Clinton gives Murdoch a $63m break

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The Independent Online

in Washington

President Bill Clinton reluctantly did Rupert Murdoch a favour yesterday when he said he would sign into law a bill containing a sub-clause that grants the media mogul a tax break said to be worth $63m (£39m).

Mr Clinton had received a letter signed by 146 Democratic congressmen on Wednesday urging him to veto the bill, allowing Congress to pass a new measure without the concession to Mr Murdoch. He declined because he believed the broad benefits of the bill were more important to the American public than denying Mr Murdoch his windfall.

The bill, will provide health insurance tax benefits to 3.2 million self-employed people: it also eliminates tax breaks for companies that sell broadcasting stations to buyers belonging to racial minorities. This was where Mr Murdoch came in.

As Mr Clinton disapprovingly remarked yesterday: "This bill carves out a special exception for one pending deal. This is the kind of dealing that goes on all the time in Washington." A line had been inserted in the bill providing Mr Murdoch with a special exemption allowing him to sell Fox TV's WATL station to a black-owned business.

While it was the congressional Democrats who complained that they had not been alerted of the line's existence before they voted for the bill, it was a Democratic Senator who had inserted it - not, ostensibly, to favour Mr Murdoch but to favour the black businesses buying the company, who received a discount in exchange for the seller's tax break.

Mr Murdoch's triumph, however, could be shortlived. According to a report in yesterday's Wall Street Journal, "any day now" the Federal Communications Commission (FCC) is expected to rule on a sweeping inquiry into the ownership structure of Fox TV. One outcome could be that Mr Murdoch would find himself saddled with up to $500m in capital gains tax payments, the newspaper said.

The source of his problem is a law, in existence since the First World War, prohibiting foreigners from controlling more than 25 per cent of the stock of a broadcast station. While Mr Murdoch is a naturalised American, News Corporation, the company he chairs, is Australian.