Rudy, Rupert, Ted & Jerry: Grow Up, Guys!

The New York City cable industry imbroglio looks like the sort of crony capitalism that pervades the developing world. It seems to be dominated by government regulations, political connections, ideological differences, and personal ambitions. The tragedy is that consumers and shareholders suffer as Mayor Rudolph W. Giuliani, Governor George E. Pataki, and the CEOs of Time Warner Inc. and News Corp. use power and politics to make decisions for an industry where market forces have no major role.

The dispute began when Time Warner promised the Federal Trade Commission to add another news channel in exchange for approval of its purchase of Turner Broadcasting System Inc., which owns CNN. It turned down a lucrative offer to carry a 24-hour Fox news channel started by News Corp. and went with MSNBC, owned by NBC and Microsoft. In the past, News Corp.'s Rupert Murdoch has accused Ted Turner and CNN of being too "liberal." Turner has compared Murdoch to the "late fuhrer," although he later apologized.

Enter the politicians. Mayor Giuliani suggested that Time Warner, run by Gerald Levin, carry the Fox news channel on one of five public-access cable channels, a move that may violate federal law. Then he convened a panel to review Time Warner's local cable franchises. Governor Pataki jumped in, with his attorney general launching an antitrust investigation against Time Warner. Hardly subtle threats.

The appearance of impropriety in this mess is overwhelming. Both the Republican governor and mayor receive significant campaign contributions from Murdoch. The mayor is up for reelection in 1997, and News Corp. owns one of two tabloids in New York--which endorses candidates.

We think the politicians should back off. This kind of behavior, reeking of conflict of interest, by state and local office holders gives the whole notion of devolution of power a bad odor. News Corp. should stop encouraging politicians to get involved in its business. And Time Warner should consider running the Fox 24-hour news channel and letting consumers decide what they want to watch.

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