Star Wars: return of the Digger

If Rupert Murdoch's new US satellite deal comes off, it could be his biggest coup of all. He may be able to look down on America and say it's mine at last.
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The Independent Online
Rupert Murdoch likes America; he has taken its nationality, and Beverly Hills is where he calls home. It is just that he cannot get enough of it. Now, after years of frustration at the hands of regulators in Washington and rival media titans like Ted Turner, he is opening a new battlefront - in space.

Murdoch announced last week that he is joining forces with a small but spunky satellite broadcaster in Colorado named EchoStar. The pact has its uncertainties and could yet founder. But for now, rattled competitors have renamed EchoStar "Death Star".

The deal could be a watershed for Murdoch. Within a few years, it could give him a new and prolific source of revenue in the US. Moreover, it promises finally to give him unfettered access to the living rooms of America for his Fox television network and its nascent all-news spin off, the Fox News Channel. His struggle for television turf in the United States, that has landed him in one nasty skirmish after another, would effectively be won.

Globally, it would mean even more. With America opened up to him, Murdoch's quest to become the broadcasting master of the world, feeding the screens of two thirds of the planet's population, would be complete. His other satellite interests already include stakes in BSkyB, the sister system in Japan, JSkyB, and StarTV, based in Hong Kong and beaming into China.

The foundation of Murdoch's television interests in America is the Fox network itself. Still aimed primarily at a young and largely ethnic viewership, Fox began seriously to threaten the established Big Three - ABC, CBS and NBC - in 1994, when Murdoch purchased New World Communications and seven affiliates in key markets defected to the Fox family. Fox has since acquired crucial sports events rights, including in recent months rights to the baseball World Series and the Super Bowl.

It was the New World deal that gave Murdoch his first grief. First the NAACP, the huge Black American civil rights organisation, and subsequently NBC fought hard to have the purchase annulled by Washington on the grounds that it violated broadcast foreign ownership limits. The case presented was that even if Murdoch had taken US citizenship, the News Corp holding company remained Australian. Murdoch ultimately beat off the challenge. He was admittedly helped when NBC discovered it needed space on Murdoch's Star satellite and hastily withdrew the complaint.

His launch last October of the Fox News Channel, however, has triggered a new, still more vicious dispute. Murdoch has for years craved controlling a serious US-based news organisation on the model of CNN, founded by Mr Turner. Fox News is struggling, however, for one critical reason: Murdoch cannot get enough cable systems to distribute it. Most particularly, Time Warner Cable, the second largest in the country, reneged on a deal at the last moment to carry it. Among markets still not receiving Fox News is New York. He makes no secret of his suspicion that Time Warner, which last year purchased Turner Broadcasting and made Mr Turner a company vice president, acted to protect CNN from competition.

There has followed a lurid exchange of insults between Murdoch and Turner. In interviews and in depositions to the courts, Turner has called Murdoch a "scumbag" and repeatedly likened him to Hitler. Murdoch's New York tabloid, the New York Post, returned fire by suggesting that Turner, who suffers from depression, had stopped taking the pills and had lost his marbles.

The EchoStar deal should give Time Warner and all the competing US cable and satellite companies reasons to tremble. Firstly, between them ASkyB, with MCI's help, and EchoStar will own 52 per cent of all the satellite broadcasting slots already awarded by the US government - far more than DirecTV, currently the largest US satellite broadcaster, which has only 28 per cent. It will also have a huge number of broadcast frequencies.

With this capacity, ASkyB will be able to offer 500 channels, with perfect picture quality and sound. Most importantly, however, it should also allow the company to "spotbeam" local television channels to individual markets, something that existing satellite companies cannot do. In other words, in Baltimore, a household with ASkyB would get the local NBC, ABC and CBS affiliates, as well as the usual satellite fare of sports and movie channels. This would rob cable of its only obvious advantage over satellite. No wonder shares of the main US cable companies plunged last week.

ASkyB may take a little longer to take flight than the hyperbole of last week suggested, but sceptics should take care. BSkyB, after all, hardly had a glorious beginning. Now it is a jewel in the News Corp crownn