…of his own shareholders.
It’s FT content, which is sacred and must not be quoted, but to summarize, Rupert has discovered that broadcasting law mandates that 75% of control of US stations must be by Americans. But foreigners own 36% of NewsCorp voting shares! Not that share ownership translates into control of stations, but let’s not be too logical here lest the argument prematurely dissolve into its constituent components of cow manure.
Solution: strip the foreigners of not one-third of their voting rights, which would reduce 36% to 24%, but half of their voting rights. One of the most greatly screwed is Prince Alaweed, a Murdoch buddy.
Now, the Murdochs claim to have discovered this recently as a consequence of share repurchases. But a reading of an analysis of the law on this says that the issue has existed since 1994, when NBC alleged that FOX was violating American law by owning too many stations. The FCC has routinely continued to grant TV licenses despite gross violations of broadcasting standards by licensees FOX and two Mexican stations infamous for supporting the oligarchy, Televisa and Azteca:
The NAACP and NBC challenged Fox’s ownership structure and asked that the FCC deny Fox’s upcoming applications for renewal of broadcasting licenses in certain cities. In the face of these complaints, the FCC asked Fox to disclose its
complete company equity structure to see if any misrepresentation had occurred in Fox’s original 1985 application for American licenses. In 1985, Fox had told the FCC that “the stations would be held by a company called the Twentieth Holdings Corporation, with 76 percent of the voting rights controlled by Mr. Murdoch and Barry Diller, then the chief Fox executive and an American citizen, and 24 percent held by the [Australian] News Corporation.” Additionally, Mr. Murdoch renounced Australian citizenship and became an American citizen. With this arrangement, Fox was well within the twenty-five percent benchmark set out in § 310(b)(4) for foreign ownership.
Fox had indeed misrepresented itself back in 1985. “Fox disclosed that Mr. Murdoch’s financial stake in the company was less than 1 percent, with the [Australian] News Corporation owning more than 99 percent of the equity.” However, the FCC accepted Fox’s argument that § 310(b)(4)’s twenty-five percent limit be enforced only as to voting interest rather than equity interest. Thus, even though the News Corporation, an Australian company, held virtually all of the equity shares of Fox, Mr. Murdoch, now an American, still retained seventy-six percent of the voting interest of Fox. The FCC’s acceptance of Fox’s tenuous argument was most likely, at least in part, a reflection of the procompetition and open market attitude that drove relaxation of § 310(b) limitations.
Fox lied to the FCC, so when that was exposed, the FCC allowed FOX to take a much larger share in the US communications market. The FCC simply re-defined what constitutes truth. But their real failure has their unwillingness to examine whether stations uphold the public interest. The willingness of the Murdoch properties to engage in stirring resentments between Americans is at complete odds with the basic standard of serving the public interest that the law on the use of the public airwaves requires.
Why has Newscorp jiggered its share ownership? A guess might be that it is afraid that if it does end up in legal trouble in the US, some attention might be cast on the indulgent attitude of the FCC toward this malefactor.