Murdoch meets his match

Ted Turner, founder of CNN, is taking him on in New York.

David Usborne Reports
Sunday 24 November 1996 01:02 GMT

The scene is Yankee Stadium in late October; the event, the World Series baseball championship between the New York Yankees and the Atlanta Braves. On the field, pitchers, hitters and fielders are thrilling the capacity crowd. Up in the stands among the spectators is the long-time owner of the Braves, Ted Turner. One of the world's most powerful media magnates, Mr Turner is sitting with his wife, Jane Fonda.

In the sky above, a small plane hired by Rupert Murdoch's US television company, Fox, offers a distraction from the game. As it makes repeated passes over the stadium, an advertising illumination flashes from its side carrying a message which all can read, but which is meant for one man only. "Hey Ted," it says. "Be Brave. Don't Censor the Fox News Channel."

Cut to United Nations headquarters in New York last Friday, where top television executives from five continents are assembled to discuss the global impact of their medium. The speaker is Mr Turner; the subject of his remarks is Mr Murdoch, and the language he uses is rude.

"We are very benign," he declares, meaning Time Warner. "There is a new group coming, led by that no-good SOB [son of a bitch] Rupert Murdoch. They want to control the world... We have got to do everything we can to stop them." He continues: "Murdoch... wants to sit here and control Indian television in India; he wants to control Chinese television in China. Bullshit!"

A listener asks what can be done. "This is a battle between good and evil," Mr Turner replies. And then: "I don't want to talk about that no- good bastard any more."

What is going on? In world media terms, a clash of titans. Like a couple of monster anti-heroes in one of the violent children's cartoons they screen on their TV channels, Rupert Murdoch and Ted Turner are now slugging it out day after day against the backdrop of the New York skyline.

They are fighting in the courts, on the airwaves and in the pages of the city's newspapers, as well as in the sky above Yankee stadium and at the UN. Ms Fonda has become involved. So have the New York mayor, Ralph Giuliani, and his wife. Americans can only gape in awe.

On one level, this contest is a vivid demonstration of the perils of galloping deregulation in the communications industry, with mega-mergers and combinations creating not more choice for consumers but less. But on another, it is a deeply human story of two outstandingly successful, self-made media buccaneers who, after sparking off one another for years, have finally collided head-on in spectacular and angry fashion.

For Murdoch watchers - those who hate him as well as those who admire him - it may also offer the moment when this ruthless, brilliant man of apparently limitless ambition finally meets his match. For Ted Turner will be no pushover. He, too, is brilliant and ruthless, having created the global news network CNN. And now he has folded CNN into Time Warner, the world's biggest media organisation, and stepped aboard as vice-chairman and leading shareholder, he is also very rich and very powerful.

IT ALL started with Mr Murdoch's announcement that he intended to use his Fox television network in the United States as a platform to launch a competing service to CNN. The new station, Fox News Channel (FNC) made its debut last month, only to suffer an instant body blow.

Time Warner declared that it would not make space for FNC on its cable distribution system in New York City, or anywhere else in the US. Until that moment, Mr Murdoch thought he had a distribution deal with Time Warner. When he saw that he had not, he went ballistic. Mr Turner, he concluded, was keeping him off American screens in an effort to protect his own creation, CNN, from competition.

As Mr Murdoch's many critics have been quick to point out, Time Warner is doing nothing more or less than giving Mr Murdoch a dose of his own medicine. Few are his competitors in Britain, for example, in broadcasting or in newspapers, who have not accused him of using his extraordinary corporate might to try to flatten them in just the same way.

But being Rupert Murdoch, he did not take his medicine lying down. He struck out in three different ways. First, he filed a lawsuit, which is still pending, against Time Warner accusing it of abusing its power as the near- monopoly supplier of cable service to New York city. Next, in classic Murdoch fashion, he called in some political favours, drawing in the fire power of New York city's Republican mayor, Rudolph Giuliani. He also harnessed his own media properties to take the battle to Time Warner and Mr Turner.

