Tuesday, May 13, 2008
If he seizes America's satellite TV market, über-mogul Rupert Murdoch will rule the airwaves on earth and in heaven. But John McCain may shoot him down.
May 21, 2001 | If Rupert Murdoch were a superstitious man, he would surely suspect by now that his efforts to become a dominant player in North America's direct-broadcast satellite business were jinxed. After several aborted attempts at cracking the satellite TV market, stretching over an 18-year period, the 70-year-old media magnate finally seems close to finalizing a complicated deal with Hughes Electronics to merge its DirecTV with Murdoch's Sky Global empire to create a $70 billion public company. If those protracted negotiations do pay off (they already collapsed once in February), DirecTV would become the jewel in Murdoch's ever-growing satellite television crown. With a flag in every developed continent, Murdoch's broadcast satellite empire would have the global reach his competitors could only dream about.
Convinced it's the answer to his cable competitors (most notably AOL Time Warner), as well as the foundation for the coming interactive television revolution, Murdoch has staked his News Corp.'s future to satellite TV. That's why the DirecTV deal, already nearly a year in the making, stands "as one of the most important of Murdoch's career," says Jimmy Schaeffler, television subscription analyst for the Carmel Group.
But bids for world domination have a way of going awry. And just as Murdoch stands ready to exult, "Mine, all mine!" along comes Sen. John McCain, R-Ariz., who recently announced that if Murdoch and Hughes come to terms, he would like to examine the merger to make sure it doesn't consolidate too much media power in the hands of one man.
Murdoch's $30 billion media kingdom girdles the globe and includes vast chunks of American media, including the Fox network; 23 TV stations; the cable networks Fox News Channel, Fox Sports Net and FX; the film studio 20th Century Fox; the New York Post; and book publisher HarperCollins. The DirecTV deal would cement Murdoch's position as the most powerful media mogul on the planet. Not bad for someone who entered the business nearly half a century ago when he inherited two Australian newspapers from his father.
But critics are concerned that the DirecTV deal would give Murdoch dictatorial powers over the country's news and information flow. Broadcast satellite has been cable TV's fiercest -- some would say its only real -- competitor. Would that still be the case if its largest player, DirecTV, were owned by a company with vast cable holdings, such as News Corp.?
And as a brash conservative ideologue, Murdoch has never been timid about using his media properties, particularly his newspapers and TV networks, to help his political friends and hurt his foes. Fox News may trumpet its sense of balance, but this is the network that hired a cousin of George W. Bush's to track the votes state by state on Election Night, including Florida, which he called for Bush. (This helpful relative also found time to keep the Republican candidate up to speed on the latest electoral developments.) Murdoch also has a long record of kowtowing to China's dictatorship, including yanking the BBC's World Service Television from the China beam of a News Corp. satellite. Murdoch later conceded to the New Yorker, "The BBC was driving [the Chinese regime] nuts. It wasn't worth it."
Then there's the trashy tabloid tone to much of Murdoch's TV programming. Would Murdoch's domination of the broadcast satellite market further debase American television?
But media mergers are not approved or rejected on the merits of the company's content. And until recently, the DirecTV deal, which analysts now expect to be completed within a matter of weeks, seemed to be in no danger. Speaking to reporters on a May 9 conference call, News Corp. president Peter Chernin said he saw no regulatory hurdles ahead.
That was McCain's cue. The next day the influential Republican chairman of the Senate Commerce Committee announced that if and when the satellite merger was finalized, he would likely hold hearings to explore any anti-competitive implications. Murdoch's acquisition, declared McCain, could result in "a consolidation of power the likes of which this country has not seen since William Randolph Hearst."
McCain's unexpected comment must have given Murdoch that old sinking feeling in his stomach. "Needless to say, luck has not been with him," says Schaeffler. "It's a concern any time the government sticks its nose in your business. It brings a lot of attention on your service and it means extra time and money on lobbyists and lawyers trying to get you results."
Murdoch immediately downplayed the Hearst comparison by pointing to the size of his media competitors. "Look at AOL Time Warner. We're a fraction of the size of that, and indeed look at CBS/Viacom," he told CNBC during an interview. Of course neither of those behemoths was built by one man, and neither is controlled by one man, the way Murdoch assembled and today governs News Corp.
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