Does Murdoch Have An Edge In A Crucial Cable Tv Battle?

Get ready for a giant rumble on Capitol Hill: Rupert vs. the cable guys. Media mogul Rupert Murdoch, no slouch at winning in Washington, is lobbying Congress to rewrite copyright laws so that his planned satellite-TV system, American Sky Broadcasting (ASkyB), can offer consumers something cable operators provide but rival satellite systems usually can't: network programs and local stations. Cable operators, well aware of their critical advantage, are sure to fight fiercely to keep their edge.

At first blush, Murdoch seems to have the upper hand with the GOP-controlled Congress. After all, he enjoys close ties to House Speaker Newt Gingrich (R-Ga.). And the News Corp. chairman, known for his conservative publications, gave more than $650,000 in personal and corporate donations to the GOP for the 1996 elections--compared with a paltry $20,000 to the Democrats. Meanwhile, the cable companies have taken a beating from Congress, which reregulated their industry in 1992 amid widespread complaints of price-gouging.

Still, cable thinks it has a good shot at derailing Murdoch's plan. For one thing, Gingrich's power is diminished these days. Moreover, the cable folks will attack any legislative fix as a gift to the politically connected billionaire. "This is private legislation to benefit one company," grouses one cable company official.

Some smaller broadcasters may also side with cable. They fear a revised law will mean that the increasingly important satellite-TV systems will carry larger stations but not the small independents. "If the broadcasters and satellite carriers aren't unified, I don't think ASkyB will succeed," says Representative Rick Boucher (D-Va.), a member of the House telecommunications subcommittee.

Murdoch's lobbying campaign is further complicated by the fact that his effort to rewrite the law isn't being pushed by all satellite players. Some operators like Echo Star Communications Corp. are supportive, but Hughes Corp.'s DirecTV isn't on board. One reason: It doesn't have the satellite capacity to carry much local programming and could be at a competitive disadvantage to ASkyB.

Until now, technical hurdles have stopped satellite operators from beaming local stations to most markets. In addition, U.S. copyright law is unclear on whether satellite players have the legal right to carry local stations, even if they have the technical means.

LATE TO MARKET. Murdoch's ASkyB thinks it has solved the technical problem. Using a technology called "spot beams," it hopes to carry local stations in the top 20 or so markets around the country. That's crucial: Since ASkyB is so late to market, it needs to offer something new. While Murdoch's team contends it can do this legally now, ASkyB still wants clarifying legislation to prevent court challenges. "The current law is workable," insists ASkyB CEO Preston Padden. "It's just cumbersome."

Murdoch is counting on lawmakers to side with him because they want to boost competition against cable systems. The Hill has gotten many complaints from consumers frustrated by limitations on their satellite systems. "They've got a competitive disadvantage that must be addressed," says Representative W.J. "Billy" Tauzin (R-La.), head of the House telecom panel.

Encouraged by such statements, Murdoch's team is working the Hill. Padden asserts that, ultimately, any changes in the law will be "for the benefit of consumers and not for the benefit of Mr. Murdoch." The mogul's challenge is to persuade Congress that it can help both constituencies at the same time. In this case, he'll do better to rely on the power of his argument--rather than the strength of his connections.

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