In the Southeast, power company money flows to news sites that attack their critics
December 19, 2022
Heard on All Things Considered

By DAVID FOLKENFLIK

NPR's David Folkenflik reported this story with Mario Ariza and Miranda Green of Floodlight, a nonprofit newsroom that investigates the powerful interests stalling climate action.

Terry Dunn couldn't fathom why Alabama's residents — among the poorest in the U.S. — pay some of the nation's most expensive electricity bills.

So in 2010, Dunn ran for a seat on the state commission that sets energy prices. He promised to hold a formal rate hearing at which Alabama Power executives would have to open their financial books and answer questions, under oath and in public. That hadn't happened for nearly three decades.

After winning, Dunn says, a top lobbyist for the utility took him aside and promised he could hold his roughly $100,000-a-year position on the commission for years — as long as he remained a team player. (Alabama Power declined to make the executive available to address the accusation; the utility and its corporate parent, Southern Company, declined all comment for this story.)

"They didn't take me serious," Dunn says now.

Dunn, a Republican and Tea Party conservative, plowed ahead. And soon enough, he found himself the target of a political pressure campaign, replete with character assassinations and online smears.

Attacks began in online news outlets in 2013. One headline in Yellowhammer News read: "Democrats Embrace Republican Public Service Commissioner Terry Dunn."

In a June 2014 column, Alabama Political Reporter's editor in chief, Bill Britt, cast Dunn as a pawn of his own aide, a Democrat.

"For some Dunn is a populist hero; for others, he's a radical environmentalist," Britt wrote. He saw Dunn as manipulated by those who "find companies like Alabama Power a convenient political target."

These were devastating portrayals for Dunn in a deeply red state.

"Mostly everything was all made up," he says. "You get to thinking, 'Why are they attacking me?' I'm just telling the truth and trying to do what's right for the people."

Floodlight and NPR have not been able to independently verify whether Alabama Power directed or had prior notice of the sharply critical coverage aimed at Dunn.

In 2014, Dunn lost his reelection bid by 19 percentage points — to a catfish farmer who had previously served as a county commissioner.

Eight years after Dunn's defeat, Alabama has still not held a rate hearing on electricity prices. Alabama Power remains one of the most profitable utility companies in the country.

Yellowhammer News and Alabama Political Reporter offer clashing ideologies - one hardline conservative, the other centrist - and appear simply to be competitors. Owners of the two sites separately defend their coverage, saying they are independent news outlets.

In reality, they are among six news outlets across Alabama and Florida with financial connections to the consulting firm Matrix LLC, a joint investigation by Floodlight and NPR finds. The firm, based in Montgomery, Alabama, has boasted clients including Alabama Power and another major U.S. utility, Florida Power & Light.

In addition to Yellowhammer and The Alabama Political reporter, the sites include Alabama Today, The Capitolist, Florida Politics and the now-defunct Sunshine State News.

A tally of the five still-functioning sites show they have a collective audience of 1.3 million unique monthly visitors. Many of their consumers are political professionals, business leaders and journalists — people who help set the agenda for lawmakers and talk radio shows in both states.

These readers have been unknowingly immersing themselves in an echo chamber of questionable coverage for years.

Matrix shrewdly took advantage of the near collapse of the local newspaper industry and a concurrent plunge in trust in media in propelling its clients' interests.

"The reduction in just the size of the press corps covering state government has created a vacuum that I think tends to be filled by people who have agendas beyond serving the public interest," says former Miami Herald executive editor Tom Fiedler.

A core tenet of U.S. journalism holds that reporting should be fair and transparent, unaffected by financial backers who may have their own hidden interests. News outlets are supposed to hold the powerful to account and give people the knowledge to make choices as informed citizens.

The public bears the brunt of deep cuts in conventional newsroom staffs, Fiedler says, as those driving the news agenda at some newer outlets are often "the special interests - in many cases, the monied interests."

