Friday, July 22, 2011

Murdoch Façade Crumbling as Scandal Takes Root in America

The U.S. Department of Justice (DoJ) is reportedly preparing to deliver subpoenas to News Corporation employees and others as part of its expanding investigation into possible violations of the Foreign Corrupt Practices Act.

A separate FBI investigation is underway in response to reports that the company may have hacked into the phone messages of victims of the September 11 attacks. (Free Press is part of a larger coalition of groups urging Washington to call News Corp. executives including Rupert Murdoch to testify before Congress )

The Foreign Corrupt Practices Act holds U.S. companies legally accountable for crimes committed abroad, especially bribes that are paid to foreign officials to protect and expand the company’s business interests.

News Corp. is running its own campaign to downplay these allegations, distance father and son from the alleged crimes, and contain the scandal to the U.K. The Wall Street Journal and Fox News Channel are leading the charge with carefully contrived editorials and on-air stagecraft. One person with ties to News Corp. told The Journal that the DoJ subpoenas are “a fishing expedition with no evidence to support it.”

Not according to British investigators, who received a trove of documents and emails from News International that identify at least $160,000 in bribes paid to police officers. This handover of evidence has been confirmed by more credible news outlets, including the New York Times and the Guardian, that have covered the unfolding investigations.

Robert Lenzner of Forbes writes that News Corp efforts to cover-up the scandal are now “cracking” as two former executives come forth to claim that James Murdoch wasn't telling the whole truth during his testimony before Parliament on Tuesday. One former executive, Tom Crone, should know. He served as part of the legal team that advised Murdoch, Jr. during an earlier investigation that involved phone hacking.

“When the full extent of the hacking and the amounts paid to police are known, the Murdochs’ claim [that] they knew nothing of these activities – and were betrayed – will go up in smoke,” Lenzner writes.

And as more leads indicate that crimes were indeed committed on U.S. soil -- including actor Jude Law's claim that his phone was hacked as he was passing through New York City’s JFK Airport -- the likelihood increases that this scandal will create heat for the Murdochs on this side of the Atlantic.

More fish for the frying pan.

Thursday, July 21, 2011

Washington Slowly Wakes Up from AT&T's Fantasy

Congress may be finally waking up to the obvious: that the massive merger of AT&T with T-Mobile just doesn't make sense.

No amount of contributions from AT&T, or visits from AT&T lobbyists, will alter this simple truth.

On Wednesday, the Senate's top antitrust official, Sen. Herb Kohl of Wisconsin, weighed the facts and wrote a letter urging Attorney General Eric Holder and FCC Chairman Julius Genachowski to reject AT&T's proposed takeover.

Sen. Kohl wrote that "the acquisition, if permitted to proceed, would likely cause substantial harm to competition and consumers, would be contrary to antitrust law and not in the public interest, and therefore should be blocked by your agencies."

Sen. Kohl's joined a growing chorus of opposition in Washington to the proposed merger. Reps. Ed Markey (D-Mass.), Anna Eshoo (D-Calif.) and John Conyers (D-Mich.) also submitted a letter on Wednesday stating that they believed AT&T's takeover of T-Mobile "would be a troubling backward step in federal public policy -- a retrenchment from nearly two decades of promoting competition and open markets to acceptance of a duopoly in the wireless marketplace."

Opposition to this unprecedented consolidation is growing, and will only continue to grow once policymakers and the public see that the facts contradict AT&T's propaganda.

In his letter, Sen. Kohl provides a detailed analysis of the deal, and notes that T-Mobile is one of the sectors strongest price competitors, with services costing from $15 to $50 less than comparable plans on AT&T. T-Mobile is a "competitor that disciplines price increases from all three other national cell phone competitors," Sen. Kohl writes, adding that approval of the merger "raises a substantial likelihood that prices will rise."

He also notes that the merger would hand AT&T and Verizon control of 80 percent of the market, Kohl cites antitrust law, which explicitly forbids mergers that "may tend to substantially lessen competition."

Despite a mountain of evidence to support Sen. Kohl's claim, AT&T continues to say, as it did in its filing to the FCC, that "the wireless marketplace will be more competitive" as a result of this merger.

