News Articles

Fast Track

9/15/2006 08:00:00 PM Eastern

Murdoch, Malone Talks Deciphered

There's an important lesson in Rupert Murdoch's discussions to give up his stake in DirecTV: Control is more important than News Corp.'s strategy.

In talks first revealed by CNBC reporter David Faber, John Malone's Liberty Media is discussing trading its stake in News Corp. for the company's interest in DirecTV. News Corp CEO Murdoch and Malone have long been partners and compadres.

But Malone started frightening the Australian mogul by amassing stock in News Corp. over the years. At last count, he had 19% of News Corp.'s shareholder votes.

The driver in this deal is fear. Control over his empire is more important to Murdoch than his worldwide strategy to dominate the TV industry through satellite dishes.

The news seems to run contrary to Murdoch's 2003 plan to purchase a controlling stake in DirecTV, capping a decade-long effort to secure a satellite-TV foothold in the U.S. News Corp. has long been the dominant satellite-TV player in England and Asia, and Murdoch saw the U.S. market as a glaring hole.

With a satellite company, Murdoch could enhance the value of his TV and film assets, launching cable networks and interactive services. He could use those same operations to thwart rivals.

Why, then, would he even think of surrendering DirecTV? Because no strategic vision is more important to chiefs of tightly held media companies than control of their own destinies and, in the case of our older moguls, dynasties.

With control, they can more easily expand their reach, shed unwanted properties, tap the corporate coffers. Do you think News Corp. would pay billionaire Murdoch's $50,000 monthly apartment rent if he really had to answer to shareholders? Executives like Murdoch, Viacom's Sumner Redstone and Cablevision's Chuck Dolan cringe at the torture endured by Time Warner's Dick Parsons at the hands of activist shareholder Carl Icahn, who owns a pesky 2% stake in the company.

Most outside shareholders own a class of stock that carries weak voting power, while the Murdoch family is the largest holder of super-voting stock. Murdoch thought his 39% share of the family company's votes gave him a lock on control. The prospect of Malone's owning a large voting stake—with the ability to flip it at any time—had News Corp. scrambling to try to dilute his potential power.

News Corp.'s DirecTV share is worth about $9 billion, while Liberty's equity stake in News Corp. is worth about $9.8 billion. News Corp. executives have spent two years trying to buy back Liberty's shares. Malone loathes paying taxes, so he won't simply accept cash. He has pushed to structure a deal that would defer any payment to the IRS.

The talks tell a lot about friendships between corporate moguls. If you want to watch your back, watch your friends.

MNT Sticks With Sagging Soaps

Despite debuting to low national ratings, MyNetworkTV (MNT) insists it will stick with its telenovela format. Fox Television Stations CEO Jack Abernethy reiterated the company's long-term commitment to the primetime soaps late last week, saying there has been no talk of switching them out.

While some producers say there have been conversations about possible replacements, Abernethy says MNT will stick with its telenovelas, including Desire and Fashion House.

MNT remains at work on the next batch of 13-week soaps. It is halfway through production on Watch Over Me and 15 days into shooting for Art of Betrayal.

Work is also under way on scripts for the third cycle. In its first four days during the week ending Sept. 10, MNT's strips averaged a meager 0.5 rating/2 share in adults 18-49, according to numbers released last week alongside network fringe and barter syndication ratings.—Jim Benson

NBC U Starts Broadband Business

NBC Universal says it will partner with the network's 230 affiliates in a business for aggregating and distributing video from NBC, its affiliates and third-party Websites.

Through the National Broadband Company, or NBBC, three parties—the content creator, the site that runs the video and NBBC—will split profits from non-skippable ads embedded in the video.

The content will not be directly accessible to the public; video will be housed in an online NBBC library where partners can upload and download clips. NBBC will either sell ads for content providers or allow them to sell and attach their own ads. JP Morgan Chase and Proctor & Gamble have signed on as charter advertisers.

Early third-party partners in NBBC include A&E Network, HowStuffWorks.com and Washingtonpost.com.

“This is about making content available on as many platforms and to as many eyeballs as possible,” says Randy Falco, president and COO of the NBC Universal Television Group.

—Anne Becker and Allison Romano

Alexis Glick To Fox News Channel

Fox News Channel has hired former Today contributor and CNBC reporter Alexis Glick as director of business news. The move gives Fox News an experienced financial news talent for when the network launches its expected business-news channel.

Most recently, Glick was a correspondent on Today and briefly considered in the field of potential replacements for Katie Couric. Prior to that, she was a senior trading correspondent for CNBC.—John M. Higgins

Correction

The photograph in the Sept. 11 Station to Station should have identified WFLA Daytime anchor Cyndi Edwards.

In the Sept. 11 Syndication & Distribution, Everybody Loves Raymond should have been identified as the top off-network sitcom.

CBS Stars Spin Hits

CBS will promote its fall series through online celebrity playlists produced by its radio group. The company's radio and marketing divisions are teaming up to stream playlists from actors in several of its fall shows at cbsgotjackd.com, a play on CBS Radio's 12 JACK-FM stations.

Beginning Sept. 18, CBS' premiere week, listeners can log on to the ad-free site and stream a two-hour show with songs chosen and introduced by the stars of new series Shark, Smith, Jerichoand The Class, as well as returning series, including CSI, NCIS and Survivor. CBS' radio stations in the 12 cities will promote the Website with celebrity soundbites on air.

The week-long promotion is designed to build buzz for the network's shows in a more creative and consumer-friendly way than solely relying on traditional commercials, says George Schweitzer, president of the CBS Marketing Group. CBS has plastered its marketing messages this season on such unconventional objects as eggs and drugstore security sensors. The network is also showcasing its series on airplanes and at auto service centers and is working on deals for hair salons and doctors' office waiting rooms.

“Any way we can make advertising into content is a good thing,” Schweitzer says. “It creates another connection between the viewer and the shows.”

—Anne Becker

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