In Alabama and Florida, Matrix sought to ensure much coverage was secretly driven by the priorities of its clients. Payments flowed as the utilities in Florida and Alabama fought efforts to incorporate more clean energy in electric grids — a fight they are still waging.

For this investigation, Floodlight and NPR drew upon hundreds of internal Matrix documents and public records, more than three dozen interviews, a review of social media postings, and an original analysis of coverage.

Those accounts reflect a complex web of financial links, in which the six outlets collectively received, at minimum, $900,000 from Matrix, its clients, and associated entities between 2013 and 2020.

All of the media organizations deny their coverage was shaped by those payments and deny they acted unethically.

The founder of Matrix, Joe Perkins, says the firm paid news sites only for advertising and other run-of-the-mill services for its clients. He also denies Matrix paid anything at all to two of the sites. Beyond that, Perkins has consistently called the firm's former CEO, Jeff Pitts, a "rogue employee" and, in a lawsuit, alleges Matrix is not responsible because the former executive acted without his knowledge or his firm's consent. Pitts did not respond to several detailed requests for comment. In court filings, Pitts says Perkins knew everything–and he accused Perkins of wrongdoing.

They also cast blame on one another over a series of recent scandals. Matrix recently made headlines for surveillance of a power company CEO and a journalist who wrote critically about Florida Power & Light's business plans. Matrix has also been accused of seeking to influence ballot initiatives on clean energy and offering a lucrative job to a public official in Jacksonville to induce him to resign. Florida Power & Light did not respond to a detailed list of questions, and an executive for the company declined to address them in a phone call.

Payments to news sites flowed as utilities fought clean energy initiatives
Coverage of Matrix's power company clients at the six news sites ebbed and surged around election seasons and other key inflection points. For example, Sunshine State News emerged when Sen. Rick Scott, a consistent ally of Florida Power & Light, was governor of Florida and maintained warm ties with him. Matrix records show the firm paid the site at least $180,000. It shuttered a year after he won election to the U.S. Senate. A former Scott aide also founded The Capitolist, based in Tallahassee.

Additionally, Matrix's clients took a strong interest in who wrote the laws and enforced the regulations. Last year, Florida Power & Light wrote a bill that was passed by the Florida Legislature and that would have gutted the ability of homeowners to make money off solar panels. Gov. Ron DeSantis ultimately vetoed it.

One state away, Alabama Power runs and owns a coal-fired power plant that is the largest single source of carbon dioxide emissions in the United States.

An analysis by Floodlight and NPR of the three Alabama news sites with links to Matrix finds overwhelmingly positive coverage of Alabama Power. The review looked at articles on each site that contained the phrase "Alabama Power" and found that the vast majority of pieces either were positive or appeared to mirror a news release by the utility.

In interviews, two former reporters at the Alabama Political Reporter recounted episodes in which articles about Alabama Power received intense and unusual scrutiny from editors. In one case, the story was never published. Its proprietor denies any such influence on the site.

Together, Alabama Power and Florida Power & Light keep the lights on for nearly 7.5 million businesses and households. Since consumers' payments contribute to much of the two utilities' profits, much of the money that the companies spend effectively derives from consumers' bills.

From its creation, Matrix has focused on manipulating the media
Matrix founder Joe Perkins has long held an interest in the power of the media. As a doctoral student at the University of Alabama, he wrote his thesis about a specific quandary: How can journalists' choice of sources and anecdotes affect public sentiment?

"When a minority opinion gains access to the news media repeatedly through various techniques to make its point, it may be perceived as more widespread and pervasive than it actually is," he wrote in his 73-page paper.

He then put his research to use, building up Matrix.

In the early days, Matrix quietly sought to influence decisions over matters like who was eligible to win contracts with the Alabama teachers pension fund. The firm eventually established a presence in 10 states.

Stealth was a hallmark of the operation. Matrix employees often created shell companies to conduct transactions for clients.

"Invisibility is more powerful than celebrity," reads a plaque hanging in Matrix's Montgomery office.

