The Age of Murdoch

Many see him as a power-mad, rapacious right-wing vulgarian. Rupert Murdoch has indeed been relentless in building a one-of-a kind media network that spans the world. What really drives him, though, is not ideology but a cool concern for the bottom line—and the belief that the media should be treated like any other business, not as a semi-sacred public trust. The Bush Administration agrees. Rupert Murdoch has seen the future, and it is him

The real difference between Murdoch and an activist like Scaife is that Murdoch seems to be most interested in the political connections that will help his business. A few examples of his better-known political engagements bear out this view. Soon after the 1994 elections, which made Newt Gingrich the first Republican speaker of the House in decades, Murdoch's publishing company, HarperCollins, offered Gingrich a $4.5 million two-book deal (Gingrich was later shamed out of accepting it). Murdoch made his sweetheart offer to Gingrich only after Gingrich had gained power, not to help him on the way up.

Similarly, his notorious China "policy" is that of a dealmaker and not a conservative purist. Just before Gingrich came to power, Murdoch made a speech with the Gingrichian theme that advanced communications technology would be "an unambiguous threat to totalitarian regimes everywhere." The Chinese government immediately banned satellite dishes, sabotaging Star TV's satellite transmissions into China. In a highly publicized and controversial series of atonements, Murdoch had his companies publish a book by Deng Xiaoping's daughter; cancel another book, about Hong Kong, that was likely to provoke the Chinese; and drop the BBC World Service, with its independent news broadcasts, from the Star TV lineup.

In 1995 Murdoch funded the creation of The Weekly Standard in Washington, which gave conservative writers another home. But at the same time, his papers in England were playing a significant role in the downfall of the Tory government. That same year the young Labour politician Tony Blair came to Australia to speak at a News Corp retreat on Hayman Island in the Great Barrier Reef. His speech and general energy impressed Murdoch. Two years later the tabloid Sun in London plumped hard for Blair and "New Labour" in an effort to unseat John Major and the conservatives. Murdoch's British press has been as pro-Blair as his U.S. outlets were anti-Clinton through the late 1990s. The Blair government has proposed relaxing TV-ownership rules in ways that would benefit News Corp.

In short, some aspects of News Corp's programming, positions, and alliances serve conservative political ends, and others do not. But all are consistent with the use of political influence for corporate advantage. In the books I read and interviews I conducted, I found only one illustration of Murdoch's using his money and power for blatantly political ends: his funding of The Weekly Standard. The rest of the time he makes his political points when convenient as an adjunct to making money. But there are many examples of Murdoch's using political connections to advance his business ends. "Andrew Heyward [the head of CBS News, a Viacom subsidiary] would be allergic to the idea of attacking a politician who opposes a Viacom interest," says a man who has competed against News Corp. "Murdoch has been shameless about using his journalism for the advancement of his business interests." In this view, The Weekly Standard and the New York Post, neither of them profitable, are more means than ends.

Changing the Rules

Murdoch's use of political power for commercial ends naturally brings us back to Washington. The dispute over ownership rules for the broadcast industry, about which Murdoch had been summoned to testify, was at face value too narrow and technical to sustain a real political debate in America. But the intense, if brief, controversy over this seemingly arcane dispute was appropriate to the long-term implications of the changes.

The most immediate and direct effect of the revised rules was likely to be on local news coverage. In as many as 180 metropolitan areas the new rules would allow the leading newspaper and the leading TV station to be owned by the same company—something that has until now been outlawed except in a few special-waiver cases. Because the leading newspaper is the only newspaper in the great majority of cities, the new rules would mean that in all but the very largest American cities one news organization could dominate. Supporters of the changes said that this might free resources for better programming—and that other sources of information, whether the Internet or national TV and print outlets, would ensure diversity and competition. Opponents said that the new rules would concentrate press power unacceptably, first at the local level and then nationally: other proposed changes would also permit the formation of larger nationwide chains.

Other than during a few weeks in May and early June, the dispute drew little coverage from the national media. Opponents said, This proves our point! Because most large media companies stood to profit from the changes, they of course devoted much less space to them than to, say, the Laci Peterson murder case. John McCain, who sometimes seemed to support the changes and sometimes did not, observed acidly at a hearing in May that newspaper editorial policies conveniently tend to follow the newspaper's economic interest. In a Washington Post story Frank Ahrens reported that at one hearing McCain reminded a lobbyist for the newspaper industry that during a Clinton-era regulatory fight all the newspapers that editorialized in favor of a certain rule change were owned by companies that would have benefited from it, and all the papers that editorialized against it were owned by companies that would not.

Beyond its immediate impact on local news and on media-business prospects, the debate symbolized a historic shift in concepts guiding the business of journalism. The shift is back to the idea of journalism as principally a business—and away from an idea promoted over the past seventy years by the Federal Communications Commission.

