Time Warner rejection of quick brown Fox sparks conflagration

Rupert Murdoch, used to getting his own way, is fighting a reversal of fortunes, reports David Usborne in New York

All of New York is absorbed by baseball just now and, specifically, the World Series clash between the city's own Yankees and the Atlanta Braves. So far it has been a soggy affair, courtesy of the weather. For my money, the other battle going on here beats it hands down for thrills and for amusement value.

Actually, there is a connection between the two. The Braves are owned by Ted Turner, whose cable empire, Turner Broadcasting, was finally merged 10 days ago into Time Warner. That little manoeuvre lies behind the fabulously fearsome battle that Time Warner now finds itself waging with Rupert Murdoch.

Anyone who has suffered Mr Murdoch's conquer-the-world antics say the cable companies in Britain struggling to emerge from the dominance of BSkyB, or indeed the publishers of this newspaper, might wish to indulge in a little private Schadenfreude from the difficulties he is facing courtesy of Time Warner in the Big Apple. Enjoy it while you can, though. Time Warner may be bigger than he is, but Mr Murdoch has a way of winning these things.

At issue is the fate of Mr Murdoch's latest media foray - his Fox News, 24-hour cable service that was launched in the United States two weeks ago. It is a biggy, even by Murdoch standards, with $80m (pounds 50m) already spent and a budget of $165m for the first year of operation alone. To succeed, however, it must get itself into as many US front rooms as possible. Above all, it needs to be seen in New York City, where, after all, it is based.

Which cable system covers Manhattan and most of the rest of the Apple? The answer, of course, is Time Warner Cable. Mr Murdoch believed until late last month that he had the word of Gerald Levin, Time Warner chief executive, that space would be found on the system for his Fox News. But just days before the Fox launch, Mr Levin in person crossed Sixth Avenue to tell Mr Murdoch the deal was off. Yes, Time Warner would, as required by the government, carry an all-news alternative to Turner's CNN. That, however, would not be Fox but MSNBC, another 24-hour service launched earlier in the summer by NBC and Microsoft.

Ka-boom. The Australian dynamite was ignited. Raging now is a conflagration between two of the world's biggest media giants that has already travelled deep into the courts. Mr Murdoch swiftly filed suit against Time Warner accusing it of anti-trust conspiracy, fraud and breach of contract (even though nothing of what Mr Levin allegedly promised was ever written down). "When you're screwed over, you fight," commented Roger Ailes, the former Republican consultant who is running the Fox News Channel (FNC) for Mr Murdoch. "We're not going to quit until we're all dead. This'll be a bloody war."

The taciturn Mr Levin is attempting to lie low. Mr Turner, however, is relishing the fight. Two weeks ago he likened Mr Murdoch to Hitler, because, like the Fuhrer, he said, Mr Murdoch used his media outlets to promote his own political goals. Mr Turner apologised and then, last Friday, said it all over again, thus: "The late Fuhrer, the first thing he did, like all dictators, was take over the press and use it to further his agenda. Basically, that is what Murdoch does with the media".

What else has Mr Murdoch done? He has called for the political cavalry, of course, recruiting the assistance of New York City's Republican mayor, Rudolph Giuliani. Mr Giuliani attempted to humiliate Time Warner by forcing it to carry both Fox and Bloomberg News on two public access channels available in the city. Time Warner filed suit against that, accusing the mayor of illegally involving city government in private broadcast business. An injunction against Mr Giuliani was quickly secured, while a first full hearing is scheduled for tomorrow.

The politicians are attempting to help Mr Murdoch in other ways too. The city agency that awards cable franchises in the five boroughs has been convened to determine whether the ingestion of Turner signifies that Time Warner is essentially a new company and that its right to serve New York should be "re-examined". Meanwhile, the office of the state attorney- general has launched its own investigation into possible anti-competitive violations by Time Warner.

In its suit, Time Warner does not mince words about what it thinks Mr Murdoch and Mr Giuliani are up to. The city, say the legal papers, is acting "essentially as Rupert Murdoch's latest political puppet". They go on: "Murdoch has also called in political debts owed to him by the mayor of New York in an effort to force Fox on to the Time Warner Cable system." Richard Aurelio, the president of Time Warner's New York cable subsidiary, added: "This is the most frightening exercise of political power that I have seen in my entire career."

An indignant Mr Giuliani may be obliged to testify in court tomorrow. He insists he is acting only to protect the jobs of 1,400 who work for the new Fox channel in the city. The often-snarling mayor brooks no insinuations regarding the friendly political coverage he and all Republicans enjoy in the New York Post daily newspaper (owned by Mr Murdoch), about Mr Ailes' work for him when he was running for mayor four years ago, or about the fact that his wife works for the local Fox TV affiliate.

There are reasons to have sympathy for Mr Murdoch. It is rather pathetic that Fox finds itself unavailable to viewers in its own home base and without the New York market its future must be shaky. As things stand, it counts only 17 million subscribers for its new channel, compared with 25 million for MSNBC and 70 million for CNN. And with Turner now under its wing, Time Warner is indeed a company with unhealthy muscle. On the other hand, if there was ever anyone who should understand what Time Warner is about, it is Mr Murdoch. Squishing your rivals is what being big is all about, isn't it Rupert?

Finally, back to baseball. Consider the plight of staff at Time Warner headquarters at Rockefeller Plaza, just around the corner from this office. Most have been aching over recent days to hang up the Yankee bunting and don the T-shirts in support of the Bronx Bombers.

But what if the new vice-president were to show up on the floor? Suddenly all at Time Warner are chanting determinedly, if unconvincingly, for the Braves.