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Obama Administration Seeks to Strengthen Rupert Murdoch

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Matt Stoller is a fellow at the Roosevelt Institute. He can be reached at http://www.twitter.com/matthewstoller

Earlier this year, Obama Federal Communications Commission Chairman Julius Genachowski proposed relaxing media ownership rules to allow Rupert Murdoch to buy the Los Angeles Times and Chicago Tribune. It’s not something you’ll see discussed much, because Republicans like the fact that Murdoch is going to get more power, while Democrats don’t want to admit that Obama is helping the person framed as their arch-nemesis. This is part of a larger pattern – media consolidation is one of the many structural problems that Obama promised to deal with. And indeed, this is the real arena where the battle over free speech is being fought. Corporate control over our communications infrastructure is the free speech question of our time.

Backed by tech billionaires and consumer advocates in 2008, Obama argued for a dramatic restructuring of communications policy (versus Hillary Clinton, whose advisors were traditional telecom lobbyists). Candidate Obama made the right noises, from a strong stance on net neutrality to opposition to media consolidation to expanded broadband access. In this case, there were billionaires who valued the right policies, not just do gooders. For instance, here’s a little noted part of Democratic Party platform from 2008.

We will encourage diversity in the ownership of broadcast media, promote the development of new media outlets for expression of diverse viewpoints, and clarify the public interest obligations of broadcasters who occupy the nation’s spectrum.

Of course, as is consistent with Obama’s main policy arc, after winning, Obama neutralized the reform groups and quickly reverted to a model of policymaking that is slightly more pro-corporate than Bush’s. He appointed Genachowski, a law school classmate known as an intellectual and moral lightweight, to run the FCC, and ensured that Larry Summers in the White House would sideline any attempts to fight against media and telecom barons. Here’s the predictable outcome, in a Free Press filing.

There has been “a nearly 20 percent decline in the level of minority ownership since 2006, and a net loss of six minority-owned stations since the Commission last collected data in October 2011. In a nation where African Americans comprise 13 percent of the population, there are only 5 African American-owned full-power commercial TV stations, just 0.4 percent of the total. This is a 76 percent decline in just 6 years.

In other words, the record of the Obama administration and corporate free speech is terrible, with one significant exception, when the administration blocked the merger of AT&T and T-Mobile. This horrific record is largely because of the Chairman of the Federal Communications Commission, Julius Genachowski, a man who has managed to take a position renowned for corruption and somehow manage to make his predecessors look noble. Not only is he roundly despised by most consumer advocates, who consider him the worst FCC Chairman in history, but he’s also thought of as weak, stupid, and feckless by the corporate sector. Mostly Genachowski panders to the telecom giants, which would normally gain him adherents in that group. But his weakness and lack of attention or understanding of the details of his job overshadows what would normally be a standard DC model of operating. For example, Genachowski made moves to block the AT&T and T-Mobile merger, but only after the Department of Justice did. Nobody respects that, not the AT&T lobbyists or the consumer advocates.

Bush’s last FCC Chairman Kevin Martin was a power hungry autocrat, but he was competent and would enact policies to punish his corporate enemies. That’s why the Bush administration FCC ruled against Comcast when that company tried to violate the principle of net neutrality on its network. By contrast, Genachowski’s FCC, with a mandate to expand broadband, has implemented toothless regulations on net neutrality while America’s offerings of broadband continue to get slower and more expensive than those elsewhere in the world. Martin wanted to govern, Genachowski wants to be liked. That such a loser is in such a powerful position is why media consolidation continues apace, and why the Obama administration is effectively pushing for Rupert Murdoch to own the major newspapers in LA and Chicago.

On a more fundamental level, media consolidation and free speech are indistinguishable problems, and liberals have avoided the intellectual conundrum this presents. For while there are periodic flare-ups of the debate free speech rights, very rarely does anyone take the time to analyze the economics of speech. The controversy about Eric Loomis, a professor who spoke out obnoxiously and aggressively against the NRA and then had his academic career threatened as a result, is the latest round in kicking up a free speech debate. But this controversy is far less consequential than questions of how the corporate sector uses free speech rights. The first amendment is not actually an affirmative right to speak.  It is written as the government’s inability to make any laws restricting the right to freedom of speech, freedom of the press, freedom to peaceably assemble, or to petition one’s government. Obviously the government makes rules all the time on the first amendment – that’s what a permit for a march, parade, or protest is. And it makes rules on speech on a regular basis, it just so happens that these are rules about who owns and runs the telecommunications and cable industries.

