Who's Afraid of News Corp.?

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We were among the few who favored the merger of DirecTV and EchoStar. Sure, it would have reduced the "multichannel video providers" available to consumers from three to two, but our marketplace of ideas (what we call the real world) also includes broadcasting, newspapers, the Internet, and other deliverers of news and entertainment. The Republic would have survived, and Charlie Ergen in full command of the DBS heavens would have constrained cable rates for a good long while.

Now we have Rupert Murdoch stepping up to buy controlling interest in DirecTV. His deal should have no serious trouble passing antitrust muster. After all, he is not reducing consumer choices. At the end of the day, fans of all that wonderfully diverse cable programming will still have two viable alternatives to their local cable system, assuming, of course, a tree isn't blocking the dish's view of the southern sky.

And News Corp., despite all the attention Murdoch gets, is not that big. In the B&C 25 ranking of media companies (see page 12), it ranks No. 7. Even if you lump in all of Hughes/DirecTV's revenue, News Corp. is still smaller than main rivals AOL Time Warner, Viacom and Disney.

But some are raising concerns about News Corp.'s vertical integration. As this magazine pointed out last month when Murdoch finally announced his deal to acquire a DBS service, News Corp. becomes the first of the Big Five media companies to have it all: a major position in the five major segments of the TV business (studios, TV stations, cable or satellite TV, cable networks, broadcast networks). Some cable operators worry that the vertically integrated News Corp. will deny them access to its cable programming and discriminate against them in pricing.

We don't see that as much of a threat. We believe Murdoch when he says that he has no incentive to make it tough for cable operators to distribute his networks. They need all the distribution they can get. Besides, Murdoch has agreed to put the non-discrimination promise in writing and have it codified in the FCC approval.

Other cable programmers may have more too worry about than the cable operators do. Will News Corp. give CNN and MSNBC "fair and balanced" treatment on DirecTV? Will ESPN be as easy to find on the electronic program guide as Fox Sports? Will FX get a better channel position than USA and TNT?

Good questions. But all these competing networks belong to media heavyweights and should be fully capable of duking it out with News Corp. in the marketplace. If DirecTV dumps on CNN, Time Warner Cable can make things tough for Fox News Channel. What goes around comes around.

Cable operators should fear the marriage of News Corp. and DirecTV. With all the might of Murdoch behind it, DirecTV will be chasing cable subscribers more aggressively than ever.

But it's nothing the government needs to fear. The best thing it can do is OK the deal, stand clear and watch with us as competition does its work.

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