Murdoch Sees Telco KO

Carlsbad, Calif.— Calling the U.S. broadband infrastructure an “absolute disgrace,” Rupert Murdoch predicted “the telephone companies are going to knock [cable operators] out” in the high-speed business.

“There are plenty of good cable companies who will [deliver] up to 10, 20 or 30 [Megabits per second] service,” the News Corp. chairman said at a late-night session of the “D: All Things Digital” conference last week. But he chastised operators for “saving their money” and not investing in sufficient capacity for the looming broadband opportunities.

“Verizon [Communications] is doing a great job,” Murdoch said as he speculated on the slow-but-steady migration of entertainment content to alternative distribution platforms.

In related remarks about mobile media becoming “a big new thing,” he also complimented Verizon Wireless for its “open” platform.

“I want everything to be open,” Murdoch said, in an oblique reference to the network-neutrality issue, which popped up during several segments of this invitation-only conference run by the Wall Street Journal. Speaking to about 500 media and technology executives and investors,

Murdoch also spoke favorably about Hulu, the Web video service that News Corp,’s Fox owns with NBC. He emphasized that News wants “to monetize our copyrights with the long tail or something else. We want to control content as much as possible.”

Earlier in the day, Sony CEO Sir Howard Stringer, in response to an audience question, asserted that both cable and telephone companies “are trying to protect their networks.”

“There are gatekeepers everywhere protecting their turf,” he said, noting that he was “a former toiler for Verizon.” (Actually, Stringer was president of Tele-TV, an aborted interactive-TV venture set up by Verizon’s predecessor, Bell Atlantic, and other “Baby Bell” companies more than a decade ago.)

Acknowledging the deal Sony made with several MSOs to support the Tru2way technology last week (see page 4), Stringer acknowledged that, “Because we’re a big company, we stand on both sides of these issues.”

Time Warner Inc. CEO Jeffrey Bewkes, during his hour in the “D” hot seat, emphasized that his company is “the strongest [TV] network group in the world.”

Bewkes predicted that, despite the growth of broadband services, in ten years mass market viewing “will still largely be on TV screens.”

Bewkes acknowledged that some delivery may come via broadband carriers, admitting, “We have not done as good a job good of explaining how we’re converging into the digital world.”

He singled out the efforts Time Warner companies have made to create special content for digital platforms, such as three- to five-minute original Webisodes of HBO’s Entourage and other titles. Like Murdoch and many other D speakers, Bewkes focused on the opportunities for wireless services. He made no comments about the looming spin-off of Time Warner Cable properties.

In a curious sequence of audience questions during the day, Bewkes and Murdoch defended the controversial hosts of programs on their respective news channels. In response to a query about Fox News Channel’s controversial host, Murdoch said, “I’m not going to throw off Bill O’Reilly.”