One example of this last takes us back for a moment to that baseball game. It did not go unnoticed that in its exclusive television coverage of the series, Fox TV avoided offering shots of Mr Turner, the owner of the Braves, and his film star wife. Sports reporters began joking about the "No-Ted-Zone" in the stands, apparently invisible to the Fox cameras. When he and Ms Fonda did come on to the screen, it was only in an unflattering pose. It was as if Fox was waiting for them to pick their noses, scowl or dribble mustard on their chins.

More poisonous, however, have been the antics of the New York Post, Mr Murdoch's city tabloid. One morning, it attacked Ms Fonda, who had just pointed out that Mr Giuliani's journalist wife, Donna Hanover, happened to be a Murdoch employee at the Fox station in New York. The Post re-ran in giant size the infamous 1972 photograph of Ms Fonda visiting Hanoi, alongside an article ridiculing her as "just another scatty-brained Hollywood nude-nik".

Aiming still lower, the paper dedicated its entire second page, one day, to posing the vital question: "Is Ted Turner veering dangerously towards insanity?" In a reference to Mr Turner's well-known struggle against depression, it asked whether he had "come off the medication"?

For his part, Mr Turner has indulged his taste for offensive language. Since the cable row began, he has variously described Mr Murdoch as a "scumbag", a "slime" and a "disgrace to journalism". He was forced to apologise to the Anti-Defamation League after twice likening his rival to the "late Fuhrer", alleging that, like Hitler, Mr Murdoch used the media outlets over which he has control to further his political agenda.

Mr Giuliani, meanwhile, who is another man renowned for pit-bull aggression, first appealed directly to Time Warner's chairman, Gerard Levin, to change his mind about FNC and give it a berth on his cable systems. When Mr Levin refused, the mayor tried to exercise his authority to force Time Warner to carry FNC on a channel that, under its franchise with the city, has been reserved for public access.

That manoeuvre prompted another lawsuit, this time filed by Time Warner against the city. Earlier this month, the company won a provisional victory when the judge in the case accused Mr Giuliani of abusing his powers and violating the cable company's constitutional right to free expression. The city, however, is appealing, arguing that if anyone's free expression rights are being denied it is Mr Murdoch's. Observers expect both that case and the Murdoch suit against Time to go all the way to the US Supreme Court.

"This is better than the Tyson fight," said John Malone, the chairman of America's second largest cable company, TCI, last week. Mr Malone is an old friend of Ted Turner and also has a 9 per cent stake in Time Warner. However, unlike Time, TCI has agreed to carry Fox Channel News to 10 million homes. "This is great comedy to me," he said. "Ted Turner hasn't felt so young and energetic in years. He loves a good fight. I would waste no tears over either of these guys."

RUPERT Murdoch and Ted Turner have probably been destined to collide for decades, for although they started in very different places, their paths have converged as their power has grown.

Both men created global media empires from modest businesses left to them by their fathers. Mr Murdoch inherited an Adelaide newspaper from Murdoch Senior in the early 1950s and, with astonishing success, built it up first into an international newspaper giant. After a near miss with insolvency in the early 1990s, he now presides over a world-leading satellite broadcasting business that encompasses BSkyB and Star TV in Asia. In America, he has conjured up a new television network in Fox TV and, as owner of Twentieth Century Fox studios in Hollywood, he is a front- rank movie mogul.

Mr Turner's launch pad was his father's Atlanta billboard advertising business. From that, he forged WTCG, a small Atlanta TV station. He vaulted into the global arena in 1975 when he experimented with bouncing the WTCG signal from orbiting satellites. Suddenly, he found that his station's reach was potentially global. His new company, Turner Broadcasting System (TBS), spawned Cable News Network which, for 16 years, remained the unchallenged provider of 24-hour cable news in the US and worldwide. Soon TBS owned a large stable of cable stations, including TNT and the Cartoon Network, as well as film studios like Castle Rock Entertainment.

