Television viewers in more than 3 million homes in New York City and its suburbs discovered this morning that their cable TV provider was no longer carrying local station WABC, flagship of the ABC Television network, raising the possibility that they might not be able to watch tonight’s globally-televised 82^nd annual Academy Awards ceremony.

The cutoff came after the breakdown of negotiations between The Walt Disney Company, which owns ABC, and Cablevision Systems Corporation, one of the nation’s largest cable companies.   Disney wants more from Cablevision in so-called “retransmission fees” for the right to transmit the WABC signal to the cable company’s subscribers.  When the two sides couldn’t reach agreement by their current contract deadline, Disney pulled the WABC signal.

These two prosperous companies will undoubtedly sort out their dispute, maybe even in time for tonight’s orgy of Hollywood self-congratulation.   What’s notable about the confrontation, however, is the harsh public language used by corporate combatants and the hints it provides of progress in the movement toward corporate governance reform.

On its web site for customers, for example, Cablevision argued: “It is wrong for ABC to demand $40 million in new fees, which is nothing more than a new TV tax, to help pay the salaries and bonuses for top ABC executives.”  (Translation: Executive compensation levels at Disney are a real issue.  That affects the type and quality of TV programming you receive.)

Disney’s WABC fired back: “Cablevision pocketed almost $8 billion last year, and now customers aren’t getting what they pay for – again.  It’s time for Jim Dolan and the Dolan family dynasty to finally step up, be fair, and do what’s right for our viewers.”  (Translation: The Dolan family makes an awfully good living because it tightly controls publicly-held Cablevision through its ownership of a special Class B common stock.  That affects the type and quality TV programming you receive.)

It’s no wonder that The Morning Bridge, a TV industry newsletter, published a special Sunday morning bulletin focusing on the war of words and asking: “Think anybody wins in these situations?”

(Update: Disney and Cablevision reached a tentative agreement and the ABC signal was restored 14 minutes into the Oscar broadcast.)

Is the tide turning?

Well, it could be that the movement for corporate governance reform is actually beginning to score some wins, if only because average citizens and small shareholders are beginning to understand that these issues can really mean something to them.  The question is whether these victories are only short-term tactical advantages or constitute signs of longer-term success.

“Up until now, it’s been sort of a Soviet system,” is the way shareholder democracy is described by Stephen Davis, executive director of the Millstein Center for Corporate Governance and Performance at the Yale School of Management.  “We have been operating in the United States under the myth that boards have been accountable to shareholders.”

Davis’s views are reflected in a generally upbeat weekend New York Times article on shareholder democracy which concludes that “the tide is beginning to turn, albeit slightly” for shareholders.  In addition to various rules changes, the Times cites the availability of more Web resources that help educate smaller investors to the issues, including ProxyDemocracy.org, Shareowners.org and MoxyVote.com.

Governance activist and blogger James McRitchie agrees that that the tide “is turning to become more balanced through increased voice from shareowners. Of course, we are still a long way from the point where most directors feel more accountable to shareowners than CEOs,” he adds.  McRitchie says his optimism about the outlook for shareholders, like that of other activists, is also fed by the work of the Securities and Exchange Commission’s newly-formed Investor Advisory Committee.

“A many-splendoured thing…”

Bob Monks

Seemingly less sanguine about the prospects for shareholder democracy is Robert A.G. “Bob” Monks, one of the world's most provocative thinkers on corporate governance.  Back in 2005, my colleague Marjorie Kelly, co-founder and then Editor of Business Ethics Magazine, wrote that “Monks seems to have invented the term ‘corporate governance.’”  As a co-founder with Nell Minow of the Corporate Library, a governance research firm, and founder of Institutional Shareholder Services (acquired in 2007 by RiskMetrics Group), Monks has an established track record in the field.

“Clearly, the modern shareholder, like love, is a many-splendoured thing, but while we can admire such diversity, we also have to ask whether any single class so broadly writ can ever begin to exercise its ownership rights vis a vis entrenched and well-funded corporate power,” Monks writes in a new, lengthy and colorfully-written post on the Harvard Law School Forum on Corporate Governance and Financial Regulation.

Monks goes on: “The practical effect of having ownership spread so broadly is that shareholders as a group have virtually no effective ownership rights they can exercise. Senior management pays itself, boards sit idly or complacently by, corporations abrogate ever more authority to themselves and gain an ever stronger voice in the political process, and when it comes time for the piper to be paid, the shareholders pony up in lost equity value and increasingly of late taxpayers pick up the final tab. This is a condition that ultimately serves no public good.”

One possible solution, suggests Monks, is a standard corporate structure with two classes of stock ownership: “passive shareholders, who choose not to exercise ownership rights, and stewardship shareholders, who already bear a fiduciary responsibility for funds under their management.”  Accomplishing that, Monks says, would require federal government action to create “a framework of legally enforceable responsibility.”

