“Phil Falcone has never even shaken the hand of the president. Ever. Period. But that fact didn’t matter once word got out that he and his wife Lisa donated to Democrats,” said a person close to Harbinger who was not authorized to speak on the record.
Ultimately, though, the man accused of greasing the wheels in Washington couldn't gain enough traction to close the deal.
Some inside LightSquared were frustrated that Falcone’s Harbinger was slow to respond to the accusations of political favoritism. Adding fuel to the fire, Falcone was separately under scrutiny by securities regulators for a $100 million loan he took from Harbinger to pay off personal loans and taxes.
But worse, perhaps, he was rarely seen around town. Unlike JPMorgan’s Jamie Dimon or Google Chairman Eric Schmidt, LightSquared didn’t have a commanding executive who sat on administration advisory committees or worked the cocktail-and-benefits circuit.
The former chief executive of LightSquared, Sanjiv Ahuja, split his time between New York and Reston, and ran other businesses. It was hard to keep track of when executives met with regulators or were in town.
“Phil is from a world where people sit in front of computer terminals analyzing their investments and operate in complete secrecy. He didn’t want to go after opponents even though they had launched an all-out public assault,” said one person close to LightSquared and Harbinger who was not authorized to speak publicly.
The company eventually fought back, spending $1 million on lobbying in the first quarter of this year compared to $350,000 during the same period of 2011. Falcone came down to Washington more frequently and met with government officials. But all of that came too late; by last summer, LightSquared had become a political outcast and the once friendly FCC appeared to turn its back on the venture. The agency declined to comment for this story.
FCC as rainmaker
The FCC has long drawn opportunists looking for big bets with steep risks. Falcone was first lured in 2006, when he began to pour billions of dollars into “resource plays” like iron ore, oil and broadcast spectrum — where supplies are finite but demand is only growing.
The FCC has been a kingmaker for billionaires like Craig McCaw, who in the early 1980s won cellular licenses in an FCC lottery. He landed McCaw Cellular in major U.S. markets and in 1994 sold it to AT&T for $11.5 billion.
In the 1980s and 1990s, Morgan O’Brien formed Nextel by stitching together radio frequencies used by taxi drivers and delivery workers to build a nationwide network. In 2004, he sold it to Sprint for $35 billion.