In fact, questions of free speech are questions more about the design principles of our system of communications, not censorship. This paper by first amendment expert Marvin Ammori has all the gory legal details. But basically, the knotty problem comes in this example – Verizon claims that it has a first amendment right to censor the internet accessed by its customers. The argument is, the government can’t tell Verizon to let your emails go through, since that would be the government making a law restricting Verizon’s editorial freedom of speech on its network. The corporate right to free speech cannot be ignored when discussing free speech as a right – corrupt ratings agencies central to the financial crisis defended themselves on first amendment grounds, and Fox News has claimed the right to distort the news. Telecoms have blocked text messages from abortion rights groups due to their “unsavory” nature and cable networks have blocked political ads criticizing those very networks.

The First Amendment is a noble statement of principle, but when inverted to serve corporate interests it is also very profitable for liberal legal types like Floyd Abrams. Abrams defended the New York Times and the leak of the Pentagon Papers, is an ACLU legend, and now works for the ratings agencies and Mitch McConnell. His greed and intellectual perversion is evident. In this revealing profile in the New York Times, Abrams said, “People sometimes have views of what side of issues I should be on that have little to do with reality.” But, he says. “I don’t spend my life simply working for the A.C.L.U.” Indeed, he doesn’t, and how convenient for him that corporate power and personal profit sync so nicely with the principle of free speech that allowed the ratings agencies to lie us into a financial crisis without consequence.

Corporate control over our communications infrastructure is the free speech question of our time. When Obama’s Attorney General Eric Holder refuses to investigate Rupert Murdoch’s company for bribery in the phone hacking scandal, and Obama’s FCC Chairman Julius Genachowski works to help Rupert Murdoch’s company buy more media assets, and the number of broadcast media outlets owned by minorities continues to decline, it’s clear we have a free speech problem. But it has nothing to do with a comment on twitter or burning flags.

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29 comments

    1. Thorstein

      The last time I looked, a few years back in a former life, about 12 genes had been implicated in “dyslexia”. All were autosomal dominant. By straight Mendelian genetics that implies that 75% of the electorate is dyslexic. Even allowing for incomplete penetrance, epigenetics, and nurture, the democracy distribution remains strongly skewed against literacy.

      Alternate literate channels of communication like the Internet (and yes, NC) only reach a sliver of the electorate. (This 2008 NYT link is getting a little dated, but in August of that year, it reported that only 1% of Americans were getting their information from the Internet.

      As Matt Stoller says, this concentration of modern day, high-tech and high-cost “printing presses” (i.e., TV, radio, and film) in the hands of the aristocracy is a very serious threat to democracy.

  1. Clive

    The only consolation I can offer is that eventually, for Murdoch, his reach exceeds his grasp. By which I mean, if history is any example from Britain, overweening ambition, hubris and ego leads him to take such steps and to behave with such arrogance that eventually political backers and tolerators have no choice but to shun him and reign him in because he’s become more trouble than he’s worth. Association with the Murdoch “brand” is now political suicide because it has become so toxic.

    That, plus the fact he’s not getting any younger. The immediate family have seemingly inherited Murdoch’s greed and need for one-upmanship but not his business acumen or a sense self preservation which is needed to keep out of serious trouble. It’s unlikely that News Corp will be allowed to be controlled in a continued absence of corporate governance as it has been without Murdoch at the helm. It will become just another media conglomerate. Many of its constituent business units have very few synergies and would be better spun off into separate parts. The irony might be that private equity snaps it up and dismembers it.

    1. Anon Too

      Grew up in Chicago when the Sun Times and the Trib battled for attention. Remember when Mike Royko left the Sun Times to start writing for the Trib, which was heresy.

      “When the Daily News closed, Royko worked for its allied morning newspaper, the Chicago Sun-Times. In 1984, Rupert Murdoch, for whom Royko said he would never work, bought the Sun-Times. Royko commented that “No self-respecting fish would want to be wrapped in a Murdoch paper”

      Mike is gone. Murdoch isn’t.

    2. rob

      murdoch may be an old man, but as his escape from any meaningful prosecution in england as well as in this country;means one thing.He is “to big to fail”.Media consolidation is disease that is progressing rapidly.When ruppert dies, the corporation will continue to exist.And if it breaks up,it will be a combine.Just like when they broke up AT&T,or standard oil.the parts are just as bad as the whole.They will surely and forever act as one.
      The fact that HE is old, won’t save us from anything.The corporation marches on.

