Citizen Murdoch

Brilliant timing. While the rest of the bomb-spooked bureaucrats in Washington try to convince a restless and unhappy public that they shouldn't be objects of contempt, the Federal Communications Commission comes out with a ruling--against the N.A.A.C.P. and in favor of journalism's foremost bully-boy, Rupert Murdoch--that shows just how easy it is for folks with big-big money to break the law and get away with it. The F.C.C. should have stripped billionaire Murdoch of his Fox TV stations. Actually, in its ruling of May 4, the commission acknowledged that he is an outlaw in the industry (we'll get into the details later on) and, in a bit of bureaucratic bluster, gave Murdoch forty-five days to convince the commission that it shouldn't punish him. Don't be fooled by that. They'll do nothing to him. And the upshot of the F.C.C.'s action will ultimately be the approval of his plan to turn Fox into what will become the right wing's principal voice in this country. Rupert Murdoch has built a global newspaper/TV empire by peddling sleaze and piffle; because those commodities have such an appeal to the world's boobocracy, the empire grows apace--most recently through a linkup with telecommunications giant MCI. Many in the media industry despise him. The Wall Street Journal, with typical understatement, once wrote that among British and U.S. liberal journalists "he has inspired a hatred and scorn that have seldom been equale in the history of press ownership." On the other hand, many politicians and bureaucrats seem to like him very much. This is doubtless because he does nice things for them. But just how far does his generosity go? Surely he doesn't stoop to outright bribery. Perish the thought! Nevertheless, given his reputation for "empire-building on the edge, financial loosey-goosey" (to borrow Business Week's description), it wasn't surprising that when Murdoch's organization was caught trying to slip Newt Gingrich $4.5 million for what would be two ghostwritten books, and given the fact that Gingrich is not exactly known as a best-selling author (his last book netted him $15,000), there were some who just automatically interpreted that as a kind of bribe. It was a rather natural conclusion to come to, considering that Murdoch had pulled the book contract ploy twice before in ways that cynics might interpret crudely. Margaret Thatcher got more than $5 million from Murdoch's publishing house, HarperCollins, for her memoirs when she stepped down as Britain's Prime Minister, and many felt this was not so much a recognition of her literary skills as it was a payoff--a delayed bribe you might say--for virtually handing over Great Britain to feed Murdoch's bottomless ambitions. With the Tory government suspending the antitrust laws, forgiving the misleading claims he filed with the government, exempting his satellite TV station from regulations that applied to earthbound TV companies, and helping him crush the press unions, etc., Murdoch wound up owning one-third of the national press and operating a satellite TV station that had almost five times as many TV channels as all the terrestrial broadcasters put together. Five million bucks was dirt cheap. If it worked in Britain, why not try it in Asia? Murdoch's Star TV, based in Hong Kong, beams five channels via satellite free of charge to thirty-nine countries, from Israel to Indonesia. Income is from advertisers. But competition abounds from other satellites and Murdoch was having trouble getting advertisers. He needed subscribers, and that meant going into cable, particularly in the lucrative China market. And that meant buttering up its corrupt government. Once again cynical observers thought they smelled a bribe when Basic Books (a subsidiary of HarperCollins) paid an unspecified amount--you can bet that it was plenty--to Xiao Rong for a biography of her father, the bloodthirsty Deng Xiaoping, the guy who ordered the massacre at Tiananmen Square. We now know why Murdoch would want to buy U.S. Congressmen at this particular moment. For insurance--fire insurance. His file at the F.C.C. was beginning to smoke, and he could have been in deep trouble--trouble that could have cost him as much as half a billion in back taxes and many more billions in the stunting of his global expansion. Mike Royko, who once described Murdoch as "a greedy, money-grubbing, power-seeking, status-climbing cad," puts the $4.5 million in perspective: "Even if the book advance were a legal bribe, Murdoch never got the short end of any deal, and Newt was probably being underbribed." Underbribed indeed. Murdoch and his family own 46 percent of News Corporation, the Australian company he built and that pays for all his dirty work. It's a gusher, bringing in more than $8 billion in operating revenues a year and a cash flow of at least $1 billion. So why wouldn't it be wise to spend a few million bucks to buy the necessary politicians and bureaucrats to protect the empire's U.S. realm, which includes the Fox TV network and the eight stations it owns outright, which generate an astounding 50 percent profit, and the six it's trying to get a piece of? Fair play (which Washington politics once again smothered) would have put those holdings in jeopardy. Indeed, the F.C.C.'s own staff, after a two-year investigation, recently recommended that because Murdoch had violated foreign ownership laws when he applied back in 1985 to buy his first batch of stations, Fox should be forced to make a drastic corporate restructuring and be hit with a hefty fine and a formal rebuke--all of which would doubtless be used by opponents to challenge any future station purchases. The investigation had been prompted by charges raised by the N.A.A.C.P. (NBC had for a time joined in the accusations, but dropped