Speaking of Oscars…

None of this is likely to help some 3 million Cablevision subscribers in the New York area watch the Academy Awards tonight.   Their outrage is reflected in the comments on local newspaper web sites:

“GREED THY name is america.......if you make a gazillion dollars you want a bazillion......”

“Corporate blackmail with the consumer caught in the middle. Time for regulatory reform.”

Indeed, the current state of shareholder rights calls to mind the Oscar-winning performance of Peter Finch as TV anchorman Howard Beale in the prophetic 1976 film “Network.” Outraged by the respective states of society and the TV industry, Beale explodes spontaneously on-camera, driving ratings through the roof as he gets millions of viewers to join him in screaming: “I’m as mad as hell and I’m not going to take this anymore.” (YouTube)

It’s a message that the senior management and boards of Cablevision and Disney – and many other publicly-held U.S. companies – should listen to again and take to heart.

Disclosure: Michael Connor is a past employee of Cablevision Systems Corporation and ABC Television.

Oscar Photo: Darren Decker / ©A.M.P.A.S.

by Peter Asmus

The radically altered political dynamics in Washington, D.C. due to the loss of a Democratic Senate seat in Massachusetts mean that so-called “cap-and-trade” climate legislation probably has little chance of passing this year.  The only hope for passing a bill in 2010 that would cut carbon emissions could involve what most pundits have long thought of as the least politically viable approach: a tax on carbon.

But if that’s going to happen, an alliance of strange bedfellows will have to coalesce in short order, bringing together extremes on the left and right.  Joining in a legislative push would be environmental advocates and some large oil companies – most notably ExxonMobil, long a chief climate change skeptic, but more recently a carbon tax advocate following shifts in upper management.

“Climate change is an issue we take seriously and (we) believe responsible steps should be taken to address the risk,” says Ken Cohen, the oil company’s vice president of public affairs.  “We believe a revenue-neutral carbon tax is a more efficient policy option to reduce emissions…and is more able to be applied on a global basis than a cap-and-trade system.”

ExxonMobil’s opposition to a cap-and-trade policy is based, Cohen says, on a belief that “we should not be creating a complex derivatives market for a new commodity called an ’emission allowance’ as the recent financial crisis demonstrates. There is no need to create an opportunity for traders to extract profits from a trading system.”

Getting 60 Votes

Cohen’s critique of proposed cap-and-trade legislation – long the favorite of Washington insiders – sounds almost identical to that of the system’s environmental critics, like Friends of the Earth, Greenpeace and the Sierra Club.

Under a cap-and-trade framework, a cap would be set on carbon emissions.  Then, large carbon emitters would be able to trade for “clean air” credits created by companies which either perform activities that allegedly reduce net carbon (like planting trees or controlling emissions) or deploy new energy technologies that displace carbon, like replacing coal with wind.

A carbon tax involves a tax on all fossil fuels, such as coal, oil and gas.

“In my view, there is zero chance that any [cap-and-trade] climate legislation will pass this year,” predicts David Bookbinder, chief climate counsel for the Sierra Club. “The only thing that really makes sense is a carbon tax – but that’s the big ‘T’ word. A carbon tax has no price volatility, there is no abusive manipulation or a market; it is a very rational policy approach.”

In January, 80 U.S. corporate leaders -- including CEOs from companies such as eBay, Virgin America and Pacific Gas & Electric -- signed a joint letter urging President Obama and Congress to pass comprehensive climate and energy legislation this year. The prime message in the letter is that unless the U.S. sets clear carbon reduction targets, it will fall behind in the current global race to develop new carbon-free renewable technologies.

But most of those companies hold little sway among conservatives in Congress.  ExxonMobil and other energy companies not invested in coal do carry weight.  If they place a high priority on passing climate legislation in the form of a carbon tax, they could bring with them the prized 60^th Senate vote environmentalists need to avoid a filibuster against climate legislation.

Changing of the Guard

Under its prior CEO, Lee Raymond, ExxonMobil earned a reputation as an eco-renegade.  A smart and hard-nosed chemical engineer, Raymond was tone deaf to the social and environmental investors and advocates who framed the sustainability movement a decade ago.  He proudly positioned the company as the world’s most powerful climate change denier.

Now, three years after the transition to current CEO Rex Tillerson, the company is gently edging out of its self-imposed period of sustainability exile.  Tillerson can’t be regarded as an unbridled green advocate, in the model of BP’s former chairman Sir John Browne, but an increasing number of one-time critics think that, when it comes to actual performance on the human rights and the environment, Tillerson and his company could be the real deal.

“ExxonMobil seems to have recently had a dose of reality pills, and is taking climate change seriously,” says Bennett Freeman, Senior Vice President, Sustainability Research and Policy, for Calvert Investments, a leading socially responsible investment company. “For example, they recently invested $600 to $700 million on developing biofuels from algae.”

