May 2013

News Corporation Board Approves Split of Company

The board at News Corporation approved a proposed split into two companies, and authorized a $500 million stock buyback for investors in the soon-to-be-formed publishing business. It also announced appointments to the board for both of the companies.

The company is expected to complete its separation on June 28, with publishing assets like The Wall Street Journal, The New York Post and HarperCollins, and a handful of Australian pay television units, forming a company that will retain the name News Corporation. Fox Broadcasting, Fox News, FX and the Hollywood film and television studio will form an entertainment company to be called 21st Century Fox.

The announcement may do little to dispel criticism that the News Corporation board is too heavily made up of members of the Murdoch family. After the division Rupert Murdoch will serve as chairman of both companies. He will maintain his role as chief executive of 21st Century Fox. Murdoch’s two sons, James and Lachlan, will be directors of both companies. But the boards will also include new faces. Robert Thomson, as chief executive of the new News Corporation, will join the publishing company’s board, as will Ana Paula Pessoa, a partner at the public relations firm Brunswick Group; Masroor Siddiqui, managing partner of the investment firm Naya Management; and John Elkann, chairman of Fiat. Joel I. Klein, chief executive of News Corporation’s fledgling Amplify education division, will maintain a role on the company’s board.

Chase Carey, president and chief operating officer of 21st Century Fox, will join several new directors — Delphine Arnault, a French businesswoman and deputy general manager at Christian Dior Couture; Jacques Nasser, a former chief executive of the Ford Motor Company; and Robert S. Silberman, executive chairman of Strayer Education Incorporated — on the entertainment company’s board.

Press Sees Chilling Effect in Justice Department Inquiries

President Obama’s conciliatory gesture toward the press — a review of Justice Department investigations involving journalists — struck some national security reporters as closing the door after the sources have already bolted.

In announcing the review in his speech, the President said he was troubled that recent investigations, which involved the extensive tracking of a Fox News reporter, James Rosen, and the seizing of phone records at The Associated Press, “may chill the investigative journalism that holds government accountable.” Journalists say that chill has already set in. Jeremy Scahill, who writes about national security for The Nation, said that some sources who used to agree to encrypted chats and off-the-record conversations have recently stopped feeling comfortable with these terms. “At times it seems that being a Luddite may be the safest way to do serious national security reporting in a climate where there appears to be an intensifying war on serious journalism,” said Scahill.

DOJ Notified News Corp. About Phone-Record Seizure

The Justice Department notified the parent company of Fox News more than two years ago about its seizure of phone records belonging to one of its reporters, a Fox official said.

The parent company, News Corp, didn't tell Fox about the notification, the Fox official said. This new detail helps clear up a mystery at the heart of the continuing controversy over the government's actions. Over the past week, officials at Fox have denied they were notified of the phone-record subpoenas, while law-enforcement officials insisted they were. It appears the reason for the discrepancy was that the notice was sent to News Corp.

Justice asked judge to keep Fox reporter in the dark over tracked e-mail

The Justice Department pleaded with a federal judge to keep a Fox News reporter indefinitely in the dark as it tracked his e-mail in a national security leaks case.

A new set of exhibits unsealed and made public this week show U.S. Attorney Ron Machen argued in 2010 that the traditional 30-day notice period did not apply to Fox News reporter James Rosen. Justice wanted to secretly monitor Rosen’s Gmail account. “Where, as here, the government seeks such contents through a search warrant, no notice to the subscriber or customer of the e-mail account is statutorily required or necessary,” Machen wrote in the June 2010 motion. "Thus, this court's indication on the face of the warrant that delayed notice of 30 days to the customer and subscriber was permissible was unnecessary." Machen, through a separate court order, also successfully stopped Google from telling Rosen that the government was spying on his e-mail account. Machen demanded to see all of Rosen’s e-mail records, including his deleted messages, e-mails in his trash folder and all attachments sent to and from the reporter. The government successfully argued to keep the search warrant under seal for 18 months before making it public in November 2011.

Groups Want DOJ Answers on Targeting Journalists

Close to five dozen groups have demanded that Attorney General Eric Holder provide a "full and transparent" account of the Department of Justice's targeting of journalists and whistleblowers, in particular its subpoena of Associated Press phone records in a whistleblower investigation and reports it had seized phone records of a Fox reporter.

Craig Aaron, president of Free Press, one of 57 groups that sent a letter to AG Holder expressing their concern, accused Justice of an "appalling abuse of press freedom." Among those also signing on to the letter included ACLU, Common Cause, the Communications Workers of America, The Newspaper Guild, Prometheus Radio Project, Society of Professional Journalists, Sunlight Foundation and the Writers Guild of America, East.

Google to Fund, Develop Wireless Networks in Emerging Markets

Google is deep into a multipronged effort to build and help run wireless networks in emerging markets as part of a plan to connect a billion or more new people to the Internet.