Now Mr Turner has traded up, selling his cable TV empire to Time Warner for $7.5bn and moving across as vice-chairman (pocketing more than $2bn for himself in the process).

While fortune smiled on both men, a rivalry was developing. Porter Bibb, an investment banker and biographer of Mr Turner, traces it back to a race from Sydney to Hobart in 1979 between an American yacht whose crew included Mr Turner, and an Australian entry funded by Mr Murdoch. The Turner boat won the race while Mr Murdoch's ran aground.

"There was this big drunken dinner after the race, and Turner got up and made mincemeat of Rupert," Mr Bibb told the Washington Post last week. Mr Murdoch "was absolutely humiliated. I don't think he ever forgot it".

That Mr Murdoch was jealous of CNN's reach and influence has been well documented. It gnawed at him that while Fox TV had made a respectable job of becoming America's fourth established network, its news division was feeble and unrespected. A 1994 attempt at getting one off the ground with the help of Andrew Neil, ex-editor of the London Sunday Times, was a flop. The creation of FNC, therefore, is Mr Murdoch's latest stab at catching up at last with Mr Turner in becoming the world's premier provider of television news.

Mr Turner's chip was always on the other shoulder: he ruled the news roost but had failed to become the kind of player Mr Murdoch is as the owner of a national American network. And it was not for lack of trying.

In 1985, he tried to buy CBS but was rebuffed; a decade later he conducted an on-off courtship with NBC and that too came to nothing. By agreeing to be bought himself by Time Warner, Mr Turner appears to have given up on his network aspirations, but he has put himself at the top, or almost the top, of the largest, and arguably the most powerful, media corporation on the planet.

THIS is much more than a personal vendetta, however bad the language. The liberalisation of the communications industry in the US, completed earlier this year, has unleashed forces that are transforming the landscape in America and worldwide. Most significant has been the rush of mergers and combinations, among them the $19bn marriage of Walt Disney and ABC television last year, Mr Murdoch's acquisition for $2.8bn of New World Communications and its string of US TV stations this year and, of course, Time Warner's deal with Turner.

The prospect of a world in which every household will depend on a single cable supplied by a single company for telephone, television, banking, shopping, Internet and who knows what new superhighway treats, has convinced every player that only the biggest, the most global, the most multi-media and the richest have a hope of survival. Only by dominating a lot of homes and a lot of media can you stay in the game.

This is generating an industry of elephants, each with enormous power. Concern is growing that this process is restricting real choice and not broadening it as the deregulators promised. Mr Murdoch once remarked that he thought three national daily newspapers would be enough for Britain (two of them his own). Mr Turner clearly feels that one cable news service is enough for New York. Many will feel the two men deserve each other.

But some in New York have an eerie feeling that this battle will not go all the way, for all the hard words, and that the two giants will end up colluding, rather than colliding. Mr Murdoch's News Corporation and Time Warner depend upon each other in many ways and in many places across the globe. Time, for instance, needs Mr Murdoch's satellites. Mr Murdoch needs content from Time, in particular from Warner Brothers, for Fox.

John Malone, the man who likened the current bust-up to a Tyson fight, is expecting it to end with a whimper, not a bang. "In the end," he says, "they'll resolve it with some transfer of economics."

How the empires square up


(Rupert Murdoch is president and leading shareholder)

Assets: pounds 14.3bn ($24bn)

Sales: pounds 5.8bn ($9.7bn)

Major businesses: BSkyB, Fox, Star (all TV); 20th Century Fox (films); News International

(newspapers); HarperCollins (books).


(Ted Turner is vice-chairman and leading shareholder)

Assets (incl TBS): pounds 15.8bn ($26.5bn)

Sales: pounds 6.8bn ($11.5bn)

Major businesses: CNN, TNT, Cartoon Network (all TV); Warner Brothers, Castle Rock (movies); Time, Fortune, Sports Illustrated (magazines); Warner, Elektra, Atlantic (records); Warner Books.

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