The FCC is in a way the most futuristic arm of the government. The operating agreements that govern the structure of today's Internet and tomorrow's wireless networks are generally thrashed out there. But the official seal that hangs over the FCC's hearing rooms is almost comically retro, with an eagle circling crudely drawn radio transmission towers while holding lightning bolts in its talons. It reflects not just the artistic style but also the technological attainments at the time of the agency's creation, as part of the early New Deal, in 1934. One of the FCC's most important, and most anomalous, functions was rooted in Depression-era technology and is now undergoing inevitable and painful change.

The anomaly was the FCC's ability to regulate news coverage. The First Amendment's stricture that "Congress shall make no law" that might abridge "freedom of speech, or of the press" has effectively kept the government away from newspaper regulation. Apart from special circumstances involving libel or wartime national-security concerns, what newspapers and magazines decide to publish has been strictly up to them.

Broadcasting—which emerged as an important news medium in the 1920s, with radio, and as the leading news source in the 1950s, with TV—differs in one fundamental way from print. In theory, anyone can start a new publication, but the nature of the electromagnetic spectrum means that only so many broadcast TV or radio channels can co-exist. Since the 1930s the FCC has therefore administered an underappreciated news-management policy. It awards licenses for local broadcast stations, and for combinations of stations into networks. These are effectively licenses to make money. Lyndon Johnson's route to wealth during his years in Congress, for instance, was based on his family's role as the radio and TV licensee for KTBC (now KLBJ) in Austin.

In exchange for this lucrative right, broadcast licensees—and their news operations—have been subject to rules that affect no other part of the press. Their licenses are up for renewal every few years. At least in theory, the FCC will grant a renewal only if the licensee proves that it is serving the public interest with the programming it offers. Broadcasters can't use foul language or be too risqué. This was the basis for George Carlin's famous "Seven Dirty Words" routine, about the words flatly outlawed by the FCC, and it is the reason that Oz and The Sopranos cannot appear on broadcast TV. Until the rules were relaxed, in the Reagan era, broadcasters had to apply a "fairness doctrine" in their coverage of political issues. Under the rules up for reconsideration this summer broadcasters couldn't own a large number of stations, or newspapers in the same cities where they had TV stations, so the political influence that comes with their favored, licensed position would be kept within bounds. They have had to offer children's programming and respond to local concerns.

Broadcasters are in the news business but have been treated like a public utility, with public responsibilities. The most famous words ever spoken by an FCC chairman were those of Newton Minow, who told the National Association of Broadcasters in 1961 that television programming amounted to "a vast wasteland." "I am here to uphold and protect the public interest," he said. "Some say the public interest is merely what interests the public. I disagree."

None of these rules, as rules, applied to the nonbroadcast press. But at the time of Minow's speech the idea behind them did: that the press enjoyed unusual privileges and therefore had unusual responsibilities. "Our republic and its press will rise or fall together," Joseph Pulitzer wrote in 1904, in words now engraved by the entrance to the Columbia Journalism School. "A cynical, mercenary, demagogic press will produce in time a people as base as itself." With allowances for fancy rhetoric, this admonition guided news operations through most of the twentieth century.

In the world beyond the FCC's purview the idea that the news business differed from other businesses had started to erode as early as the 1970s. The process involved "infotainment," corporate mergers, pressure for greater profits, and other well-known phenomena. The change within the FCC has been more distinct, though less publicized, and it is the background to this summer's drama.

Ronald Reagan's first chairman of the FCC, Mark Fowler, removed many of the controls on what radio stations could air. Before the mid-1980s Sunday-morning schedules on radio stations were laden with dutiful public-affairs and religious programs; after the controls were lifted, stations could air whatever they thought the market wanted. Fowler indicated that the same reasoning might apply to television. He is responsible for the second most famous utterance by an FCC chairman: TV, he said, was only a "toaster with pictures"—that is, a commodity requiring product-safety regulation but nothing more. Fowler's FCC also enabled Murdoch to create a fourth major network, Fox, by approving his acquisition of local TV stations.

A more dramatic change came in the following decade, when a Democratic FCC, chaired by an antitrust lawyer and close friend of Al Gore's named Reed Hundt, worked with a Republican Congress to pass the Telecommunications Act of 1996. This was arguably the most important economic event of the Clinton era: its effects have been greater than NAFTA's, and they will clearly last longer than the brief achievement of eliminating the federal budget deficit. The act was a top-to-bottom reconsideration of FCC policies that has had dramatic consequences, foreseen and not, for the mobile-phone industry, telephone companies, Internet-based businesses, and many other firms.

