The U.K. media establishment, which likes nothing better than to gang up on Rupert Murdoch, has ganged up on him again. They oppose his proposed takeover of satellite broadcaster BSkyB, of which he already owns 39.1 percent, and are hectoring regulators to block the transaction.
The Financial Timesjust editorialized its disapproval of the takeover on media-concentration grounds, demanding in its headline that Murdoch be brought “to heel.” The editorial goes on to claim that “Murdoch’s power grip on the UK media industry” has deterred British politicians from investigating the News of the World phone-hacking scandal. (See this previous column for a summary of the scandal.)
Murdoch’s News Corp. already controls 37 percent of newspaper circulation in the United Kingdom, and BSkyB commands—”in revenue terms”—35 percent of the TV market, a number that includes public broadcaster BBC, according to the editorial. The FT frets that BSkyB may soon control half of the TV market and that Murdoch will leverage this power to bundle subscriptions to the online versions of Murdoch-owned newspapers and use those subscriptions to price other newspapers out of the market. In other words, the FT is terrified of being swamped by a business model that barely exists!
Yesterday, the Guardian chose to cover the FT editorial as breaking news. It also publisheda story about Claire Enders, a media analyst who had sent the United Kingdom’s top regulator a 20-page report criticizing the deal as a “reduction in media plurality to an unacceptably low level.” Enders regards the deal as a “force de frappe” that will allow Murdoch to destroy the competition. Writing in the Observeron Sunday, film producer and Labor appointee to the House of Lords David Puttnam boiled all of the objections down to one, calling the Murdoch acquisition a threat to British democracy. And last month, BBC Director General Mark Thompson warned that Murdoch’s BSkyB threated to dwarf the BBC and “all the other commercial broadcasters put together.”
The British establishment has suffered from fear of Murdoch ever since he arrived on the London scene to buy the Sun and News of the World in 1969. His later purchases of the Times and the Sunday Times in 1981, his constant meddling in politics—which have earned him a reputation as the 24th member of the Cabinet—and his success as a satellite broadcaster in the United Kingdom make him seem all-powerful.
But how big and bad is he? Murdoch’s hold on 37 percent of U.K. newspaper circulation comes at a high price. According to a March 2010 report in the Guardian, the annual pre-tax losses for the Times and the Sunday Times in the last reporting period were about $135 million, up from about $78 million the previous year, and profits for the Sun and the News of the World were down. If not for Murdoch’s deep pockets and willingness to spend, the Times, circulation 494,205 and declining, and the Sunday Times, circulation 1 million and declining, probably wouldn’t exist. Perhaps instead of castigating Murdoch, they should be thanking him for supporting diverse media.
Murdoch’s recent decision to hide the digital editions of the Times and the Sunday Times behind a pay wall has marginalized the two titles. And rather than using his alleged market power to drive the competition out of business by cutting prices, Murdoch just boosted the Sunday Times from 2 pounds to 2.20. That’s not likely to increase circulation.
Denouncing Murdoch as a potential monopolist every time he buys or starts a media property reveals the idiocy and the dishonesty of his critics. Obviously, his political foes hate to see Murdoch’s megaphone get bigger. But who are his political foes? He has shifted from Tory to Labour and is currently back with the Tories. As I’ve written before, Murdoch has no real politics beyond what’s good for Murdoch. Besides, media bosses don’t really have half the power ascribed to them. So rather than denouncing Murdoch for making politicians bend over, his critics would be better off asking politicians why they’re so willing to be the mogul’s slaves.
As for fears that Murdoch’s further consolidation of media properties will automatically bring him greater power, please see the October 2009 Atlanticfeature that documents the historically bleak performance of media conglomerates. Murdoch has lost billions on his purchases of MySpace, Wall Street Journal parent corporation Dow Jones, and Gemstar-TV Guide International; on his investments in China; and on his ongoing support of the New York Post, just to name a few brilliant miscues. Who is to say that his consolidation of BSkyB will translate into gold and power instead of backfiring?
Most of the squealing has less to do with the evil the genocidal tyrant might do if he acquires all of his precious BSkyB than it does with a fear of competition by most other media organizations. Say what you will about Muroch— and I have —he loves to compete. He started a new TV network here in the United States when everybody said it couldn’t be done. He poached NFL football from CBS. He took on CNN and has beat it in the ratings with Fox News Channel. Now he’s gunning for the New York Times. Most U.K. newspapers and the state-chartered BBC—just to name another media conglomerate that controls a gargantuan media share across various for-profit platforms around the world—would rather seek government protection than meet Murdoch in the marketplace and compete.
Instead of shielding the media status quo with measures to Murdoch-proof the country, U.K. regulators would be smarter to encourage competition. Make it easier for new satellite and terrestrial broadcasters to get started. Make it easier for new wireless and terrestrial Internet providers to enter the market. Make it easier for businesses to repurpose whatever spectrum they currently control to serve customers better.
In the media world and elsewhere, reduced regulation increases competition, and increased competition nullifies whatever rationalizations are thrust forward to justify the remaining regulations. I’m all for media companies fighting Murdoch. But let them fight him with competition, not protection.
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