Media Mogul Courts Minorities

But is proposed deal a "Faustian bargain"?

Media baron Rupert Murdoch appears close to striking a deal with a coalition of minority leaders in which he will donate at least $100 million to help increase the number of minority-owned U.S. broadcast stations. But a source familiar with the negotiations describes the investment fund as part of "a package deal" orchestrated by Murdoch to expand his media empire.

According to sources familiar with the negotiations, Murdoch will provide the funding under the condition that, in return, members of the coalition agree to endorse a waiver Murdoch plans to request from the Federal Communications Commission that would allow him to buy more TV stations in the United States. Under current FCC regulations, further acquisition by Murdoch's News Corp., which includes the Fox network, would constitute an illegal monopoly.

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"It's a pity, but you have to bribe white people to support affirmative action," one civil rights leader, who asked not to be identified, said of the negotiations. Murdoch has long been considered a foe by minority groups.

But Murdoch has timed his offer at a particularly desperate time for groups that are advocating greater minority ownership of broadcast stations. In April, a three-judge panel from the U.S. Court of Appeals for the District of Columbia overturned an FCC rule that required TV and radio stations to make a concerted effort to hire minorities.

A week before the ruling, newly appointed FCC Chairman William Kennard, the first African American to hold that position, addressed the annual meeting of the National Association of Broadcasters and practically begged his audience to increase minority representation in the industry. "I am increasingly concerned that at a time when our country is becoming ever more pluralistic the media is becoming less so," he said. According to an April 1998 editorial in the trade publication Electronic Media, only 2.8 percent of all broadcast licenses are minority owned.

Following Kennard's plea, Murdoch lobbyist Peggy Binzel began talks with at least eight minority advocates, including, sources say, Antoinette Cook Bush, a telecommunications lobbyist at the firm of Skadden, Arps, Slate, Meagher and Flom (and stepdaughter of superlobbyist Vernon Jordan); David Honig, who works with Jesse Jackson's Rainbow/PUSH coalition but who is said to be representing the Minority Media and Telecommunications Council in the talks; Jim Winston of the National Association of Black Owned Broadcasters; John Oxendine, president of Broadcast Capital Fund; and Tom Hart, a telecommunications lawyer at Shook, Hardy & Bacon who works with the Telecommunications Advocacy Project.

When contacted by Mother Jones on Friday, June 26, Hart confirmed that he had participated in discussions and he verified the basic details of the deal -- including the minority representatives' support for Murdoch's FCC waiver -- but refused to comment further. Bush, Honig, and Oxendine all did not return phone calls as of press time. Murdoch, sources say, has offered $100 million to the coalition, but its members are holding out for more. Another sticking point is over who will control and distribute the funds.

While the deal could lead to some increase in minority ownership, it would also accelerate the consolidation of media ownership. Mark Crispin Miller, who teaches media studies at New York University and is director of the Project on Media Ownership, says, "It's a Faustian bargain. It offers Murdoch a 'PC' camouflage to extend his influence still further. It will ultimately make little difference if he makes a few loans to minority owners."

Murdoch's TV broadcast properties already approach the 35 percent national coverage limit set by the FCC for a single company. (The limit was 25 percent until 1996, when Congress, under pressure from Murdoch and other network owners, raised it to its current level.) To buy more stations, Murdoch needs a special dispensation from the FCC. Sources tell Mother Jones that the FCC is aware of the ongoing negotiations, though officials at the FCC refused to comment.

Andrew Schwartzman of the Media Access Project, a public interest telecommunications law firm in Washington, D.C., has been briefed on the talks by some of the negotiators. He says he believes that the FCC might approve a waiver if Murdoch and the minority advocates are able to come to terms. "Kennard is very anxious to make something happen," he says. "You have to assume that it's a serious venture that will get a careful and receptive look."

Murdoch has received exemptions from the FCC before. In 1993, the commission waived its "cross-ownership" rule -- which bars companies from owning a newspaper and a radio or TV station in the same market -- allowing Murdoch to buy back the New York Post. The FCC did so because, it said, Murdoch -- who had been forced to sell the Post five years earlier because he owned a Fox TV affiliate in New York -- was the only person who could prevent the Post from falling into bankruptcy.

Two years later, the FCC chose to go against the recommendations of its own staff, which found that Murdoch's Australia-based News Corp. should be defined as a foreign company and have its U.S. TV holdings limited to 25 percent. Instead, the FCC decided that since Murdoch had served the "public interest" by founding a fourth national network, he should be allowed to maintain full control of his TV stations.

Then-FCC Commissioner James Quello championed Murdoch's cause in both cases. After the most recent waiver, Murdoch hired two Quello associates -- his former special counsel and a close family friend -- as lobbyists for News Corp.

This latest deal is particularly ironic because Murdoch has frequently been at odds with minority groups. In 1996, he gave $1 million to the California state GOP during the last few weeks of the Proposition 209 campaign, when the party was devoting significant resources to winning voter support for the anti-affirmative action ballot initiative. In 1997, Murdoch reportedly urged Ward Connerly, a University of California regent who launched the Prop. 209 effort, to challenge Sen. Barbara Boxer (D-Calif.) in her upcoming re-election campaign.

Ken Silverstein is a Mother Jones contributing writer.

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