      1. Clive

        I do agree Rob that in a Medusa-like way, that any “Baby Rupes” may well for a while embody the same characteristics as their founder/parent companies. But eventually, my opinion is they’ll be just like any other enterprise and it’ll be a case of doing whatever pays the best. Ugly fracas with the political classes is bad for business. Your typical faceless money grabbing CEO with all the long-term thinking of a Nat isn’t going to be interested. With Murdoch, it was, is and always will be personal. That’s the key difference and it will end as soon as he’s out the picture.

        And this is going off topic in a big way so I won’t progress it further other than to say that to some, AT&T in its original guise was the epitome of what was *right* with corporate America. I don’t know first hand, but I read a great book called “The Rape of Ma Bell” which documented how, in that author’s opinion, divestiture was the ruin of a unique and valuable organization.

    3. JamesW

      Outstanding blog post/article, sir!

      That’s absolutely no consolation, given the fact (which the vast majority of Americans are ignorant of, as they are ignorant of almost everything today) that Rupert Murdoch’s criminal organization successfully litigated in two separate federal cases, one they won outright, the second after appeal, that it is now legal, and has been for around 9 years or thereabouts, for all so-called “media” in America to fictionalize the news.

      That’s right, it is legal for everyone in the media to FICTIONALIZE THE NEWS ! (Admittedly, they’ve been doing it illegally for quite some time now.)

      The majority of radio/TV station owners in America also just happened to file a friend of the court (or amicus curaie) brief on behalf of Rupert Murdoch and FoxFiction, meaning he has majority support of the American non-media media.

      Which is why the majority of Americans are still completely clueless as to the causes of the economic meltdown, the details behind the Obama administration’s health insurance “reform” program, the “get-out-of-jail-with-infinite-bailouts” financial “reform”, and the causes of the Great Depression, of course.

      Fewer still understand that essentially Verizon and AT&T are owned by the same people, with AT&T having been reconstituted over the past few years, so that it is even more powerful and richer than its previous self, prior to their so-called breaking up decades ago.

  2. Dan Kervick

    “Martin wanted to govern, Genachowski wants to be liked.”

    This is so typical of the Obama administration in general. When corporate big shots get mad at them, it really seems to hurt their feelings.

  3. Paul Tioxon

    Matt, here is an excerpt from a study of Newscorp’s social and political power from Penn State. It is a study of interlocking directorships, not only of Newscorp but of the other major media groups.

    “We have also found Rupert has ties to both Steven Jobs and Bill Gates, the founders and CEOs of IBM and Apple. He also contributed to both democratic and republican party nominees over the last few elections. This type of overlapping interlocking allows Murdoch to always maintain his economic status and power within these changing markets. Having the ability to be a part of the newest innovations allow for Murdoch to stay on top of the media market with technological advances. Contributing to both parties allows him the comfort of knowing his power can’t be usurped by the next party taking office. His power guarantees that he will not only maintain his current status, but will continue to become more powerful as time goes on, regardless of who is in office.

    Murdoch’s link to Viet Dinh is one we found extremely troubling. This link can connect Murdoch to former U.S. Senators, judges and even a former Supreme Court Justice. Dinh is a professor at Georgetown University and has constant access to current and future risings lawyers, politicians and judges. The field of education is the other half of this troubling link. It is possible that professors such as Dinh, with ties to such a powerful individual, will adapt the information which they disseminate to their students to match the concepts used by this current model. This becomes a dangerous idea to think that young minds could be shaped according to a structure that must be altered soon. As Murdoch has stated, “We are in the midst of a phase of history in which nations will be redefined and their futures fundamentally altered.”

    http://www.personal.psu.edu/kmk395/blogs/comm405/murdoch.html

    Obama, his group in power in the WH, does not make Murdoch more powerful, but the network that Murdoch is a part of, and by that means, he and his family. The power does not come off the shelf, or is not taken individually, but is the culmination of working to build up social relationships of power with others seeking to do the same. In this study is a graphic connecting the lines among the nodes of players in business, government, academia, etc, which constitutes a network of powerful people and the institutions that are the mechanism of transmitting their influence out into the world beyond their own corporations, where it affects us all individually.

    1. JamesW

      Excellent comments, and the same overall arc applies to the darling of the faux liberal set, Warren Buffet.

      Buffet, whose corporation has been in tax court forever fighting against paying any federal taxes, can talk and talk and talk, but he damn well realizes that the super-rich, like himself, are all incorporated, and therefore their corporations will continue to abscond without paying federal taxes, so his useless talk about individuals paying their fair share of taxes is just so much more faux liberal propaganda.