out when Murdoch bought NBC off by allowing it space on his Asian TV satellite.) The N.A.A.C.P. wanted to block "his" purchase of another TV station in Philadelphia and to make him surrender those he already "owns," including WNYW in New York City. The staff's recommendations were rejected by the full commission, which admitted Murdoch had broken the law but said the "totality" (their word) of evidence didn't prove he had been a total liar on his application. I put quote marks around the words "his" and "owns" because that was the crucial question: Are they really his, and does he own them--or do they belong to a foreign corporation that has no legal right to own them? The crux of Murdoch's problem was citizenship. He was accused by the N.A.A.C.P. of "lack of candor" in his application regarding Section 310 (b) (4) of the Communications Act, which prohibits a foreigner from owning more than 25 percent of a television station. To get hung up on the question of citizenship must gall the hell out of Murdoch because he has never shown any desire to be a responsible citizen of any country and holds all governments in contempt. Not long ago he predicted that new technology would soon allow him to overpower broadcasting regulations around the world in order to achieve his ambition to become the Global Mogul of TV. "In the end," he said, "technology can get past the politicians and past the regulators." Maybe eventually. But in the meantime he has been forced to toe a few lines. And the most important of these has been citizenship. Isn't he a citizen? Yes. He became a U.S. citizen in 1985, strictly for commercial reasons, as he admits. "A business justification," he says. "Put it that way." Having made a humongous fortune debasing newspapers in Australia (his homeland) and in Britain and in the United States, he wanted to move into television. With the help of anti-regulation Tories he succeeded in a big way in Britain, but he was blocked by Section 310 in this country until he became Citizen Murdoch. President Reagan cut red tape to expedite his becoming a patriot-for-dollars. Since then Murdoch has been awesomely aggressive in pushing the Fox network, and its potential seemed almost limitless, until.... Until the N.A.A.C.P. and others contended that he didn't really own the Fox outfit. They charged that his citizenship was merely a front for the real owner, News Corporation, which is not allowed to own television stations in the United States. Anyone with common sense would have agreed. To get its hands on a television setup in this country, News Corporation laid out $600 million and assumed $1 billion in debt. For that it got all the common stock. Murdoch owns none of it. But he owns most of the preferred stock (costing $760,000), which he says gives him voting control of the company and therefore qualifies him as the "owner" by F.C.C. standards. He dismisses equity as of no importance. On that issue, consider this Q. and A., found in a confidential deposition recently obtained by The Nation, which the F.C.C. took from Murdoch in January. At one point the F.C.C. attorney read a 1992 statement that had been made by Barry Diller, then Fox's chief executive officer, explaining why he was leaving the corporation. "Rupert Murdoch and I began discussing last summer my growing desire to become an actual principal in the business activities with which I was associated. Clearly, since Fox is a wholly owned unit of News Corp., that was not a practical or possible ambition within the company." The F.C.C. attorney taking the deposition asked Murdoch if he agreed with Diller's statement. Well, yes, said Murdoch, he had to admit that Fox "is a wholly owned unit of News Corp.," and that "the capital, the losses, the risk was all within News Corporation." All the profits, too, are News Corporation's, he said. But, he argued, Fox is "not a wholly owned subsidiary in terms of voting control. The directors of News Corporation do not control the Fox Television stations or Fox. I did." Murdoch said he didn't know his exact title, but "I'm the man who gives all the instructions, yes." But giving all the instructions is a far cry from being the owner, as any C.E.O. will tell you. Anyway, it isn't safe to believe anything Murdoch says about corporate operations. Later in the deposition Murdoch reversed himself, saying, "Diller was pretty much the master" of the Fox operation, and "Mr. Diller really ran it very completely." As for Murdoch's claim that possessing a majority of the preferred stock gave him ownership, I again call your attention to Diller's parting press release, which Murdoch approved before it was released. Diller's chief complaint was that he was not "an actual principal in the business activities" at Fox. Yet he owned 25 percent of the preferred shares, or $250,000 worth (Murdoch owned 51 percent). Why didn't Diller consider that his stake in Fox made him an owner? Well, for one thing, he never received a penny of the corporate profits. Instead, he was paid 12 percent interest on his investment. No matter what Murdoch now claims about the power of preferred shares, Diller obviously didn't feel that his gave him any portion of ownership. The deposition shows it apparently wasn't job-safe for Murdoch's employees to suggest there was something so fishy about the Fox corporate layout that it might arouse the suspicions of the F.C.C. An attorney wrote a memo containing this paragraph: "Because of the uncertainty, however, of the outcome of a challenge to Fox TV's ownership structure, we have been in agreement that it is paramount to avoid any corporate restructuring which would potentially invite reexamination of Fox TV's ownership structure by the Commission." The guy who wrote that is now off the payroll. Murdoch has