It gets worse. In response to Sen. Kohl's letter, AT&T spokesman Michael Balmoris said that the senator's view "is inconsistent with antitrust law, is shared by few others and ignores the many positive benefits and numerous supporters of the transaction."

Think about that for a second. A top AT&T flack is saying that a highly respected leader of the Judiciary Committee, who is considered an expert in matters related to antitrust, knows nothing about antitrust law, or knows less than AT&T's public relations department.

While their false claims about competition seem obvious to everyone, especially those who can count, convincing Washington to question the gospel of AT&T is no easy task.

The phone giant has spent $200 million on lobbyists and campaign contributions over the years. This astronomical sum goes a long way toward explaining why earlier this month a sum a cabal of House Democrats looked the other way and signed a letter stating that the merger would lead to billions of dollars in new investment and create thousands of new jobs.

Never mind that the opposite is true, that the merger will mark a net drop in capital expenditures for network build out and likely result in layoffs for more than 20,000 "redundant" T-Mobile employees.

In Washington, the facts too often don't hold a candle to a phalanx of industry lobbyists and a pile of campaign checks. Until now, this toxic blend of misinformation and cash has hijacked the debate surrounding this merger, and just about every other effort to reform the forces of the status quo.

The good news is that the common-sense efforts of Kohl and others are staring to unravel AT&T's fantasy. More people inside Washington have begun to see its lobbying juggernaut for what it is: a well-funded push for a government handout, instead of competing fairly in the free market.

AT&T doesn't need to acquire T-Mobile to serve rural America or improve the quality of its service. And as more members of Congress point out, this merger will kill competition and lead to higher prices, reduced investment and more unemployment.

As Washington separates fact from fantasy, the regulators at the DOJ and FCC simply need to do their jobs. They will surely have no choice but to reject this takeover outright.

Imagining what those T-Mobile ads would look like

Wednesday, July 13, 2011

Murdoch Scandal Jumps the Pond

The media scandal that's snared Rupert Murdoch and other News Corporation executives in Great Britain has crossed the Atlantic, and could cause more homegrown trouble for the U.S.-based media company.

In the past 48 hours, Democratic Sens. Jay Rockefeller, Frank Lautenberg, Barbara Boxer and Robert Menendez have called for an investigation of News Corp., saying that the behavior of Murdoch's executives and staff in England raises serious questions about the legality of the conduct of the company under U.S. law.

And the calls haven't been exclusively partisan. On Wednesday, Republican Rep. Peter King said the allegations of News Corp phone hacking were "disgraceful" and warranted an FBI investigation.

Already a range of groups including Free Press, Public Campaign, ThinkProgress, CREDO Action and Media Matters for America has collected signatures from 100,000 Americans demanding an investigation. is organizing a sizable protest to occur outside Murdoch's Manhattan townhouse on Thursday.

New Allegations to Come

It's clear from reports in the media that more allegations are going to surface, and that they'll not be limited to crimes committed in the United Kingdom.

Reporters at the Murdoch-owned news properties allegedly hacked the phone messages of more than 4,000 people, including the voicemail of a 13-year-old murder victim Milly Dowler, which set off a furious public backlash in Britain. But News of the World journalists were based in the United States during the time the paper allegedly hacked into people's phone records.

We already know that some reportedly tried to pay a New York City police officer to hack into the phone messages of the American families and victims of the September 11 terrorist attacks.

We also know that News Corp., as an American company, is accountable to the Foreign Corrupt Practices Act (FCPA), which states that U.S. companies can be prosecuted for crimes committed abroad. (Part of the investigation unfolding in the UK involves $160,000 in bribes allegedly paid to police by Murdoch executives to stifle an investigation of the phone hacking).

On Tuesday, former New York State Governor and Attorney General Eliot Spitzer wrote that the Justice Department has been very actively prosecuting FCPA violations in recent years. "The News Corp. case presents a pretty simple test for Attorney General Eric Holder," Spitzer wrote. "If the department fails to open an immediate investigation into News Corp.'s violations of the FCPA, there will have been a major breach of enforcement at Justice."

Murdoch Not Above the Law

Murdoch has amassed a worldwide media empire, which in America includes Fox News Channel, The Wall Street Journal and The New York Post, and hundreds of local broadcast stations and cable channels.

For too long, Murdoch has leveraged his enormous media power to get what he wants from leaders in Washington and London, and to insulate himself and his company from official scrutiny.