Freeman suggests that ExxonMobil’s support of a carbon tax is not driven by any desire to woo environmental advocates. “ExxonMobil does not do the warm and fuzzy thing well,” he says.  On the other hand, the company could be a powerful force in the carbon tax debate.  Culturally, says Freeman, “they are very straightforward. If they tell you ‘no,’ they mean ‘no.’  They have a “command and control” culture that helps drive commitments through the company.”

Seasoned eco-warriors like Randy Hayes, founder of the Rainforest Action Network and former head of the International Forum on Globalization, are happy to see oil companies such as ExxonMobil supporting a carbon tax.

“Either cap-and-trade or a carbon tax can be made to work to reduce the damage our society does, but the carbon tax is cleaner and my choice,” says Hayes. He goes on to say that “I can't imagine the version [of the carbon tax] that ExxonMobil, the Wall Street Journal, or the Financial Times want is the same one that nature needs. That said, we need the captains of industry to back a plan commensurate with the scale and timing of the problem.”

The Business Virtues of a Tax

There are compelling business reasons for companies like ExxonMobil to support a tax on carbon.

First, if Congress fails to act on climate, the U.S. Environmental Protection Agency will be forced to regulate carbon emissions under the Clean Air Act, creating a library of complex rules that could be expensive and only marginally effective.

Second, if Congress enacts a cap-and-trade approach, ExxonMobil fears the price volatility that could come with a global carbon trading regime, which could wreak havoc on oil development planning and finance.

Third, a carbon tax will reduce demand for coal, the most polluting fossil fuel, and give a marketplace advantage to natural gas and biofuels, the most carbon-lean.  ExxonMobil has increased its investments in natural gas, and recently made major investments in advanced algae biomass energy conversion.

Fourth, ExxonMobil may want to counter competitors like Shell, who are highly invested in energy commodity trading.

Environmental groups have their own reasons for supporting a carbon tax. “The whole concept behind the House and Senate cap-and-trade bills – creating large, international markets for carbon – is flawed. Worse, it gives away incentives to polluters and the targets for reductions are woefully inadequate,” concludes Ben Schreiber, Climate & Energy Tax Analyst for Friends of the Earth.

Friends of the Earth is one of more than 400 organizations now collaborating under the broad umbrella of “Climate Reality Check,” an initiative contemplating alternative legislative approaches to those already being considered by Congress.  “We don't have the 60 votes in the Senate to get where we need to be: a 40% reduction in carbon from 1990 levels,” says Schreiber.  “Even if the offsets included in either House or Senate cap-and-trade bills were real and verifiable, the reductions in carbon from 1990 levels are still less than 10 percent.”

Members of the “Climate Reality Check” coalition – which includes environmental justice, low-income and faith-based organizations - signed a letter last year opposing the House cap-and-trade legislation sponsored by Reps. Henry Waxman and Edward Markey.  The group had been exploring a "Plan B" even before the Copenhagen summit, but has yet to publicly come endorse a carbon tax or any other approach.

Elaine Kamarck, of the Kennedy School at Harvard University, and co-chair of the U.S. Climate Task Force, thinks the political viability of a carbon tax has actually increased over time.

“If a consensus emerges that cap-and-trade is just not going anywhere – and that seems to be just sinking in – then they will go back to the drawing board and examine other options,” she said. “You have to realize that cap-and-trade was initially being pushed before the economy fell apart. Markets were God and Wall Street was still filled with heroes. In that kind of political environment, cap-and-trade had some ‘oomph’ behind it. Now, Goldman Sachs and the rest of Wall Street are in the same category of bad guys as big polluters.”

Is ExxonMobil Serious?

Of course, any alliance with environmentalists depends on whether ExxonMobil is truly committed to a carbon tax.   Some critics claim the company’s public about face on climate change under CEO Tillerson is not heart-felt.

Robert A.G. Monks, a long-time ExxonMobil shareholder and critic, gives Tillerson credit for acknowledging “that there is such a thing as global warming” but harshly criticizes the ”inability of top management of this colossal company to understand, to take into account, to respond responsibly to the expressed concerns of entitled constituents.”

And there are lingering doubts regarding ExxonMobil’s role in the climate change debate. A recent story in the U.K.’s The Independent claims ExxonMobil was the funding source behind the rash of stories feeding skepticism about climate change in the lead up to the Copenhagen summit last December. While there is no doubt that ExxonMobil has delivered large financial contributions to think tanks such as the Atlas Economic Research Foundation (in the U.S.) and the International Policy Network (in the U.K.) as late as 2008, there is a lack of current available evidence the firm is the largest funder of such activities in 2009.

Whether ExxonMobil is playing two sides of the climate change issue at once is intriguing, to say the least. It could very well be that the company is a bit schizophrenic, which would not be surprising, given the history and size of the firm.

If a carbon tax is to ride to the rescue for both radical environmentalists, the faith community, human rights activists and, yes, oil companies, then something had better happen soon, since the attention span of Congress is limited, and another election cycle is nearing.

Peter Asmus (www.peterasmus.com) is the author of four books on energy and has been covering energy policy for over 20 years.