Murdoch's Mega-Media Merger

By David Sirota, Christy Harvey and Judd Legum, The Progress Report. Posted December 22, 2003.

In a devastating blow for media diversity, the FCC, on a contentious 3 to 2 vote, approved a "$6.6 billion media mega merger" between DirecTV satellite television service and Rupert Murdoch's News Corporation. The merger will add DirecTV's 11 million subscriber to Murdoch's U.S. empire which already includes local television stations reaching more than 44 percent of the country, a major national broadcast network, numerous cable and satellite channels, the most widely used electronic program guide, newspapers, magazines, a publishing house and movie studios. The unprecedented size and scope of Murdoch's holding will, according to FCC Commission Jonathan A. Adelstein, put News Corp. "in a position to raise programming prices for consumers, harm competition in video programming and distribution markets nationwide, and decrease the diversity of media ownership."

The FCC-approved deal allows News Corp. to effectively shut out local programming – especially in rural markets. Although News Corp. initially pledged to provide local television stations to satellite subscribers, they later revealed that they intended to do so by incorporating conventional antennas into its devices and "hope the customer can receive a signal." For people who live in rural areas, that will frequently mean they receive no signal at all. Commissioner Adelstein says that News Corp's position means that "what could have been the most important public interest benefit of this merger turns out to be nothing more than a sham."

News Corp. owns a vast array of television outlets, including many which feature highly coveted regional sports programming. The acquisition of DirecTV will give News Corp even more bargaining clout when it negotiates retransmission fees with cable and satellite competitors. Even the FCC recognized that this was a problem. In approving the merger, the FCC required that "its Fox subsidiary offer its programming to other cable and satellite operators on the same terms as it does to DirecTV." The FCC also required that News Corp. accept "arbitration of any disputes" and must continue to provide programming while the dispute is being resolved. One problem: "the benefits of these conditions disappear without a trace after six years."

When News Corp. pitched the merger to the FCC it claimed that the merger "will give them the scale and scope to compete more effectively." But News Corp. failed to "demonstrate that any of these alleged savings would be passed on to consumers nor did they evince great enthusiasm for doing so." News Corp. produced very little data as to how the transaction "could possibly discipline rising cable rates." FCC Commissioner Michael J. Copps said the likelihood News Corp's acquisition of DirecTV would lower prices for consumers "is so remote as to be invisible."

Ever wonder how Murdoch usually gets what he wants? News Corp. spent nearly $10 million on lobbying from 1999 to 2002. Murdoch himself has met personally with FCC commissioners and key lawmakers several times. For the 2004 election, News Corp. has already contributed $200,000. For the 2000 and 2002 cycles the company's contributions exceeded $1.7 million dollars.

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