Testifying before Congress for the first time since 1997, News Corp. Chairman Rupert Murdoch urged lawmakers Thursday to support his proposed acquisition of a 34% stake in satellite provider DirecTV, promising he will not discriminate against rivals or withhold his cable programming from others.
“The public-interest benefits of this transaction are manifold and substantial,” Murdoch told the House Judiciary Committee during a hearing to examine the proposed $6.6-billion deal.
Despite some nudging by Democratic lawmakers, Murdoch declined to extend the company’s nondiscrimination promise to include its Fox broadcasting network.
Neal Schnog, vice chairman of the American Cable Assn. and president of a small cable operator in rural Oregon, said he feared News Corp. would use its control over local Fox broadcast stations to hike retransmission prices or deny cable companies like his permission to air Fox network content, thereby driving customers to DirecTV.
“The federal government should not let this Fox into the DirecTV henhouse,” Schnog said.
Lawmakers expressed concern that News Corp. might discriminate against cable programming owned by rivals. “Are you going to allow CNN to remain on DirecTV?” asked Rep. Sheila Jackson-Lee (D-Texas), referring to AOL Time Warner Inc.'s news channel.
Murdoch reiterated the company’s pledge to not use DirecTV to discriminate against unaffiliated programmers or enter into exclusive arrangements with News Corp.-owned companies. He said it would be “madness” to take any steps that would limit the exposure of the Fox cable channels by refusing to air them on rival pay-TV systems.
Consumers Union Co-Director Gene Kimmelman said the News Corp. nondiscrimination pledge -- which the New York company submitted to the Federal Communications Commission last week -- still could permit News Corp. to raise prices of Fox programming for all cable and satellite companies, including its own.
Though a News Corp.-owned DirecTV would have to pay more too, the company conceivably would more than make up the difference with higher revenue collected from other cable operators.
Murdoch and supporters of the DirecTV deals said the cable programming market was too competitive to permit News Corp. to simply hike prices and expect other cable operators, including such giants as Comcast Corp. and AOL Time Warner, to pay.
The hearing revealed a largely partisan split over the merits of the News Corp.-DirecTV deal, which still faces regulatory review from the Justice Department and FCC.
Republicans generally welcomed News Corp.'s move, believing the company will act aggressively to expand DirecTV’s service and compete with cable providers.
Democrats were more skeptical, fearing Murdoch’s growing control over media properties and taking the opportunity to criticize what they see as the conservative slant of his Fox News Channel.