This is exactly the problem that media reformers have been warning about for years. When one company amasses too much control over a nation's public discourse, democracy suffers.

It seems clear now that Rupert Murdoch and his News Corp. colleagues believed that their tremendous media power placed them above the law.

But fortunes are turning, and Rupert Murdoch must now answer for all that has happened under his watch. If he or his executives broke the law, they need to be held accountable in the United States.

Monday, July 11, 2011

The Trouble with Rupert

There are many reasons that the scandal that's engulfing Rupert Murdoch has riveted public attention over the last seven days. It's a story that features all of the classic elements: twists of fate, betrayal, deception, abuse of power, and, even, murder.

But beneath Murdoch's meltdown lies a bigger problem, and its one that's not confined to the United Kingdom. It plagues all consolidated news organizations that reach a certain size and stature, but especially News Corp: The problem of media that get too cozy with power.

There's a disturbing parallel between Rupert Murdoch's methods in the UK and those he deploys in the US. More than any of the current crop of media moguls, Murdoch accrues political influence through aggressive manipulation of News Corp's many media outlets. It's not just in the ways they cover the news but how they use this coverage to gain favorable access to elected officials.

Consider the easy rapport struck among Murdoch's London executives and conservative candidate David Cameron. After he was elected Prime Minister, Cameron tapped a top News International executive to be his spokesman.

Compare that to the way Fox News Channel has courted GOP presidential candidates, many of whom have served as paid commentators for the network, in expectation that one may succeed in his or her bid for the White House.

In Sunday's New York Times, David Carr wrote: "News Corporation has historically used its four [London] newspapers... to shape and quash public debate, routinely helping to elect prime ministers with timely endorsements while punishing enemies at every turn."

Look at how control of media outlets in another powerful city -- New York, where he owns the New York Post, The Wall Street Journal, two television stations, and where both News Corp and Fox News Channel are headquartered -- has placed Murdoch on the A-list among Manhattan's glitterati.

Comforting the Comfortable

Murdoch's relentless pursuit of political power has turned Finley Peter Dunne's famous quote about the role of journalism on its head. News Corp sees its purpose as "comforting the comfortable and afflicting the afflicted."

It was a fortunate twist of fate -- thanks in large part to the dogged reporting of The Guardian -- that the afflicted would eventually have their say.

Reports revealed that News of the World staffers had hacked into the phone messages of a kidnapped and murdered 13-year-old to get a scoop. They even deleted messages in order to listen to more of the parents' desperate pleas, and, in the process, misled investigators to believe that the victim was still alive.

Now, the Daily Mirror reports that Murdoch's journalists at the News of the World had offered to pay New York police officer to hack into the phone messages of victims of the September 11 attacks here in the States.

Until now Murdoch's comfy ties to leadership have proven fruitful in promoting candidates, and winning official approval of the policies and mergers he has sought over the years.

But this could be changing. As A.C. Grayling wrote in a Friday Times op-ed, "News International's bid to take control of the television company British Sky Broadcasting, or BSkyB, was, in the opinion of many, a step too far, given that, even before the hacking revelations, its influence on politics and public conversation had become deeply corrosive."

This corrosive influence over London's political class is no less true of News Corp here in the US, where Murdoch displays a ruthless drive for access and control. That's why it was reassuring when a federal appeals court last week rejected a 2007 ruling by the Federal Communications Commission that would have let media giants amass more power by buying up more local news outlets.

The move no doubt delivered a blow to Murdoch's ambitions. And if past is prologue his reaction will be harsh.

In the 1990s, when the FCC was threatening to take away a single News Corp broadcast license, Murdoch's chief in-house lobbyist, Preston Padden, warned then FCC Chairman Reed Hundt's chief of staff that he would not be able to "get a job as dog-catcher" if the agency proceeded with its plans.

Murdoch later assailed Hundt in an op-ed for The Wall Street Journal, which triggered widespread attacks against the FCC chair by Congressional Republicans.

But the tables may now have turned against the media mogul. Had the FCC been allowed to loosen its curbs to consolidation this time around, Murdoch could have moved to control many more broadcast and print news outlets in New York, and elsewhere.

Last week's appeals court ruling was not only a rebuke of the FCC's decision, but also of the idea that the amassing of more media power posed no threat to our democracy.

