Fox in the henhouse: how Murdoch made broadcast news - telecommunications magnate Rupert Murdoch's move to obtain 12 network stations for his Fox Broadcasting Co - includes related article on Murdoch's disapproval of violence in motion pictures - Cover Story

0 Comments | Insight on the News, August 15, 1994 | by Jamie Dettmer

You could hear network executives gasping coast to coast as they learned that Rupert Murdoch, owner of the upstart Fox Broadcasting Co., had lured away 12 of their affiliates, including several in major markets such as Dallas, Tampa and Atlanta. To the general public, the growls from ABC, CBS and NBC must have seemed like much ado about nothing. But to media watchers, Fox's bold raid was only the latest of several coups that have brought the 8-year-old network a kind of instant status.

For those who have followed the buccaneering career of the 63-year-old media mogul, the affiliate deal was vintage Rupert. Since inheriting a small newspaper in Adelaide, Australia, in 1953, Murdoch has been shaking up the media world and leaning on his employees to achieve what his less-imaginative rivals swore was impossible. News Corp. Ltd., Murdoch's holding company, has expanded by acquisitive leaps and bounds into the world's third-largest telecommunications conglomerate, operating on four continents. In 1960, the company's revenue was $5 million; by the early 1990s, it had risen to nearly $9 billion. And unlike the other worldwide media giants -- Time Warner, Sony, Bertelsmann, Berlusconi and Disney -- News Corp. is the only one still run by one man.

Today, the naturalized-American controls more than 70 percent of the Australian press, five national newspapers in Britain, the New York Post, TV Guide and other publications in the United States, as well as the Twentieth Century Fox Film Corp. He owns 50 percent of the 14-channel, pan-European satellite system known as British Sky Broadcasting. And he recently purchased the pan-Asian Star TV, another satellite system that could reach up to 3 billion people from Tokyo to Tel Aviv, and the Massachusettsbased Delphi Internet Services, a computer network with access to Internet's 20 million users.

Murdoch's global expansion presents opportunities for huge economies of scale: News Corp. can offer advertisers, production companies and possible merger partners cheap access to several markets and audiences. And although its future is uncertain, the Fox television network could be crucial to Murdoch's Napoleonic plans to construct a globalinformation empire. A successful U.S. network would provide him not only with the cash he needs to continue to expand, but also with a plethora of coveted American movies and programs to fill airtime all over the world.

Established in 1986, Fox got off to a sluggish start, evoking sneers from the Big Three networks and condescension from critics (although programs such as the Tracey Ullman Show and In Living Color were roundly praised). But in the 1990s, Fox began to attract a hip, young audience with The Simpsons and other shows. The networks took notice but remained complacent, reassuring themselves with the fact that Fox had no daytime soaps. The flop of Fox's foray into late-night programming, The Chevy Chase Show, helped lull the networks into a false sense of security, say media analysts.

Then, late in 1993, Fox stunned the industry and the nation by buying the lucrative rights to broadcast the National Football Conference, outbidding CBS by $400 million and breaking that network's 40-year association with American's Sundays. "The NFL buy-up shocked the networks," says David Hiltbrand, television critic for People magazine. "With that alone, Fox became a big player.... CBS with its aging audiences should look out."

The agreement in late May between Fox and New World Communications Group Inc., the media group that holds the new Fox affiliates, is the network's largest stride toward parity with the Big Three. Indeed, the precedent-setting alliance between Murdoch and Ronald Perelman, the Revlon cosmetics magnate who owns New World, exposed the networks' Achilles' heel -- their tenuous links with affiliates -- and it paves the way for a massive realignment of local stations. Affiliates undoubtedly will demand concessions from networks, says Smith Barney Shearson analyst John Reidy, including greater control over programming and a share in advertising revenues.

Murdoch publicly admits he is searching for more affiliates and another big deal may be forthcoming. Some media watchers have reported that he has approached Group W Broadcasting Co., a unit of Westing-house Electric Corp. that recently made an affiliates deal with CBS. Meanwhile CBS, which lost eight stations to Fox, has been forced to contemplate a shift to tabloid-style programming to ward off Fox's challenge, say analysts. In fact, CBS's Laurence Tisch found himself negotiating with QVC's Barry Diller to merge the broadcast network with the homeshopping channel. (Diller helped create Fox and moved on in 1992 after he quarreled with Murdoch.) The two failed to seal the deal.

Corporate executives aren't the only ones following Murdoch's maraudings. "It's not healthy for democracy and it's not healthy for competition," says Robin Cook, British Labour Party trade spokesman, of News Corp's effect on British journalism (see sidebar, page 9). Some attacks -- particularly from the left, which tends to cast Murdoch as a right-wing demon -- border on the hysterical. London journalist Francis Wheen wrote recently that Murdoch has "made a fortune from selling excrement and in the process has debauched our culture and corrupted our youth, producing a generation of lager louts, sex maniacs and morons."