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Posted: 5/9/2003 11:35:43 PM EDT

Mr. Murdoch Goes To Washington

By Cynthia L. Webb
washingtonpost.com Staff Writer
Friday, May 9, 2003; 9:40 AM

Media mogul Rupert Murdoch went to Capitol Hill in Washington yesterday to win lawmakers' support for News Corp.'s bid for a controlling stake in Hughes Electronics Corp.'s DirecTV satellite service.

Just how hard of a sell Murdoch had depends on who covered the hearing. According to Reuters, it was more of a Murdoch love-fest than a grueling cross-examination by lawmakers. "News Corp. chairman Rupert Murdoch's attempt to gain control of the nation's largest satellite television company was warmly received by the GOP-controlled House Judiciary Committee on Thursday as Republican reaction to the $6.6 billion deal fell just short of fawning," the wire service reported. [b]Nevertheless, the ever-quoteworthy Rep. Maxine Waters (D-Calif.) didn't mince words with Murdoch during his appearance. Waters, an outspoken liberal, told the media giant the "you scare the hell out of me," according to Newsday.[/b]

The hearing's focus went beyond the merits of News Corp.'s proposed DirecTV deal. "At times, the hearing sounded more like a forum on whether Fox News Channel has a conservative bias that might become more widespread under the DirecTV plan - or is 'fair and balanced' as it claims," Newsday said. In a different spin than Reuters, Newsday's headline said: "House Committee Grills Murdoch On DirecTV Deal." The Los Angeles Times said the hearing "revealed a largely partisan split over the merits of the News Corp.-DirecTV deal. ... Republicans generally welcomed News Corp.'s move, believing the company will act aggressively to expand DirecTV's service and compete with cable providers. Democrats were more skeptical, fearing Murdoch's growing control over media properties and taking the opportunity to criticize what they see as the conservative slant of his Fox News Channel." The Wall Street Journal offered this colorful quote: "Will Fox overcharge for its programming? No, they wouldn't do anything like that!" [John Conyers (D-Mich.)] said sarcastically. Two other Democrats, Reps. Sheila Jackson-Lee of Texas and Jerrold Nadler of New York, warned that a conservative bent at News Corp.'s Fox News Channel could drown out other voices after a purchase of DirecTV."

The Washington Post noted the concerns of Murdoch's critics: "Opponents of the merger ... say it would give Murdoch too much muscle because he would own not only popular programming -- Fox shows such as 'American Idol,' the top-rated Fox News Channel and broad-ranging sports events -- but also the pipeline to pump it into consumers' homes. Smaller cable companies are worried that Murdoch could drive customers away from cable and to DirecTV by overcharging cable companies for Fox programming or by simply denying it to cable operators. Murdoch countered by telling the committee he wants Fox programming to be seen in 'every single home we can.'" One critic is the American Cable Association, the trade group for small cable operators. "The federal government should not allow this Fox into the DirecTV henhouse," said Neal Schnog, vice chairman of the association, according to various published reports on the hearing.

Murdoch, the Australian-turned-U.S.-citizen, argued that DirecTV deal would improve service to satellite customers and spur even more competition. But "Gene Kimmelman, a senior director at the Consumers Union advocacy group, said the proposed merger 'is truly bad for consumers' because it could lead to price increases for both cable and satellite television customers," The Associated Press reported. "Murdoch countered that the company's self-interest is to put as many channels as possible on DirecTV, and scoffed at the notion he would ever pull News Corp. programming from his possible satellite competitor, Echostar. 'It would be madness if I was to deny Echostar the Fox signal,' said Murdoch. 'It would cost us at least $400 million a year.'"

Federal regulators still have to approve the DirecTV deal. The track record on similar efforts has not been positive. Last year, the Federal Communications Commission put the kibosh on a proposed merger between DirecTV and EchoStar. However, The Washington Post indicated that Murdoch's bid might past muster. "Telecommunications and antitrust lawyers give this merger a better chance of going through than the EchoStar-DirecTV merger because that deal would have left only one major U.S. satellite television provider," the newspaper said.
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