      Just as the Gays recently embraced Ted Olson, former solicitor general under Bush, former employee of Richard Mellon Scaife on his “Arkansas Project” (digging up any and all dirt on the Clintons, although god only knows why they bother?), the litigator for Bush v. Gore to steal the 2000 election (where the US Supreme Court effectively ruled that US citizens don’t have the constitutional right to vote, ergo their denial of a Florida recount) and litigator in the recent Citizens United decision.

      America’s number one religion today is truly the worship of ignorance.

  4. rob

    Media consolidation.It is like putting “soma”, in the water supply.everyone will get their dose.The powers that be are comfortable that those in opposition won’t be heard,but by a few.and they can be ignored.Project censored regularly does stories that won’t be heard.
    what fourth estate?Is that rupperts sons house in the hamptons?

    1. rob

      Lets also give a shout out to link TV, and Democracy NOW.
      As well as sites like Naked Capitalism.
      These are examples of what would be getting reported, if not for the control of the media.

    2. Cynthia

      Consolidation is a problem in the marketplace, and it’s only getting worse. We see this happening not only in the media and the telecommunications space, but now we are seeing it in the airlines space as well as in the healthcare space. Let me just zero-in on the healthcare space, since that’s the space I know most about. I’m nowhere near an expert on the healthcare market, but I follow it closely enough to know quite a bit about it.

      One of the latest trends in health care is for large hospital chains and networks to buy up private and independently-owned physician practices. ObamaCare encourages this trend based on the theory that if patients can be seen under a single large healthcare umbrella, be a chain or network, the quality of their care will greatly improve. In theory that may be true, but what is most definitely true is that this is causing the cost of health care services to go WAY up. This is mainly due to the fact that hospitals and any outpatient facility in their particularly chain/network are reimbursed at a much higher rate than private and independently-owned practices are. For instance, an insurance company, be it private or public, will reimburse the cost of an EKG done at a hospital or one of its affiliated clinics at roughly FOUR times the rate compared to what it would if the same EKG was done at a privately owned and operated clinic.

      It’s definitely not the case that a hospital chain/network is better, much less FOUR times better, than a private, independently-owned clinic at performing and interpreting an EKG, or any other test or procedure for that matter. There is no qualitative difference at all between the two EKGs. Period. But because large hospital chains and networks receive an excessive amount of reimbursement money from the insurance industry as well as get to tack on an outrageously huge so-called “facility fee” to EVERY patient’s bill — something that private practices also can NOT do (see links below) — they use all of this excess reimbursement money to pay for an overly fat and bloated management structure, as well as provide medically-unnecessary services like five-star quality meals and inpatient massage therapy.

      So, I say we make reimbursement rates the same across the board, whether a test or procedure is done at a private, independently-owned clinic or a hospital-owned chain/network. That way hospital chains/networks will be forced to cut out a lot of unnecessary costs, from an overly fat and bloated management structure to five-star quality meals and inpatient massage therapy.

      http://www.newsobserver.com/2012/12/15/2547121/doctors-join-hospitals-and-prices.html

      http://www.washingtonpost.com/national/health-science/hospitals-face-increased-scrutiny-for-charging-facility-fees/2012/12/22/176ed6b4-4962-11e2-820e-17eefac2f939_story.html

      1. psychohistorian

        I agree and want to add more evidence.

        The Physical Therapist I have been going to consistently for over 4 years is an independent and her therapy is much better than Kaiser who I could see for some things but the PTs’ there are limited in the therapies they can use on you. My PT does mobilization which is PT speak for chiropractic therapy and IMO, it is a much more effective version of such. I could have been referred out of Kaiser to a chiropractor but then would need to have an immediate Kaiser PT appointment to do the follow up……GFL with that.

        My PT has learned and applies all therapies in her knowledge and experience base and that is in my best interest. She can do all the normal PT stuff as well as deep tissue myofascial release, craniosacral therapy and strain/counter strain which have also not made it into the world of Kaiser, if those therapies ever will. The therapies that Kaiser decides that their PTs’ will provide are controlled by cost within their system rather than what is best for the public they supposedly serve.

        I am not trying to condemn Kaiser here. Of the HMOs’ they are probably the best and I have received very good health care from their employees. But the incentives of our health system are bass ackwards. When profit or cost control is the bottom line, patients are the ones who suffer.

        We can do better than this but do we have the will to overthrow the rich that want us to suffer so they can afford any health care they want, at any time?

        It is not looking so with the agnotology of the MSM.

