Murdoch Warms Up the House - Multichannel

Murdoch Warms Up the House

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It's hardly a secret that Rupert Murdoch and House Republicans are tight, a bond that some view as not far from being a capitalist copy of Pravda
and the Soviet-era Kremlin.

In a rare appearance on Capitol Hill, Murdoch testified before the House Judiciary Committee last Thursday to defend his bid for DirecTV Inc., the 11-million-subscriber direct-broadcast satellite service vying with cable operators in every hamlet in the country.

Plaudits abound

Republicans on the panel embraced the naturalized American media baron with the Aussie accent for taking Fox News Channel to top of the cable-ratings charts, and for other daring media ventures.

"If my wife doesn't get a good dose of Fox News, she gets pretty grumpy. So there are a few of us who appreciate what you put on the air," said House Judiciary Committee chairman James Sensenbrenner (R-Wisc.).

The merger has come under attack from Democrats and others for placing too much power in Murdoch's hands. Murdoch dismissed that as totally inconsistent with his risk-taking track record, which includes creation of the Fox broadcast network, which few gave a chance against mighty ABC, CBS and NBC.

Rep. Mike Pence (R-Ind.) probably laid it on the thickest.

"I am a free-market conservative and I want to applaud your ingenuity and I want to express my gratitude for your willingness to risk your personal resources in ways that I think that added diversity to the American debate," Pence said.

Dems spoil fun

Not surprisingly, a few Democrats played spoiler.

Rep. Sheila Jackson Lee (D-Texas) said she disliked the political tilt of two News Corp. properties, Fox News (except for journalist Juan Williams) and the tabloid New York Post
newspaper.

"Those are two most prominent content that we see. They seem to be against everything that's minority, everything that is progressive," said Jackson Lee, an African-American.

Turning to the merger, she said she feared Murdoch would use DirecTV to cut off programmers not in keeping with his politics.

"You ownership is staggering," she said. "The question is: Are you going to allow [Cable News Network] to remain on DirecTV?"

Murdoch reassured her.

"Of course, we are going to keep CNN on the air," he said. "We want to have as much diversity in programming as possible."

Murdoch wasn't there solely to appease. He rejected suggestions that he needed to expand programming commitments to secure regulatory approval to acquire a controlling 34 percent stake in DirecTV parent Hughes Electronics Corp. for $6.6 billion.

No more promises

Murdoch has volunteered to abide by federal program-access laws, giving his competitors access on fair terms to a stable of News Corp. cable networks until 2007, when the rules are set to expire. News Corp. is currently covered by the rules, but certain asset sales by News Corp. partners Liberty Media and Cablevision Systems Corp. would change that.

But when Rep. Rich Boucher (D-Va.) pressed him to make his program-access commitment good beyond 2007, he would not yield.

"No, we would not agree to that. We don't think it would be fair to be committed by a rule that none of our competitors would be affected by," Murdoch said. "We would put ourselves at a permanent disadvantage to all of our competition if we accepted your suggestion."

Murdoch — who spent a total of about two hours before the committee — shot down another Boucher idea. The lawmaker asked if Murdoch would waive all consideration in order for rivals, such as EchoStar Communications Corp., to gain access to local Fox TV signals.

"No, I wouldn't," Murdoch said

Consumer groups, small cable operators, such as UVision Inc., and big MSOs such as Cox Communications Inc. all see Murdoch as having too many options. He could deny access to Fox broadcast programming (which is not covered by his program-access promise) or he could agree to give access to his stations, but not unless his rivals paid a rich premium and agreed to carry cable networks they didn't want.

"Na, they wouldn't do anything like that," sneered Rep. John Conyers (D-Mich.), the senior Democrat on the committee.

On the matter of withholding his TV stations from EchoStar and perhaps others, Murdoch noted that by law he must bargain in good faith, though he omitted that the good-faith requirement expires Jan. 1, 2006.

'Madness' to deny

"As far as we are concerned, I would just point out that it would be madness if I were to deny EchoStar the Fox signal, the Fox stations. It would cost us at least $400 million per year, and I am sure that Mr. [EchoStar chairman and CEO Charlie] Ergen could do other things to me in retaliation that would cost me another $400 million per year," Murdoch said.

Murdoch said he hoped the merger would allow DirecTV to serve all 210 markets with local TV signals, to expand high-definition TV service and perhaps to make direct broadcast satellite-delivered broadband access a reality.

Murdoch said he planned to discuss with Ergen ways in which the two could share the cost of expanding local TV service into small markets. EchoStar declined to comment.

Neal Schnog, president and chief operatingofficer of UVision and vice chairman of small-operator cable group the American Cable Association, told the panel that the News-Hughes combo should be blocked.

He alleged that Murdoch would use control of content and distribution to force small cable companies to pay rich sums for programming they didn't want or deny them access to programming they needed to remain competitive with DirecTV.

"If this merger proceeds, the reality will be like the Fox show Joe Millionaire. The merger has superficial appeal, and its stars are smooth talkers. But at the end of the show, the ugly truth will emerge," Schnog said.

Even Murdoch smiled at that one.

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