Perkins and Pitts, the CEO, were characterized by some as akin to father and son; Perkins promised to one day pass on the company. Pitts benefited from an ability to instill loyalty and fear in those who carried out his commands, according to multiple people who have worked with him. (Most Matrix associates refused to be interviewed on the record for this story, citing the influence the two men maintain in their professional circles.)

It took the unraveling of Matrix to reveal the full extent of its influence.

At the end of 2020, Pitts left Matrix to start his own rival consulting firm called Canopy Partners. Perkins sued, accusing Pitts of secretly engaging in work for a utility based in Juno Beach, Florida while at Matrix. That is where Florida Power & Light is headquartered.

In litigation involving both men, Pitts alleged he quit Matrix over Perkins' "unethical practices," including "deploying phony groups and digital platforms to intimidate individuals as a method to influence public perception and litigation."

How Alabama Power became a digital media player
The Alabama Political Reporter and Yellowhammer News launched during the same week in 2011. They have consistently cheered Alabama Power through overwhelmingly positive news stories.

Starting at least as far back as April 2013, Matrix paid $8,000 a month to the Alabama Political Reporter, according to internal Matrix records. Matrix also drew up a proposed website design for the publication in June 2015, according to prototypes obtained by Floodlight and NPR.

Britt, Alabama Political Reporter's editor in chief, says he could not verify the specific Matrix payments. He mocks the authenticity of the prototype, while confirming that Matrix designed his website. Britt affirms he took money from the firm for advertising and acknowledges that Matrix also paid for reporters to do research for the firm, an atypical practice for newsrooms.

"We have to make money," Britt says.

When Alabama Power CEO Mark Crosswhite announced his retirement last month, Alabama Political Reporter posted a story written by "STAFF." It reproduced the company's press release, verbatim.

The links to Yellowhammer News are more convoluted. In 2014 — the year Terry Dunn lost his bid for reelection — he faced attacks in the online press, including in Yellowhammer News.

Floodlight and NPR were able to document a complex stream of transactions between a nonprofit run by an Alabama Power contractor and a series of nonprofits linked to Matrix and Yellowhammer News.

For example, Yellowhammer News runs the Facebook page of a nonprofit, the Alabama Free Market Alliance, which attacks renewable energy. That nonprofit received $100,000 in 2014 from the Alabama Power-linked group, federal tax records show. All the nonprofits were involved in work that furthered the interests of Alabama Power.

"Yellowhammer Multimedia has no relationship, financial or otherwise, with Alabama Political Reporter, Matrix LLC or Alabama Free Market Alliance," Yellowhammer News owner Allison Ross says. She did not respond to questions about the site's relationship with Alabama Power.

A Florida power company CEO orders up a story at The Capitolist

Florida has stood out as one of Matrix's biggest successes. The firm represented several of the state's largest corporations, including a major fertilizer and sugar company as well as Florida Power & Light.

Documents obtained for this story show executives at Matrix and Florida Power & Light dictated some coverage at The Capitolist after a Matrix employee purchased an option to buy the publication in 2019 through a limited liability company.

In May 2020, The Capitolist ran a story mocking a call by the Miami Herald for reader donations. The headline read: "The Miami Herald has turned to begging to support their biased reporting and fear-mongering."

Emails obtained by Floodlight and NPR for this story show that Florida Power & Light CEO Eric Silagy had proposed the story to Matrix employees.

"I would think The Capitolist would have a field day with this one," Silagy wrote to Pitts on May 4, 2020. The story ran three days later. Silagy had also suggested a cartoon of a prominent Herald reporter, Mary Ellen Klas, "with a tin cup on the street corner." The Capitolist blasted to thousands of its email newsletter subscribers an edited image of Klas in which she holds a sign asking for "Spare change for Fake News — Miami Herald reporter needs help."

Journalism relies on a currency of trust: trust that the information provided is fairly presented. Trust that there are no hidden ulterior motives driving those reports, even when news is presented with a point of view.

"If you are paid for copy, then you can't be fair," says Chuck Strouse, the former editor in chief of Miami New Times. "You have to acknowledge and be upfront with your reader about what exactly is happening. I mean, that's just a cardinal rule of journalism."

