The New Television: Rupert Murdoch in the middle

Feb 24, 2003  •  Post A Comment

Rupert Murdoch recently visited the offices of the Federal Communications Commission to lobby for a relaxation of broadcast ownership rules. I’m surprised that staff members didn’t bow down and sing “Hail to the Conquering Hero.”
The News Corp. chief, a longtime supporter of Republican causes, is undefeated at the FCC since the GOP took control in 2001.
Here’s the record:
Voting along party lines, the FCC granted a waiver in August 2001 that allowed News Corp. to purchase 10 television stations, which gave the company two stations in New York. (The FCC’s cross-ownership rule prohibits a company from owning a newspaper and a local station in a city; News Corp. now owns two New York stations and The New York Post.)
The federal government last November rejected the EchoStar-DirecTV satellite merger, which Murdoch had lobbied against because he wants to buy DirecTV. EchoStar offered some last-minute concessions to the Justice Department that might have satisfied antitrust concerns. However, before Justice could review the new offer, FCC Chairman Michael Powell held a surprise press conference to announce that the commission was rejecting the deal. (Powell, son of Secretary of State Colin Powell, is a rising star in the Republican Party.) With the FCC in opposition, the Justice Department became irrelevant.
Powell has used his office as a bully pulpit to criticize some broadcast networks and the cable industry for not airing more programs in high definition. The FCC chief believes that digital TV sales will not take off unless consumers see that their favorite shows are in high-def. However, Powell has been silent on the Fox Network’s decision to ignore HDTV altogether. Fox, which is owned by Murdoch, does not air a single show in high-def. And, apparently, Powell and his fellow Republican commissioners are not planning to pressure Murdoch to do anything about it.
The FCC’s kid-gloves approach stands in stark contrast to how the agency once viewed News Corp. Because Murdoch’s company is foreign owned (Australia), the feds were cautious about allowing him to seize control over U.S. media properties. For instance, the then Democratic-controlled FCC took an entire year before voting in 1995 that News’ ownership of Fox was in the public interest. (I bet that some Democrats would like to reconsider that decision.)
But it looks like Murdoch’s longtime courting of the Republican Party is paying off. (He contributed $744,700 to GOP candidates in the 1996 election cycle alone, according to Common Cause.) The media mogul seems able to order up policies and rules like room service in a hotel.
Now Murdoch wants an end to or relaxation of broadcast ownership rules (Powell has already said he’s on board)-and most analysts believe he will buy DirecTV (despite reports of a bid from telco SBC). After Murdoch grabs more control of the nation’s media, will he try to influence the development of new TV technologies in his image? And if so, is there anyone who will stop him?
Aggressive approach
DirecTV, the nation’s top satellite TV service, with more than 11 million subscribers, has been a leader in the promotion and deployment of high-definition television. The satcaster provides high-def channels of HBO, Showtime, Mark Cuban’s HDNet and a pay-per-view movie channel. DirecTV has also developed partnerships with various TV makers to include DirecTV tuners in HDTV set-tops.
DirecTV’s aggressive approach has contributed to the recent boost in digital TV sales. In response to DirecTV, rival EchoStar and cable TV operators have rolled out high-def services perhaps earlier than planned. The overall increase in HD programming has encouraged more consumers to buy new digital sets.
However, if Murdoch buys DirecTV, it’s a fair question to ask if he will continue to push HDTV. On Fox in the United States and on Murdoch-owned stations worldwide, HDTV is clearly not a priority. Murdoch believes that the cost of deploying the technology is not equal to the return. He prefers interactive services, such as games and gambling, which generate immediate revenue and can be accessed monthly user fees. (News Corp. is a 43 percent owner of Gemstar’s TVG Network, the horse racing wagering service.)
If carried out Murdoch’s vision would help revive interactive television in the United States. However, with the FCC making HDTV a national priority, how will the agency react when Murdoch asks for approval to purchase DirecTV? Will fellow Republican Powell threaten to kill the deal unless Murdoch produces a plan for high-def?
If Murdoch does buy DirecTV, it could force Powell and the Republicans to make a choice: HDTV or Rupert Murdoch? Which one is more important to their futures?
Phillip Swann is president and publisher of TVPredictions.com. He can be reached at Swann@TVPredictions.com.