Oligopoly brief: News Corporation
Of all the great media oligopolies, the News Corporation is the most multinational. This $20 billion company derives 75% of its revenue from the US, but its presence in Europe, Latin America, Asia, and Australia is very strong. While its greatest assets are now in broadcasting and satellite TV, it has is a major movie studio, a newspaper leader in the UK and in Australia, and a major book publisher, as well.
In spite of its multinational scope, the company is identified with one man: Australian newspaper tycoon Rupert Murdoch who built the company in 1980 and directs it like a private holding, which it is not. He runs it like an exacting autocrat, giving key roles to his sons and other relatives.
More than any other media empire, News Corp.'s politics are in the open. Its newspapers and Fox News subsidiaries are banner-wavers for the right, and the Weekly Standard is the Time magazine of the conservative movement. With other top media empires at least act politically neutral, they are all rather status quo oriented, despite the myth of the liberal media. The partisanship of the News Corp. is barely disguised, however.
Another area where News Corp. has faced controversy has been in its relations with China. His STAR satellite TV system in China has been silent about human rights issues (especially after the Tiananmen Square incident) and anything else that the Chinese government (including a program on Mao from the BBC) might want not to be aired. The company's book arm, HarperCollins, which was set in 1998 to publish a book by ex-Hong Kong executive Christopher Patton, caved in easily to Chinese government pressure to can the book. (The book was later published in another house.) It also seems that Murdoch's newspapers have soft-pedaled any criticism of the Chinese government. While these controversies have died down somewhat, News Corp. got no credit for kowtowing to the Chinese government and self-censorship.
After a steady diet of takeovers, the News Corporation has eased off on new acquisitions in the two years, with the major exception of its purchase of over $6.8 billion for a 34% share of Hughes Electronics from General Motors. The big asset in question is DirecTV, the #1 US satellite with 11 million subscribers. That gives the company 33 million satellite subscribers worldwide (not to mention many more pirate watchers in China), making it the world's biggest source of pay TV.
While the move was competed only a few months ago, already DirecTV has ramped up sales efforts and is working with telephone companies to offer packages of phone and TV that outflank the cable TV companies. The company is also working on providing interactive services, such as voting for contestants on its hit American Idol talent show or allowing sports fans to see plays with different camera angles. The idea is that the company will develop a range of new, perhaps exclusive programming as well.
The move puts in News Corp. in a position of great strength in the TV industry, as a distributor and program maker, just what Comcast is seeking to do in buying Disney. As an interesting online article ("Planet Murdoch") in the Australian magazine Bulletin states
While Murdoch has been treated with respect in Hollywood since he bought 20th Century Fox in 1985, the cable guys have always, with good reason, treated Murdoch like a Fox about to break into the henhouse. During the late-1990s Murdoch's cable television programming unit fought a bloody public battle to have Fox News and Fox Sports channels carried on cable as part of the basic service, rather than an expensive add-on. Murdoch, having won that battle and also DIRECTV, is now a major content supplier to the cable guys as well as being their most fierce competitor in the distribution business. Of the million new subscribers DIRECTV wins each year, most are deserters from the cable systems.
Murdoch now finds himself in an extraordinary position, operating in all parts of the television value chain. He owns a free-to-air TV network, a slew of mainstream cable TV channels, and a satellite TV distribution system.
Of course, the company must be careful in using its new power. Having cable companies carry Fox channels is a major source of revenue, and too much competition might make Comcast, Time-Warner, or Cox start playing hardball in return.