America's founding fathers understood that media are essential to an informed electorate. What they may not have foreseen was rise of a media mogul like Rupert Murdoch, for whom the media serve merely as a means to his political ends.

The misdeeds of Murdoch's empire -- both here and abroad -- serve as plain evidence that last week's appeals court decision to curb consolidation was the right move.

Thursday, July 07, 2011

The Difference Between 'Town Halls' and Town Halls

Twitter's #AskObama question selection process was "like panning for gold in the wrong stream," tweeted Economist political writer Will Wilkinson.

Wilkinson should know. He was one of the "curators" asked to sift through the feed and select questions for President Obama during Wednesday's live event.

According to CNN, the so-called "Twitter Town Hall" was so heavily moderated and filtered that only 0.045% of the 40,000 questions asked were actually posed to the president.

While it's not realistic to expect the president to answer all 40,000 questions, we can hope for a process whereby questions are selected in a more democratic or even random way.

In real town hall meetings, any person who gets to the microphone gets to ask a question of officials. If you've witnessed a local city council meeting, you know that this often makes for odd, populist political theater (with a fair dose of paranoid ranting thrown into the mix).

And yet unfiltered questions often throw officials off script and make for revealing moments that feel much more like the truth. The end result is far more participatory and democratic than any of the recent "Town Halls" run by Facebook and Twitter.

Jack Dorsey, the Twitter co-founder who delivered the questions to Obama, is open to changing up the play on future Twitter Town Halls. After the event he tweeted that the event was a "great first step for future Town Halls," and he asked his nearly 1.7 million followers for advice: "How can we make Twitter @TownHalls better in the future?"

Any ideas?

Wednesday, July 06, 2011

Google+ vs. Facebook: Should Human Rights Factor in Your Choice of Social Network?

Question: What would billionaire Mark Zuckerberg lose by refusing Chinese demands that he censor Facebook? What would he and his company gain from being more principled?

This came up after reading Christopher Luna's analysis of Google+ as an alternative to Facebook, Zuckerberg's social networking colossus that boasts 750 million users globally.

Google+, which launched in beta last week, has been Topic One among the “digerati,” who've spent much of the week kicking the tires of Facebook's new competitor and reporting back to followers and friends.

But Luna, a masters student at Harvard Divinity School, looked at the competing services through a different lens.

He wrote that he’s come to trust Google more because of its refusal to buckle to Chinese censors:
Google is currently in a power war with China, and Google has made the correct choice in its difficult decision between compromising with a totalitarian government that would exert every pressure possible, legal and illegal, to use the information that we trust to Google to continue its campaign against freedom and dissidence.
Facebook, Cisco and Microsoft have shown themselves to be much more willing to comply with Chinese gatekeepers in order to gain access to the nation’s vast marketplace of users.

For Luna, Google's stance on behalf of free speech and human rights should be the deciding factor for social media users.

"The choice here isn't just about business. It's about whether a capitalist economy can show that the bottom line is not the only thing in the world that matters," he writes. "It's about whether a corporation can exist and thrive while standing by principles that support the value of human beings."

In 2011, networked technology has become a megaphone for freedom movements from Tunisia and Yemen to Burma and Vietnam. Yet at the same time new media companies have provided repressive regimes with the means to turn technology against their citizenry -- to spy on communications, censor content and, even, track down dissidents for arrest.

And while I agree with Luna that Google has a better record than Facebook on several open Internet and human rights issues, both are in the business of selling us, their users, to advertisers. For some people, that basic fact -- including their need to gather as much data as possible about us whether we are aware of it or not -- compromises their products too much. (Wouldn't it be great if those 750 million people used Diaspora's open social network instead?)

In a more perfect world tech companies that stand up for freedom and justice should naturally be more successful economically. This isn't the way our globalized markets have functioned over the centuries, but perhaps we've reached a point in our newly connected world where principles can lead to profits.

For this to succeed, though, consumers will need to become more engaged in corporate behavior both at home and abroad, and to vote with their wallets (and clicks) for the company that takes the high road.

For Luna, the choice is obvious: "I'd like to see Google win this war [with Facebook], and I know who's side I'm on here. I kind of think that leaving Facebook is one way that we can participate…"