News Corp/DirecTV deal gets critical focus

During Congressional hearings on cable television last week, the proposed acquisition of DirecTV by Rupert Murdoch’s News Corporation drew sharp criticism from members of Congress.

Sen. John McCain (R-Ariz.), the Senate Commerce Committee chairman who supported last year’s proposed merger between EchoStar and DirecTV, said that News Corp.’s massive holdings of broadcast stations, satellite distribution, sports teams, newspapers and cable networks raise "interesting questions” that need to be addressed before the sale."

Several Democrats in the House were especially hostile to the Murdoch bid. Reps. Sheila Jackson Lee (Tex.), Rick Boucher (Va.) and Anthony D. Weiner (N.Y.) expressed strong doubt. Boucher suggested that Murdoch would create a monopoly of programming and carriage after gaining control of DirecTV. Jackson Lee said the politically conservative Murdoch is "against everything minority and everything progressive.

Critics of the merger contend Murdoch gains too much power because he not only owns popular programming, but he would gain the distribution system into viewers’ homes. Smaller cable companies are worried that Murdoch will overcharge them, making it impossible for them to compete with DirecTV.

“We should not let this fox into the DirecTV henhouse,” testified Neal Schnog, vice chairman of the American Cable Association and president of the Uvision, an 8,800-subscriber cable system in Oregon. “Like the robber barons of the past, he would have an arsenal of content at his disposal.”

Murdoch argued to a House committee that his $6.6 billion bid for a controlling interest in DirecTV would provide competition to the cable industry and better service to satellite customers. When asked if he would deny popular programming such as the Fox News Channel to his EchoStar competitor Charlie Ergen, Murdoch said such a ploy would be a disaster.

"It would be madness if I were to deny Fox News Channel to EchoStar," Murdoch said. "It would cost me $400 million a year and Charlie Ergen would do something to retaliate that would probably cost me another $400 million a year."

Government regulators are now considering the proposed deal. It is being given a better chance of approval than last year’s EchoStar-DirecTV merger.

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