For our purposes, what mattered about this bill was clause 202(h). These few lines instructed the FCC to review every two years its rules limiting media ownership—and to "repeal or modify" any rule that "it determines to be no longer in the public interest." These words could mean a lot of things—including not very much, if they were interpreted as instructing the FCC to stick with rules unless there was flagrant evidence of their pointlessness. But new players entered the drama: the judges of the D.C. Circuit Court of Appeals, and a man who had once been law clerk to one of them—a man who would be the lead player in the next act. In their collective view, clause 202(h) was full of possibilities.

The D.C. Circuit, which is of great importance as the venue for most suits against federal agencies, has recently been a source of conservative intellectual energy, as the Ninth Circuit, on the West Coast, has been a stronghold of liberal judges and views. Antonin Scalia and Clarence Thomas both came to the Supreme Court from the D.C. Circuit (as did the more liberal Ruth Bader Ginsburg). Robert Bork was on this circuit when Ronald Reagan nominated him to the Supreme Court. Douglas Ginsburg, now the D.C. Circuit's chief judge, was nominated by Reagan for the Supreme Court and would in all probability have been confirmed had it not been for controversy over his admitted marijuana use in the 1960s and 1970s, which caused him to withdraw. Another judge on the court, David Sentelle, is a former aide to Jesse Helms and was part of the three-judge panel that selected Kenneth Starr as the special prosecutor.

The judges on this circuit had a chance to examine clause 202(h) when several media companies sued the FCC to overturn limits on their expansion, merger, and cross-ownership plans. In two influential rulings issued last year, the D.C. Circuit Court ruled for the companies and against the FCC. Unless the FCC could prove the need to maintain its regulations, specifically the limits on cross-ownership, it had to change or remove the controls forthwith. In his ruling on one of the cases, Fox Television Stations v. FCC, Chief Judge Ginsburg wrote that some people may have imagined that Congress intended the FCC to take an "incremental" approach to relaxing ownership rules. But they couldn't be more wrong. "The mandate of § 202(h)," he wrote, "might better be likened to Farragut's order at the battle of Mobile Bay. ('Damn the torpedoes! Full speed ahead.')"

Some lawyers and legal scholars say that what the court was asking—all it could properly ask, despite Ginsburg's breezy remarks—was that the FCC do more to explain and defend its rules, such as those that kept the dominant newspaper in a city from buying the dominant TV station. "One way to respond to that sort of decision would be to go out and get proof that the limits are serving interests consistent with the First Amendment," Lawrence Lessig, of Stanford's law school, recently told me. He pointed out that the Supreme Court's rulings in this area have given the FCC considerable leeway to apply ownership rules. By this logic the FCC could have responded to the Fox ruling not by removing its ownership limits but by more fully explaining the rationale for them. If companies filed another suit, and if the D.C. Circuit Court sided with them yet again, the FCC could in principle appeal to the Supreme Court. Robert Pitofsky, a law professor at Georgetown University who was the chairman of the Federal Trade Commission during the Clinton Administration, says, "The courts were asking for a greater burden of proof. This didn't mean you have to throw all the rules out."

It did not look that way to the man who had to decide whether to fight the rulings: the chairman of the FCC, Michael Powell.

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James Fallows is a national correspondent for The Atlantic. His Atlantic cover story last November, "The Fifty-first State?," about postwar Iraq, won the 2003 National Magazine Award for Public Interest. His books include Free Flight: From Airline Hell to a New Age of Travel (2001), Breaking the News: How the Media Undermine American Democracy (1996), and Looking at the Sun: The Rise of the New East Asian Economic and Political System (1994). More

James Fallows is based in Washington as a national correspondent for The Atlantic. He has worked for the magazine for nearly 30 years and in that time has also lived in Seattle, Berkeley, Austin, Tokyo, Kuala Lumpur, Shanghai, and Beijing. He was raised in Redlands, California, received his undergraduate degree in American history and literature from Harvard, and received a graduate degree in economics from Oxford as a Rhodes scholar. In addition to working for The Atlantic, he has spent two years as chief White House speechwriter for Jimmy Carter, two years as the editor of US News & World Report, and six months as a program designer at Microsoft. He is an instrument-rated private pilot. He is also now the chair in U.S. media at the U.S. Studies Centre at the University of Sydney, in Australia.

Fallows has been a finalist for the National Magazine Award five times and has won once; he has also won the American Book Award for nonfiction and a N.Y. Emmy award for the documentary series Doing Business in China. He was the founding chairman of the New America Foundation. His recent books Blind Into Baghdad (2006) and Postcards From Tomorrow Square (2009) are based on his writings for The Atlantic. His latest book is China Airborne. He is married to Deborah Fallows, author of the recent book Dreaming in Chinese. They have two married sons.

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