a way of putting the fear of God--or of financial loss--into those who work for him, including Diller, who still has a TV production tie to a Murdoch company. When the F.C.C. deposed Diller, an attorney read back to him the departing statement that Fox was a wholly owned unit of News Corp. and asked, "What did you mean when you said that?" Babbling incoherently, in what sounds like panic, Diller replied: "Well, it has no--there's no distinction other than the fact that what my meaning was, I was simply trying to convey meaning by statements that you're reading from, underlying meaning as to why I was going to leave the company is that while people may have thought that I was a principal in Fox, and Fox company, and, in fact, while I may function as one and to some degree do, in fact its common stock, so to speak, ownership, its equity was owned by NewsCorp." O.K., O.K., Diller, calm down, get a grip on yourself and try it again, starting with that last mention of "ownership." Are there good reasons for cursing the bureaucrats for the likelihood that Murdoch will win this fight? Plenty of them. One excellent reason, as the N.A.A.C.P. has argued, is that if the F.C.C. caves in and permits unlimited foreign ownership--or if Congress changes the law to allow it--the big money from abroad (the N.A.A.C.P. claims that 80 percent of the world's telecommunications capital is foreign) will come flooding in and make it even more difficult than it already is for U.S. minority groups to buy into the industry. Another reason the N.A.A.C.P. wants to get Murdoch out of television is the same reason it had for opposing his purchase of the New York Post and station WNYW--it believes he panders to racism. The limit on foreign ownership has been communications law for sixty-one years. Why change it now? In fact, this is exactly the wrong time to change it. News Corporation's dominance of the media in Britain, and the incredibly wretched standards it has brought to that market, are frightening evidence of what Murdoch would do in the United States if the F.C.C. continues to relax its regulations. You may think television is a wasteland now, but if his British operations are any guide when Murdoch really gets rolling, Fox's Married...With Children will seem, in retrospect, like Hamlet. Murdoch-controlled media have prospered around the world by stressing what William Shawcross, Murdoch's biographer, accurately called "titillation, sensationalism and vulgarity." The Fox network offers nothing that can be called a news program, which may be a blessing, for Murdoch has steadfastly demonstrated in his papers, including the New York Post, that he has no interest in delivering news about politics except as it is used for propaganda to promote the politicians who let him have his way. People who have worked for him say he constantly meddles in editorial policy and directs the slanting of political reporting. Murdoch thought it was a great idea to publish Hitler's diaries, though he had been warned they were phony; when the hoax was exposed he shrugged it off, saying, "After all, we are in the entertainment business." Is there a limit on how much garbage he will sell? As the Daily Telegraph pointed out, Murdoch is the guy who tolerated his newspapers' "glorification of 1,200 deaths on the [Argentine cruise ship General] Belgrano; the falsification of memoirs by the widow of a Falklands War hero; the lie that Liverpool supporters had rifled corpses at Hillsborough football stadium." And one of Murdoch's papers, as Anthony Lewis pointed out, carried on a "cruelly irresponsible anti-science" campaign questioning the existence of an AIDS epidemic in Africa. So much for Murdoch's journalistic "standards." Speaking of which, it is ironic that he recently became a financier for a new right-wing publication to be called The Standard. Its editor, William Kristol, promises a magazine that will be "a cross between a conservative New Republic and a weekly Wall Street Journal editorial page." In other words, politically Ice Age and socially thuggish. First and last, Murdoch has the soul of a tabloid journalist. He may be, as Auberon Waugh once said, "a hairy-heeled tit-and-bum merchant from Oz," but it pays off. Nude women on page three, sex advice, fabricated news and racial scare stories turned his London tabloid The Sun into the largest selling English-language paper in the world. In this country, his checkout counter Star, with headlines like "Rapist Caught by Own Cat," won the hearts of 2.8 million buyers. But what he's done with his newspapers is nothing compared with what he sees in the near television future. F.C.C. regulations prohibit any individual or company from owning more than twelve TV stations or reaching more than 25 percent of the country through its stations, but if Murdoch succeeds in his present plans, the Fox network and its business partners will soon push past those limits. If that prospect bothers liberals for ideological reasons, it ought to scare the shit out of the religious right for all the reasons it sums up in the phrase "family values." Some on the right know what's coming. In his Wall Street Journal column Tim Ferguson recently noted that to many, Fox's evening lineup is "replete with vulgar sensationalism." And he quotes William Bennett, the right wing's padre, with this complaint: "It doesn't follow that being libertarian, one has to put on trash for other people's children to watch." To all such criticism, Murdoch responds innocently, "What is taste, what is morality?" And if Murdoch's right-wing supporters think he's hot to promote democracy around the world, let them remember his most notorious surrender. While setting up his Asian operation he proclaimed that satellite technology posed "an unambiguous threat