The editors operating the Matrix-linked sites do not appear to be following those rules.

For example, emails show that The Capitolist's editor-in-chief and publisher, Brian Burgess — once a top aide to Senator Scott back when Scott was Florida's governor — asked Matrix executives for permission to write a pro-solar energy story. The story was requested in May 2020 by one of The Capitolist's other sponsors — a public relations company.

"Sachs Media is asking me for coverage on this, but wanted to run it by you first," Burgess wrote to Abigail MacIver, the Matrix employee to whom the site was formally registered. "Need guidance on this ASAP."

Sachs Media's founder, Ron Sachs, confirms that his firm had advertised in The Capitolist.

Emails show the Matrix executives ultimately agreed to let Burgess write the story because, as MacIver wrote, "it makes him look like he's not in our pocket and it isn't bad for" Florida Power & Light. (The executives were among those Matrix later sued.)

"The Capitolist stands by the accuracy of every story it has published and openly acknowledges that we bring a center-right, pro-free market editorial viewpoint to our work," Burgess writes in response to questions from NPR and Floodlight.

Advertisers receive more coverage at popular news site Florida Politics
Of all the leaders of sites with links to Matrix, only one, Florida Politics Publisher Peter Schorsch, acknowledges he doesn't observe traditional journalistic practices when deciding what to cover.

In an interview, Schorsch says he practices "combination journalism": He says Florida Politics' coverage is not dictated by advertisers, but it often gives them favorable coverage. And, he says, sometimes he gives them more coverage.

"Once a relationship is developed, if they come to us with the pitch [to cover a story], yes, they are going to be at the front of the daily line as opposed to a national advertiser making a pitch who I've never dealt with before," Schorsch says. "I will say there's a very big wall in our operations" between advertisers and coverage.

A 2021 invoice shared by Schorsch shows that Florida Power & Light paid the site $43,000 for advertising, enough to cover the cost of a full-time reporter. Schorsch says his reporters do private research for clients too, though he would not specify what that entailed.

By his own account, Schorsch also was paid roughly $100,000 by Apryl Marie Fogel, the publisher of Alabama Today, another of the Matrix-linked sites. The money went for help with "editorial and digital tech services," he tells NPR and Floodlight. Fogel, who is also former Matrix CEO Pitts' romantic partner, received more than $140,000 from Matrix, the firm's records show. (She declines to comment on her ties to Matrix, saying "not my monkeys, not my circus." )

Schorsch calls Fogel a friend and says he did not know she was being paid by Matrix.

Ryan Ray, a Florida Politics reporter from 2014 to 2017, says Schorsch directed him to write favorably about industries that advertised with Florida Politics.

"There is no question that polluters, big special interests and others who have an interest in influencing Florida state government have paid Peter Schorsch for positive coverage or to avoid coverage," Ray tells Floodlight and NPR. "I think even he would tell you that."

Schorsch rejects that allegation.

"I don't think there's been any thumb on the scale," Schorsch says. And he defends his model of journalism.

"I'm not trying to pretend that I'm an angel or anything like that," Schorsch says. "But ... man. If I go, there's nothing left in this f***ing space. There's like the Tampa Bay Times, the Miami Herald, and you're down to nothing."

"They abandoned me. So let them struggle."

As for Terry Dunn, he now lives more than two hours' drive from Montgomery, Alabama's capital. He left the city for good after he lost his reelection bid in 2014.

"Seeing how dirty everything was, [it's] basically just a cesspool down there," Dunn says. "I was glad to get out."

Despite believing Alabama Power sent Matrix to drag him down, Dunn has trouble separating those who created corporate propaganda from the people who swallowed it — and voted him out of office. He knows that Alabama residents' electricity rates are not appreciably better today than they were before his election. These days, what fight he had has been displaced by resentment.

"Alabamians bitched about high power bills, but when they had someone that would address it, they abandoned me," Dunn says. "So let them struggle to keep the lights on."