SENATORS QUESTION NEWS CORP.-DIRECTV DEAL

Senate Judiciary Antitrust Subcommittee members said proposed News Corp. takeover of Hughes Electronics and subsidiary DirecTV raised concerns and needed to be closely examined, but none specifically said deal should be rejected. Judiciary Committee ranking Democrat Leahy (Vt.) said transaction would “test the truth” of assertion that Justice Dept.’s “public interest” inquiry in merger reviews would protect consumers. Subcommittee Chmn. DeWine (R-O.) and ranking Democrat Kohl (Wis.) urged FCC and DoJ Wed. to review deal carefully, but not suggesting it should be rejected.

News Corp. Chmn. Rupert Murdoch reiterated arguments he made to House Judiciary Committee and Senate Commerce Committee earlier this year, saying neither News Corp. nor DirecTV had market share to create situation that would be dangerous to consumers. Deal would result in improvements in local-into-local service and created no horizontal or vertical concerns, he said. DirecTV Chmn. Eddy Hartenstein said deal would make his company better competitor to cable, which controls 80% of subscription TV market.

Leahy raised greatest concerns and said that while the FCC media ownership review wouldn’t directly affect the deal, it would “color the evaluation of all media deals,” including this one. Kohl asked Murdoch to make commitments, including to make all News Corp. programming available to DirecTV competitors on same terms and to work to increase number of markets covered by local-into-local service. Leahy also pushed Murdoch to do better on local-into-local, noting that only EchoStar provided local- into-local in Vt.

Murdoch told Kohl he would sign consent decree with DoJ to enforce promises he made about giving competitors access to News Corp. programming. Murdoch said transaction had to be approved by News Corp. and DirecTV boards, but Kohl said he wasn’t satisfied that audit board set up to review deal would be sufficient.

Gene Kimmelman of Consumers Union said there was nothing about deal that would drive down prices for consumers. Advance/Newhouse Chmn. Robert Miron said deal would drive up prices for all subscription TV services. It would greatly raise News Corp.’s negotiating leverage with subscription TV services for its programming, Miron said. Small cable operators particularly would be hurt by that arrangement, he said. Miron said he also was speaking for Cable One, Cox Cable and Insight.

Murdoch said he was surprised that Miron “would allow himself to be used by Cox.” He listed several entities that Cox owned and said it was larger and had more concentrated than News Corp. “When Mr. Kimmelman was fantasizing about what News Corp. might become, I thought he was talking about Cox,” Murdoch said. Kimmelman agreed there were problems with Cox’s size, but said size of News Corp. also was concern.