  5. dog bites man

    The question of our time, right, and our time started way back with the McBride Commission. Corporate concentration for state control is the longstanding policy of this kleptocracy, and while Obama is crookeder than most, he’s hewing closely to the orthodoxy of the two state-authorized parties. You’ll have to pry the mighty wurlitzer out of John Bennett’s cold, dead hands.

    This is one more reason to shitcan this useless constitution. The First Amendment was probably the last functioning protection against state overreach, and the ongoing corporate seizure of constitutional rights will gut that too. The supreme law of the land on free speech is now CCPR Article 19, which does give you the affirmative right to speak that the 1st Amendment ignores. Article 19 provides for restrictions but they are closely circumscribed by an evolving body of law and subjected to independent review. That’s why the hacks and dotards of the US judiciary ignore supreme law like it’s Penn State locker-room roughhousing. They’re trained to belligerent ignorance of world-standard rights and rule of law. As in any fucked-up hermit kingdom, you have to go over their heads to the world. There’s no legitimate authority to turn to here at home.

    1. dog bites man

      Yeah, almost everybody. Idea is, if you let the barbaric shitholes join up with the grownup countries, everybody can gang up on them and embarrass them for their abject failures, chapter and verse. It’s a trap, basically. Works for our barbaric shithole too. You should see what the Human Rights Council did to plump squirming maggot Harold Koh. They tore him about six new ones. It was great. Frickin laughingstock. Whole world has seen it but the USA. Mobilizing shame, it’s called. That’s why Obama is hiding from the Committee Against Torture and the Human Rights Committee, he knows what’s gonna happen to him.

    1. JamesW

      No sane citizen would ever watch Fox, nor would any authentic (with the emphasis on “authentic”) liberal or progressive EVER appear on that propaganda operation.

      Of course, Stephanie Miller, Ed Schultz and Thom Hartmann were republicon voters up until the moment they took over their ostensibly “liberal” radio shows, but people, and especially propaganda specialists, do not become overnight liberals or overnight progressives.

      This tracks back to at least one hundreds in America, with similar operations and psyops, with the recent revival in the 1980s, when Pat Buchanan began his radio show with another conservative, who was falsely labeled a “liberal” and a “conservative”, but those in the know weren’t fooled, as so many idiots in America today are.

      Anyone, and I do mean anyone, who believes Stephanie Miller (who believes Bradley Manning should get life in jail, and WikiLeaks shut down and Assange extradited and buried), and Ed Schultz, who is lovey dove with Chris Matthews, Dick Cheney’s personal familiar for the eight years of the Bush Administration, and Thom Hartmann, who has propagandist after prograndist on his show (while ONLY allowing the occasional Matt Taibbi, Nomi Prins, Russ Baker, etc. a scant 5 minutes at a time) shouldn’t ever vote.

      These three (and Bill Press) simply do not pass the stink test: the most obscene interviews I have ever listened to involved Hartmann and Rockefeller stooge, Peter G. Peterson (I thought Hartmann was going to beg Peterson to adopt his butt) and Hartmann and Kevin Phillips (when Phillips was claiming that the CPI, or Consumer Price Index, was responsible for the economic meltdown!!!!).

      The phony who wrote The Great Diversification, mixing facts with fantastical fiction, the usual propaganda redirection op, was recently on Hartmann’s misinformation show with almost unlimited time accorded him.

  6. Susan the other

    This looks like GM. Sam Zell got slammed by the real estate downturn and the Tribune filed for bankruptcy a few years ago. It already owned the Los Angeles Times so both papers have been in financial trouble. I haven’t followed whether anything has been resolved, but this looks like the best resolution. Sell it all to Rupert. Maybe it is a favor to Sam Zell more than a favor to Rupert Murdoch.

    1. damian

      zell bought it with a participation with an ESOP. he overpaid by a lot and mismanaged the chicago tribune coupled with bad timing from internet advertising model torpedoing ad dollars in print media generally

      i think his ego was bigger than his brain in this decision – all the signals were in place before he bought it

      filed for BK

  7. Jjmacjohnson

    Hillary was upfront and wrong Obama was his typical self. Say one thing you don’t believe then do the other when the time comes. No surprise.

  8. Me

    “Corporate control over our communications infrastructure is the free speech question of our time.”

    It’s actually an oxymoron. But then, you know that, and are simply trying to blur the distinction between governments and corporations, the power of the gun vs. the power of the purse. The former is vastly more to be feared, the latter only to be feared in its ability to manipulate the former.

  9. Veri

    Problem in the industry? Sure. Except, for Obama, it appears that the problem is one of not enough consolidation.

    Well, business-friendly Obama may strike again. Will he?

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