How could disgruntled shareholders even contemplate Rupert Murdoch stepping down as chairman or CEO of News Corp. (Nasdaq: NWS)?
True, Captain Rupert had rough sailing when he and his first mate
(James) came down with an attack of collective amnesia during the
parliamentary select committee hearing last month regarding certain
irregularities at his UK newspapers. But who wouldn't want the company
helmed by a man who has mastered the art of turning laws and ethical
considerations into Swiss cheese -- a man capable of finding loopholes
big enough for a Qantas 747 to navigate -- when it still faces the
possibility of troubled waters in the case of the Metromedia TV
As I explained in earlier episodes of this thrilling mystery, Murdoch
and News Corp. violated two sections of the most sacred law in the
canon of media regulation, the Communications Act of 1934, to acquire the six stations on which the Fox TV network, Fox News, FX, and the rest are built. (See Australian Skeletons in America's Closet.) All are robust profit centers, according to the company's fourth-quarter conference call this past Wednesday.
How Murdoch steered his way out of the crimes of being an alien who
owned a foreign entity that bought US TV stations -- both of which are
specifically banned by the statute -- is a feat that still generates awe
in media circles. How did he do it?
Well, let me tell you. First, he made the ultimate sacrifice by going
down to the naturalization court in September 1985 and becoming an
American citizen... 118 days after he violated the law. But the Federal
Communications Commission didn't seem to notice or care about this
Becoming a citizen satisfied the regulatory requirements but
apparently stirred quite a fuss at home. His mother was especially upset
that her son turned his back on his queen. Dame Elisabeth said, in effect, that it would have killed his father (Sir Keith) if he hadn't died in 1952.
After the NAACP filed a petition to deny renewal
of the Channel 5 license, Citizen Rupert went to his new nation's
capital on Thanksgiving weekend of 1994. He wanted to explain that a
grave injustice was being perpetrated on him by the threat of an
official hearing on the license renewal. Why was the FCC harassing an
American businessman and interfering with his First Amendment rights?
On his tour of the capital, he visited such tourist attractions as
the office of Newt Gingrich, who had been swept into the Speaker of the
House office with his Contract With America. An amazing coincidence then
occurred. Murdoch's publishing company, HarperCollins, agreed to give
the speaker a $4.5 million advance
for two books. It looked bad, since Newt's previous book, a bodice
ripper, earned only about $8,000 in royalties. Gingrich later said he
didn't know Murdoch owned HarperCollins. He said he didn't know the
offer was made. It was a coincidence. That's what coincidences are
While in town, Rupert dropped in on some other lawmakers. Since he
couldn't press the flesh of all 520 legislators, he stuck to heads of
committees dealing with telecommunications and media.
Sen. Larry Pressler
(R-S.D.) agreed that the FCC was picking on Rupert. He announced
hearings on his proposal to eliminate funding for the FCC as part of the
Contract With America's pledge to reduce spending and balance the
budget. In another of those amazing coincidences, Rupert had held a
fundraiser at the 21 Club that raised $50,000 for Sen. Pressler's next
The FCC eventually voted not to hold a formal hearing on the petition
to deny the Channel 5 license renewal. The NAACP lawyers tried three
more times to get the FCC to see its errors. Each time, Rupert was
Of course, it didn't hurt that he also donated a million dollars to
the Republican Party of California, even before Citizens United. The GOP
has long been one of his favorite charities.
Citizen Rupert is brilliant. He found a way to turn the First Amendment on its head, as Richard Reeves of Truthdig
noted. "As to the idea of separating totally the press and the
government, his goal has been to merge them -- with himself as the
master of both."
It may be a comfort for ye of little faith, disgruntled
stockholders, to know the job is not done. The sun never sets on