience that is broader than any cable station or radio network for free.”

Independent ethics experts noted another reason that Cruz might be able to maintain the arrangement: the pact could be considered a contract rather than a gift. “It can be a bit of a challenge to apply gift rules to contractual arrangements,” said Kathleen Clark, a law professor at Washington University in St. Louis, who specializes in government ethics. Sure, iHeartMedia is giving Cruz’s podcast a bundle of services, but in return, he is supplying the company with Ted Cruz—a famous, sharp-tongued podcast host with the proven ability to attract listeners and, therefore, advertisers. “I might argue that the member is providing something of value in return for what iHeartMedia is presenting,” said Clark.

Even if the Senate ethics committee were to agree that the services iHeartMedia is providing qualify as gifts, Cruz still might not be breaking any laws, according to another expert in government ethics. “The Senate ethics committee will then have to wrestle with the issue of whether the deal fits within one of the many exceptions to the gift rule,” said Brett Kappel, an attorney at Harmon, Curran, Spielberg & Eisenberg. For example, Senate rules allow members to accept benefits resulting from outside business or employment activities, “if such benefits have not been offered or enhanced because of the official position of the member, officer, or employee and are customarily provided to others in similar circumstances.”

Cruz likely would have to reveal the terms of any deal on an annual financial disclosure. Senators are required to report any agreements they enter into that result in compensation, as well as when a single source provides them with gifts worth more than $335. Cruz’s filing for 2022 is due in mid May, although he’s likely to get an extension that will push it back to August. (His previous disclosures make no mention of the deal.) The Senate’s six-member ethics committee oversees lawmakers’ compliance with ethics rules. Punishments for accepting a gift from a lobbyist can include reprimand and censure, but an inquiry may never be made public, said Payne.

As for iHeartMedia, by Jan. 30, it is required to file a semiannual lobbying compliance report certifying that it has read, understood and not knowingly violated the Senate’s rules on gifts. Gift-giving lobbyists are subject to possible criminal penalties of up to $10,000 in fines and five years in prison, while failing to comply with the Lobbying Disclosure Act can bring fines of up to $200,000 and five years imprisonment.

According to the complaint, Cruz’s situation appears to be unique. “Although Senator Cruz is not the only member of Congress to host a podcast, he is the only member who is apparently violating federal law, because there is substantial evidence that an illegal source finances the podcast.”

“No one is this bold to accept a deal like this,” Payne said of Cruz. “You just don’t do it.”