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Under New FCC Ownership Rules, Approval of News Corp/FOX and DirecTV Merger Destroys Media Diversity

December 18, 2003
Kenneth DeGraff, (202) 462-6262 ext. 1116

Under New FCC Ownership Rules, Approval of News Corp/FOX and DirecTV Merger Destroys Media Diversity
Consumers Suffer Another Blow to Media Choice, Localism and Diversity

(Washington, D.C.) – Today’s decision by the Federal Communications Commission to approve the mega-merger between Rupert Murdoch’s News Corp/FOX and DirecTV not only has the potential to drive up consumers’ cable and satellite TV bills, it also could expand Murdoch’s ability to expand his influence over local media markets under the FCC’s new ownership rules, consumer advocates say.
“This merger illustrates everything that is wrong with the FCC’s new media ownership rules, which take a bulldozer to the pillars that support our democracy by destroying competition, checks and balances between media outlets, and diversity of views presented in the media, said Gene Kimmleman, senior policy director for Consumers Union, publisher of Consumer Reports.
With the merger, Murdoch’s News Corp. – which currently owns 35 TV stations, including two broadcast stations each in the top markets of New York, Los Angeles, Dallas, Washington D.C., Houston, Minneapolis, Phoenix and Orlando – also will control one of only two satellite multi-channel TV distributors in the country. Under the new FCC ownership rules, News Corp. also could buy a second or third television station in communities where it already owns one station, as well as purchase a local newspaper, creating the potential for media dominance in many of the nation’s top markets.
“This puts too much power over media in the hands of one company,” said Kimmelman, who has helped lead the fight to overturn the June 2 FCC rules, which would allow one company to own TV stations that reach 45 percent of the nation’s households, permit mergers between TV stations representing 90 percent of the viewing public, and allow TV/newspaper mergers in markets representing 98 percent of Americans.
Since News Corp. owns the Fox Network, Fox News, Fox Sports, FX and regional sports channels across the country, the merged company will have enormous power to drive up prices for the programming it owns. The FCC has required Murdoch to make his programming available to everyone under comparable prices, terms and conditions. However, consumer groups note that Murdoch could raise his prices for DirecTV as well as pressure cable operators to pay more for his programming. The Commission acknowledged the excessive power this merger would create by imposing some important limits on News Corp.’s ability to vastly overprice its programming, but it did not do enough to protect consumers from inflated cable and satellite prices.
“There is the potential that prices would go up throughout the market and consumers would end up getting soaked,” said Kimmelman. “We support arbitration to limit NewsCorp’s excess power in these transactions, but that doesn’t prevent sweetheart deals between DirecTV and cable, where the end result is higher prices to satellite and cable customers.”
“While the Commission imposed some helpful conditions on this merger, it offered no more than a silly putty patch on the crumbling structural pillars that ensure open democratic debate in our society,” Kimmelman said.
Murdoch’s News Corp. currently owns:
35 Broadcast TV Stations — including two broadcast stations in New York, Los Angeles, Dallas, Washington DC, Houston, Minneapolis, Phoenix and Orlando.
Cable Network Programming — Fox News Channel (the most watched cable news channel), Fox Kids Channel, FX, Fox Movie Channel, Fox Sports Networks, Fox Regional Sports Networks, Fox Sports World, Speed Channel, Golf Channel, Fox Pan American Sports, National Geographic Channel, and the Heath Network.
Filmed Entertainment — 20th Century Fox Film Corp., Fox 2000 Pictures, Fox Searchlight Pictures, Fox Music, 20th Century Fox Home Entertainment, Fox Interactive, 20th Century Fox Television, Fox Television Studios, 20th Television, Regency Television and Blue Sky Studios.
Publishing — New York Post, the Weekly Standard, HarperCollins Publishers, Regan Books, Amistad Press, William Morrow & Co., Avon Books, and Gemstar TV Guide International.
Sports Teams and Stadiums — Los Angeles Dodgers, and partial ownership in the New York Knicks, New York Rangers, LA Kings, LA Lakers, Dodger Stadium, Staples Center, and Madison Square Garden.
In purchasing DirecTV, NewsCorp will also own one of only two nationwide satellite distributors of television programming. DirecTV has over 10 million subscribers.