Tuesday, June 26, 2007

New York Times Examines Murdoch's China Dealings

Here's the much-anticipated Times piece: Murdoch’s Dealings in China: It’s Business, and It’s Personal.
Regulatory barriers and management missteps have thwarted Mr. Murdoch’s hopes of big profits in China. He has said his local business hit a “brick wall” after a bid to corral prime-time broadcasting rights fell apart in 2005, costing him tens of millions of dollars...

Mr. Murdoch cooperates closely with China’s censors and state broadcasters, several people who worked for him in China say. He cultivates political ties that he hopes will insulate his business ventures from regulatory interference, these people say.

In speeches and interviews, Mr. Murdoch often supports the policies of Chinese leaders and attacks their critics... His courtship has made him the Chinese leadership’s favorite foreign media baron.
The big story is about how News Ltd, and MySpace in particular, bends over backwards to help the Chinese government impose restrictions on free speech. In return for Murdoch's compliance, "television channels affiliated with Mr. Murdoch beam more programming into China than any other foreign media group."

The Gawker is impressed:
Based on yesterday's sorry spectacle we'd be inclined to suspect that it is indeed an attempt to damage Murdoch's prospects of taking over the Wall Street Journal. But today's article is legitimate coverage of a legitimate story, delivered professionally and offering the kind of analysis and information newspapers are supposed to provide. (We would have liked more sexy Wendi stuff, but you can't have everything.)
This NYT section proves that Wendi's involvement with Rupert's business has been more than he sometimes admits:
By the late 1990s, Mr. Murdoch was traveling several times a year to the country. He was often joined by Wendi Murdoch, who left her formal position in the company but continued to scout for investments in China and participate in strategy decisions there, several people who worked for the News Corporation said.

One of her roles: introducing her husband to Chinese entrepreneurs. Many of them had received business degrees in the United States, as she had at Yale.

The Murdochs invested about $150 million in half a dozen start-up Internet and telecom companies at the height of the Internet bubble between 1999 and 2001. Only one, Netcom, returned an appreciable investment profit, two former News Corporation executives said.

But one of the entrepreneurs the Murdochs befriended during the investment spree was Jiang Mianheng, the son of President Jiang. Ms. Murdoch and some other News Corporation employees argued internally that the younger Mr. Jiang could help Star distribute its broadcasts more widely, two former News Corporation executives said.

It is unclear what role, if any, Mr. Jiang played. But in 2002, the company became the first foreign broadcaster to receive “landing rights” to sell programs to cable systems in Guangdong Province, near Hong Kong.
My wife is Japanese, so I know how important it can be for a Westerner to have good advice on Eastern cultural idiosyncracies! It wasn't long before Murdoch had signed up a media and stock market entrepreneur named Ding Yuchen, whose father was the Communist Party's propaganda chief.
A second partner was the Central Committee of the Communist Youth League, considered the political power base of China’s new top leader, Hu Jintao.
Murdoch gained concessions, but pushed too hard and ended up making a loss of between $30 and $60 million. But he maintained the good favour of the political elite, and his wife seems to have opened a back door to further profits:
Wendi Murdoch has stepped up her role in China. She plotted a strategy for the News Corporation’s social networking site, MySpace, to enter the Chinese market, people involved with the company said. The News Corporation decided to license the MySpace name to a local consortium of investors organized by Ms. Murdoch.

As a local venture, MySpace China, which began operations in the spring, abides by domestic censorship laws and the “self discipline” regime that governs proprietors of Chinese Web sites. Every page on the site has a link allowing users or monitors to “report inappropriate information” to the authorities.
This news was also interesting:
Journalist and author Seth Faison, who covered the 1989 Tiananmen Square massacre for Hong Kong's South China Morning Post when Mr Murdoch owned it, said in a radio interview last week that a News executive pressed him to "tone down" coverage because the company was trying to negotiate a television deal with Beijing at the time.
Given how Wendi Deng has accomodated Chinese authorities in MySpace, I wonder what she thinks about her husband's ethics-free political opportunism? If a reporter asks her to comment on Tiananmen Square, I wonder if she would have the "good sense" to keep quiet, or the courage to speak up? I doubt she has ever had much of a political awakening - so far, it's all been bright lights and big wallets - but now would be a good time.

Murdoch might argue that he is just a businessman trying to straddle both sides of the globalisation divide, and that he conforms to Chinese government regulations just as he does with US and European ones. But as yesterday's NYT story showed, Murdoch frequently pushes the barriers and forces Western governments to cede major concessions on matters of law. He can't get away with that (yet) in China, so he is playing nice.

Whichever way you look at it, the only thing that seems to matter to Murdoch is the profit margin. And that is the big problem with News Ltd: journalism has to be about more than just profiteering, or it's nothing. If a reader cannot be sure that what they are reading (or hearing or seeing) is the unvarnished truth, then they will go elsewhere for the answers. Murdoch is not just dragging journalism down to the level of popular entertainment, he is also prostituting major bastions of quality journalism (including the UK Times, and the WSJ if he can get it). The result is that business-savvy politicians who are "tight" with Murdoch get free reign to do as they please, without proper scrutiny. And that, my friends, is the slippery path to outright Fascism.

It's ironic that the Chinese Communist Party should be embracing such a beast, but obviously their instincts for authoritarian overkill have now combined with a widespread lust for personal profit. The idealistic visions of Marx and Lenin (such as they were) have been long forgotten. Now it's all just spin and power games. Welcome to the New World of globalised corporate profiteering.

No comments: