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Are the Koch Brothers' Politics Hurting Their Bottom Line?


David Koch in New York on Dec. 9, 2013

Photograph by Jin Lee/Bloomberg

David Koch in New York on Dec. 9, 2013

It’s kind of amazing to think that as recently as a few years ago, invoking “the Koch brothers” to almost any American would have drawn a blank stare. Then, as now, Charles and David Koch were the wealthy heirs behind Koch Industries, one of the largest privately held companies in the U.S., and they were major donors to conservative politicians and causes. To the general public, they were almost completely unknown.

That changed in 2010, when the New Yorker‘s Jane Mayer wrote a long piece describing the Kochs’ “war against Obama” and shining a light on the many political tentacles of what liberals have taken to calling “the Kochtopus.” Rather than staying in the shadows, the Kochs reacted by attacking Mayer—precisely the wrong strategy for a couple of reclusive billionaires hoping to maintain their anonymity. Since then, they’ve been cast as Machiavellian villains by political opponents, including the Democratic majority leader of the U.S. Senate, who has made a hobby of demonizing the Kochs.

Because their fortunes are privately held and they don’t need to answer to public shareholders, the brothers have largely appeared immune from the effects of having political mud thrown at them on a regular basis. Maybe not: A study by the media-tracking firm CMAG found Democrats running ads “lambasting the Kochs by name and image” in nine states. As CMAG’s Elizabeth Wilner notes, the ad campaign resembles the one launched by liberal Super PACs against Mitt Romney and Bain Capital in the 2012 presidential race.

In response, Koch Industries has begun running “image ads” such as this one to put a softer face on the company—and implicitly, the two men behind it:

This ad is, as Wilner suggests, “a tell”—a sign that political attacks on the Kochs may be having a negative effect on their business interests. Koch Industries is behind all sorts of popular consumer products that range from Dixie Cups and Brawny paper towels to cattle. (Beef Magazine recently extolled their stewardship of Matador Cattle Co.) Recognizing this, anti-Koch activists have pushed boycotts of their products. It stands to reason that four years of mounting attacks may finally be hurting Koch Industries’ bottom line.

Whatever cost those attacks have imposed, it has evidently not been sufficient to dissuade the Kochs from ramping up their political spending. With Republican control of the Senate in sight, their main political outfit, Americans for Prosperity, is rolling out a new $125 million campaign.

Green_190
Green is senior national correspondent for Bloomberg Businessweek in Washington. Follow him on Twitter @JoshuaGreen.

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