Murdoch Puts Champagne On Ice As FCC Staff OK DirecTV Deal

04 December 2003

The lifetime ambition of Rupert Murdoch is about to be realised.

America's Federal Communications Commission is poised to approve the acquisition by News Corporation of a controlling 34% stake in the nation's largest satellite broadcaster DirecTV, following a recommendation to that effect from the regulator's staff.

But although the champagne is on ice at NewsCorp, the corks won't pop just yet. Certain conditions have been imposed on the $6.6 billion (€5.47bn; £3.83bn) deal to ensure there is no abuse of market power.

The main proviso is the establishment of a non-binding arbitration mechanism to settle disputes between NewsCorp and cable companies.

The latter are worried that NewsCorp could deny them programming, for example the popular Fox News network, to encourage cable customers to switch to DirecTV. There is also concern that smaller operators could be forced to accept higher programming costs by the threat of withholding programs.

Although NewsCorp has vowed it would not descend to such bullyboy tactics, chary FCC staff want to shore up these promises via independent mediation backed with contractual muscle. The regulators also want to formalize NewsCorp's undertaking that DirecTV will carry local free-to-air TV stations in given US markets.

The five FCC commissioners under chairman Michael Powell are currently reviewing the staff recommendations. Given that Murdoch and his media are vocal supporters of the Bush administration, a political firestorm could ignite if the FCC's Republican majority choose to ignore the guidance of its own executives.

Data sourced from: Financial Times; additional content by WARC staff