Rupe catches hell from Hill over DirecTV

Consumer advocates, cable companies voice concern

WASHINGTON — News Corp. CEO Rupert Murdoch defended his deal to acquire control of DirecTV Thursday against claims that allowing the megamerger would be letting the proverbial fox into the satcaster hen house.

Appearing before the House Judiciary Committee, Murdoch, who also owns Fox News and 20th Century Fox, faced harsh criticism from consumer advocates and small cable companies worried that the $6 billion deal would result in higher programming prices.

“If this merger proceeds, the reality will be like the Fox show ‘Joe Millionaire.’ The merger has superficial appeal, and its stars are smooth talkers. . . . But at the end of the show, the ugly truth emerges,” warned Neal Schnog, vice chairman of the American Cable Assn., a group of companies serving rural markets.

Schnog argued that News Corp.’s control of programming and a distribution channel would place too much pressure on small cablers to cough up additional cash for shows and content they don’t want. Eventually, if Murdoch wanted to, he could push small cablers out of the market completely.

Throughout the free-wheeling hearing, Murdoch repeatedly rejected such concerns, highlighting News Corp.’s promise voluntarily to abide by the same federal program-access laws cablers must adhere to, and claiming to have no reason to engage in anti-competitive behavior.

“I have no wish to vex Mr. Schnog,” Murdoch claimed. “We just want to be seen in every home we can.”

But that pledge lost some of its punch when Rep. Rich Boucher (D-Va.) asked him if he would continue to operate under those rules after they expire, as they are set to do in 2007. “No, we would not agree to that,” Murdoch stated flatly. “We don’t think it would be fair to be committed to a rule that none of our competitors would be affected by.”

Boucher pressed on, asking the media baron if he would step aside to allow his competitors, such as his main rival EchoStar, to gain access to local Fox TV signals.

“No, I would not,” Murdoch retorted. “I would just point out that it would be madness if I were to deny EchoStar the (Fox) signal. It would cost me $400 million per year, and I am sure that (EchoStar topper Charlie Ergen) could do other things to me in retaliation that would cost me another $400 million.”

Several times during the three-hour hearing, Murdoch praised Ergen’s business practices and appeared eager to have a chance to compete head to head. (Ergen and EchoStar’s bid for DirecTV did not pass U.S. muster.)

Open books

Later in the hearing, Murdoch consented to a request by Rep. Zoe Lofgren (D-Calif.) to make his programming license fees available to the public, claiming that the fees are readily available and not a secret at all.

That statement shocked Schnog, who asked if he could get Murdoch to put it in writing right then.

Only a handful of GOP lawmakers showed up for the hearing, and much of their testimony was filled with kudos and support for Murdoch. The Democratic side of the dais was filled. Reps. Sheila Jackson-Lee (Calif.) and Jerry Nadler (N.Y.) were the most brutal.

Nadler read excerpts from an article in the Columbia Journalism Review that accused News Corp. of avoiding U.S. taxes by setting up shop overseas, a contention Murdoch denied. “We pay about 35% of our revenues in taxes, about the industry average.”

Never one to mince words, Jackson-Lee took several swipes at the conservative bias she claims is obvious on Fox News.

Calling herself a “zealot for free speech,” Jackson-Lee said she recognized the net’s right to stand against “everything that is minority, everything that is progressive.”

But she wondered if he would continue to allow CNN to air on DirecTV in all of its markets, to which Murdoch readily agreed.

Rep. Anthony Weiner (N.Y.) was the only Democrat who appeared to believe the mammoth deal would increase competition and generally benefit consumers. “Maybe Mr. Murdoch is not the dream owner of DirecTV. I’d rather keep the reality shows at 20 rather than 200,” he joked. “But more competition is better than none at all.”

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