to totalitarian regimes everywhere." Murdoch's satellite was beaming BBC broadcasts highly critical of China's thuggish leaders. The thugs--with whom Murdoch was eager to do business--complained. So he did what came naturally: He kicked the BBC off the air. Whatever, if any, corporate juggling the F.C.C. asks for in this charade can be easily handled by Murdoch, who in his deposition boasted that things like equity and ownership are "all semantics" and "you can get a bunch of accountants to give any names" you want to it. Like a lot of bureaucratic interventions aimed at corporations, this one has an enormous loophole. Violators of the alien ownership limits will be driven out of the industry, the law says, only "if the commission finds that the public interest will be served by the refusal or revocation of such license." Uh-oh. Indeed, in its May 4 ruling, the F.C.C. invited Fox to give it cause to justify a waiver, unprecedented in its history. For some reason, F.C.C. commissioners do not like to displease Murdoch. They have done a number of extraordinary favors for him in the past. In 1993 the F.C.C. made an unprecedented exception to the rule that nobody could own a TV station and a newspaper in the same city--thereby allowing Murdoch, who already owned New York City's WNYW, to buy the New York Post. Later, the commissioners exempted Fox from certain key marketing restrictions that applied to other networks. They said they did this because Fox wasn't really a network--although everybody in the industry treats it as a network, the press (including the trade press) calls it a network and Murdoch himself boasts of it as the "fourth network" (or "newtwork," as a Freudian typo in one of the N.A.A.C.P.'s legal briefs aptly put it). On several occasions the F.C.C. commissioners have demanded that he turn over certain files to determine if he is telling the truth; Murdoch (through his lawyers) just laughs at them, saying he'd rather see them in court, and they let him get away with it. A major reason the F.C.C. will probably do nothing to punish Murdoch is that it knows whatever it did would be swiftly undone by the Republican Congress, which seems in the mood to kill the alien-ownership limit. This, of course, is what Murdoch, accompanied by his Washington lobbyist, went to see Gingrich about before the book deal was announced. Murdoch's own spokesman acknowledged that Gingrich was only one of eighteen officials Murdoch cornered in a three-day blitz of Washington. Senate majority leader Bob Dole made no secret of talking with Murdoch about his "problem," nor did most of the others. Murdoch got what he came for. Several killer bills were proposed, the most important probably being the one introduced by Senator Larry Pressler, the Republican peanut from South Dakota. Its importance stems from the fact that he is the new chairman of the Commerce Committee, which oversees telecommunications legislation. Pressler is a pretty pitiful guy. He was first elected to Congress twenty-one years ago as "a Common Cause candidate," vowing to chase all that dirty special interest money out of politics. You guessed it: His re-election kitty is booming. If plenty of Murdoch money doesn't wind up in that kitty, Pressler isn't Pressler. But if fellows like Murdoch do press money on their benefactors, is that just supporting democracy, or is it a bribe? In the PAC era, it gets harder and harder to tell. John Noonan Jr., the University of California legal scholar who did a landmark study of bribery, says, "The core of the concept of a bribe is an inducement improperly influencing the performance of a public function meant to be gratuitously exercised." But that definition, as he concedes, is maddeningly vague and changes with the times. Making it all the more confusing, "often a society has at least four definitions of a bribe--that of the more advanced moralists; that of the law as written; that of the law as in any degree enforced; that of common practice." Murdoch was in such a rush to become a citizen and get on with business that perhaps he didn't take time to read the Constitution of his new homeland. If he had done so, he might have had some historical interest in seeing that the founders of this country looked upon bribery as such a loathsome practice that it is one of only two crimes (treason is the other) mentioned by name in the Constitution for which a federal official can be impeached and removed from office. Or perhaps he did read the Constitution on that point but considered it unimportant because it is quite obvious that the bribing of public officials, by one means or another, has become a commonplace and casual crime, and is usually done without public embarrassment, much less punishment. Not, of course, that Murdoch would consider doing such a thing, or that the members of Congress he deals with would consider taking a bribe if offered. Still, since temptations do abound, they should all bear in mind that, though most offenders get away with it, the buying and selling of political favors is not a peril-free sport. In the past three decades at least one Vice President, half a dozen or so Congressmen, four governors and hundreds of lesser officials have been convicted of bribery, and some have gone to prison. And the Securities and Exchange Commission forced so many large American corporations into confessions that it produced what Professor Noonan calls "the most abundant documentation of bribe giving known to history." Bearing in mind the dominant party in Washington today, it maybe apropos to note that most of that bribery occurred during periods when Republicans--that illustrious triumvirate Nixon/Reagan/Bush--were setting the moral tone for government. Source

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