August 2010

North Korea appears to have ramped up its propaganda war against South Korea and the U.S. by turning to Twitter and YouTube - websites that most citizens of the reclusive communist country are banned from viewing.

The North's government-run Uriminzokkiri website posted an announcement last week saying it has a Twitter account and a YouTube channel. More than 80 videos have been uploaded since July to the global video-sharing site under the user name uriminzokkiri. The series of clips include condemnation of "warmongers" South Korea and the U.S. for blaming North Korea for the sinking of a South Korean warship in March.

The "Legislative framework proposal" on net neutrality released by Google and Verizon last week was a shock and a disappointment for those who had bought into Google's motto of "Don't be evil." It's a sad example of what happens when corporations are allowed to write regulatory rules -- and why the Federal Communications Commission needs to re-seize the reins on broadband regulation.

Congress could fix this by passing a network neutrality bill, but Senator John Kerry, who chairs the communications subcommittee, said that is unlikely to happen this year. Luckily, there's another solution: the FCC can rewrite the rules and reclassify broadband Internet access as a telecommunications service for the purposes of regulation. Needless to say, there are opponents of this approach. Some activists speak of "regulatory capture," under which ideologues or industry-affiliated wonks could come to control the regulatory apparatus. And the industry giants don't want to be regulated at all. But at the moment, the choice appears to be between having major industries self-regulate their Internet behavior, and having the FCC regulate it. Given that the Google-Verizon proposal seems helpful primarily to Google and Verizon at the expense of an open, innovation-friendly Internet, it's time for the FCC to step in.

Unlike the national political parties and federal candidates, the Republican Governors Association can take in unlimited amounts from corporations, and companies are showing their interest. News Corp., the media company controlled by Chairman and Chief Executive Officer Rupert Murdoch, gave the RGA $1 million in June.

News Corp. opposes proposed federal rule changes that would weaken the position of its Fox network in negotiations with cable companies. Governors may have a stake in the issue. In March, for example, New York Governor David Paterson stepped in with a call for binding arbitration in a dispute over fees between Bethpage, New York-based Cablevision Systems Corp. and Burbank, California-based Walt Disney Co.'s ABC.

Jack Horner, a spokesman for News Corp., said in an interview: "It's patently false that a corporate donation would have any bearing on our news-gathering activities at Fox News or any other of our properties." News Corp., which also owns the New York Post, Wall Street Journal and Times of London, said in a statement that the company "believes in the power of free markets, and the RGA's pro-business agenda supports our priorities at this most critical time for our economy."

It is hardly unusual for media companies to support candidates and political parties. General Electric, which owns NBC, has given $245,000 to the Democratic governors and $205,000 to the Republican governors since last year. Disney, which owns ABC, donated $20,000 to committees associated with Republicans and $11,000 to Democratic committees. CBS gave $13,000 to Democratic PACs and $1,000 to Republican ones.

Asked whether such donations raise questions about other networks' coverage, Daschle said: "The Fox contribution is in a completely different league. Other media firms' donations are generally small and about equal to the many committees that receive money."

Until now, the News Corp./Fox political action committee had given 54 percent of its donations to Democrats and 46 percent to Republicans, according to the Center for Responsive Politics -- including $8,000 to Senate Majority Leader Harry M. Reid's campaign committee and $5,000 to House Speaker Nancy Pelosi's organization. News Corp. also gave $45,000 each to GOP and Democratic campaign committees on Capitol Hill. A seven-figure donation is not a first for Murdoch; he gave $1 million to the California Republican Party in 1996.

"Any pretense that may have existed about the ties between Fox News and the Republican Party has been ripped violently away," said Hari Sevugan, spokesman for the Democratic National Committee. "Any Republican that appears on Fox should now have a disclaimer that they are financially supported by the network and any coverage of the elections this fall on Fox should be reported with disclaimer for what it is -- partisan propaganda."

At Time warner, Walt Disney, NBC Universal, Cablevision, Scripps, Viacom, and News Corp, cable networks were their companies' biggest cash cows in the second quarter, a trend that will only become magnified in the years to come.

While advertising climates change depending on the economy, fees paid to these companies by cable, satellite and fiber video providers (known as affiliate fees) are much more predictable. "The affiliate fees have good growth characteristics and good visibility going forward," said David Bank, an analyst at RBC Capital Markets. "And on the advertising side, I think cable will continue to gain share from broadcast. When you add those two things together, you have a pretty good secular profile."

Disney, NBC Universal, Viacom and News own television production studios that provide much of their programming. Disney, NBCU and News Corp. also own three of the Big Four broadcast networks. Not only have they been able to charge higher fees to video providers for their cable networks, but each is increasingly determined to get cash compensation for the right to retransmit the signals of broadcast network stations in most of the nation's biggest markets. While all of this adds up to a bonanza for the largest media conglomerates, it has set the stage for contentiousness.