In a frontal assault on Fox Inc.’s right to continue owning U.S. TV stations , New York’s chapters of the National Assn. for the Advancement of Colored People are charging Fox with “flagrant violation” of an FCC rule that bars foreigners from owning more than a 25% interest in a U.S. TV station.
The NAACP petition filed at the FCC late Friday argues that even though Fox topper Rupert Murdoch became a naturalized citizen to buy U.S. TV stations, the stations remain under the control of News Corp., an Australian company.
Fox senior veepee of affiliates Preston Padden dismissed the NAACP petition. “These ownership issues were before the FCC eight years ago when it approved the transfer of the Metromedia stations,” he said. “There is nothing new in the NAACP filing.”
The NAACP filing cites Fox annual reports and News Corp.’s recent filings at the U.S. Securities & Exchange Commission to support the claim that News Corp. — and not Murdoch — controls the Twentieth Holding Corp. (THC), the holding company for Fox’s U.S. TV stations.
For example, in a recent SEC filing, the NAACP noted that News Corp. stated it holds “all of the common stock of THC, representing substantially all of the equity thereof.” In News Corp.’s1993 annual report, the company noted that “Fox Television Stations also achieved record profits in 1993,” according to the NAACP filing.
“In short, News Corp. does not even bother to pretend that the Fox stations and their parent THC are principally owned by Murdoch as an individual.
“The companies are openly described as controlled subsidiaries of News Corp., in complete derogation of both Fox’s representations to the (FCC) and … the Communications Act.”
A spokesman for the NAACP would not comment on what prompted the challenge. But the organization previously challenged Murdoch’s latest purchase of the New York Post.
Section 310(b) of the 1934 Communications Act limits foreign ownership of U.S. broadcast properties to 25% of voting stock in the controlling company.
When Murdoch decided to buy Metromedia TV stations, which were owned by John Kluge in 1985, he shed his Australian citizenship to comply with the FCC regs.
Fox has since maintained it is in compliance with FCC rules because the News Corp. interest in THC is 24%, while Murdoch holds the remaining 76% voting interest.
However, the NAACP filing claims that Fox has two classes of stock, voting preferred and voting common, and that Australian-owned News Corps. has “de facto control of THC.”
“In short, Murdoch’s THC holdings are a sham created to obtain FCC licenses to which Fox was never entitled,” the NAACP claims.
The NAACP claims “it is clear that non-U.S. citizens own some 36% of News Corp., a figure far in excess of the 25% limit on alien ownership of companies controlling U.S. (TV) licensees.”
The NAACP legal brief specifically asks the FCC to bar Fox from buying WGBS-TV in Philadelphia.
However, the filing could seemingly threaten Fox owned and operated stations in other markets as well.
Despite Fox veepee Padden’s dismissalof the charges, Andrew Schwartzman, head of the D.C. public interest law firm Media Access Project, said the issues raised by the NAACP petition may prove troublesome for Fox should new FCC chairman Reed Hundt prove an aggressive regulator.
“With a new chairman whose philosophy is unknown, this (petition) could potentially be a very big thing,” said Schwartzman.