Congess vote may stymie Murdoch

RUPERT Murdoch's News Corp looks like being the big loser from the startling vote by the Republican-controlled House of Representatives against changes to the Federal Communications Commission media-ownership rules.

A key proposal of the changes, of which Murdoch would have been one of the biggest beneficiaries, was the lifting of the national television audience cap from 35% to 45%.

News Corp and rival Viacom (which each reach about 40% of the viewing audience) already breach existing regulations, although they have had a waiver until a final decision is made. Murdoch and Viacom, which owns CBS network, may now be required to divest some of their TV interests.

The vote also refocuses unwelcome attention on Murdoch's plan to buy satellite broadcaster DirecTV, which requires regulatory approval. Opponents, many of whom also voted down the FCC rules, claim it will give Murdoch's Fox channel too much power in the US media market.

The level of hostility against the new regulations, particularly by Republicans, has caught the party and the White House by surprise. Media companies, with Murdoch in the lead, have been lobbying hard for the changes.

In a last-ditch effort to head off the growing opposition in Congress to the change, about 75 executives from Fox, CBS, NBC and ABC, the big broadcast TV companies, met 160 Congressmen to urge them to support the new rules. The lobbying effort failed because the House voted overwhelmingly against the FCC changes, 400 to 16.

Opponents of the FCC's plan focused on Murdoch during their own lobbying, with CNN's founder Ted Turner branding him 'the most dangerous man in the world'.

The vote is bound to unleash a round of fierce political infighting. The Bush administration has already threatened a Presidential veto in a written statement to congressmen. 'The administration believes that the new FCC media ownership rules more accurately reflect the changing media landscape and the current state of network station ownership, while still guarding against undue concentration in the marketplace,' the statement said.

The White House warned of a veto if 'this provision or a provision like it with respect to any one of the other FCC rules is contained in the final legislation presented to the President', referring to the provision to set the television audience cap at 35%.

News Corp said it was still considering the implications of the vote.