These wireless networks would serve areas such as sub-Saharan Africa and Southeast Asia to dwellers outside of major cities where wired Internet connections aren't available, said people familiar with the strategy. The networks also could be used to improve Internet speeds in urban centers, these people said. Google plans to team up with local telecommunications firms and equipment providers in the emerging markets to develop the networks, as well as create business models to support them, these people said. It is unclear whether Google already has lined up such deals or alliances. In some cases, Google aims to use airwaves reserved for television broadcasts, but only if government regulators allowed it, these people said. The company has begun talking to regulators in countries such as South Africa and Kenya about changing current rules to allow such networks to be built en masse. Some wireless executives say they expect such changes to happen in the coming years.

Sen Vitter trades fire with 'Obama phone' firm

Sen. David Vitter (R-LA) and TracFone Wireless, a pre-paid cellphone carrier, are hurling accusations at each other over a federal phone subsidy program for the poor.

The company has claimed that Sen Vitter is trying to gut a program that was "born out of" Hurricane Katrina, while Sen Vitter has accused TracFone of profiting from a wasteful government hand-out. The program, called Lifeline, has been pejoratively referred to as the "Obama phone" program, although it began long before President Barack Obama took office. It had its genesis as a subsidy for landline phones in 1985 and expanded to cover cellphones in 2008, during the George W. Bush administration. The spat began when Sen Vitter and other GOP senators introduced a bill earlier this month to end a provision that relates to the cellphones portion of the fund. Last week, the company ran an advertisement in the New Orleans Times-Picayune attacking Sen Vitter for his efforts to end the program. In response, Vitter held a press conference in New Orleans to say a sardonic "thank you" to TracFone for paying for an ad that draws attention to "this out-of-control, fraud-ridden entitlement program.” He claimed the ad was "misleading" for tying Katrina to the Lifeline program, noting that the FCC did not expand the program to cellphones until three years after the hurricane. He also noted that TracFone CEO F.J. Pollak and his wife have donated to Democratic campaigns.

Over-The-Air’s Silver Lining Also Has a Looming Cloud

[Commentary] One of the great things about broadcasting is broadcasting — the over-the-air (OTA) technology that lets anyone, anywhere tune in for free (assuming the proper antenna). OTA gives broadcasters an edge over all cable channels, which are restricted to the subset of TV homes that choose to subscribe to cable or satellite. Because broadcasters reach virtually every TV home, they continue to draw the biggest TV audiences. They remain the favorites of the mass marketers as the returns from the upfront ad dealing will prove once again in the coming weeks.

But as station executives plot strategy for the next 10 years, they need to consider the role that over-the-air broadcasting — especially in the advanced, more potent form contemplated by ATSC 3.0 — will play. In the meantime, they need to find the sweet spot. They need to encourage some cord-cutting so as to maintain a high percentage of OTA-only homes and their advantage over cable channels. At the same time, they don't want the percentage to go so high that it starts really irritating cable and satellite operators and cutting significantly into their retransmission revenue stream.

Laurene Powell Jobs and Anonymous Giving in Silicon Valley

In Silicon Valley, people get very rich, very fast, often when they are very young. As a result, they are often criticized for not giving away enough of that money. There are signs that is changing, as people like Mark Zuckerberg become more philanthropic. But many in tech are still in their 20s, and say they are working long days running companies and trying to improve the world with their products, and will be able to focus on philanthropy later in life. There is another story line, though, one brought to light by the tale of Laurene Powell Jobs.

She is the widow of Steve Jobs, one of the tech titans who received the most criticism for a lack of philanthropy. Yet for more than two decades, his family has been giving away money — anonymously. One of the main ways she is able to do that is because of the way she has structured her organization, Emerson Collective. It is an LLC, like a small business, instead of a tax-exempt 501(c)(3), like a charitable organization or foundation. That means that Emerson can make grants, for-profit investments and political donations — and does not have to publicly report its donations as a foundation does.

Apple Pumping More Money Into Lobbying

Apple has never had much of a profile inside the Beltway. It shuttered its big government affairs office in Washington, DC, in the late ’90s and since that time hasn’t had much of a presence in the nation’s capital. But now, as it finds itself under increasing scrutiny for its business practices and tax policies, the company is ramping up its Washington lobbying efforts. In 2012, Apple spent $1,970,000 on lobbying, according to Open Secrets.

This year, Reuters reports, it’s on track to spend double that. So, close to $4 million. That’s not a massive lobbying expenditure; certainly it pales in comparison to those of rivals like Google and Microsoft, which doled out $18 million and $8 million, respectively. But it’s high for Apple, which a decade ago spent a little more than half a million dollars on lobbying. And it reflects a renewed effort to make its voice heard by D.C. policymakers, one that began in early 2011 with the hiring of Fierce, Isakowitz & Blalock, a formidable lobbying firm with a number of executives who did stints in the Bush administration and the Republican National Committee.

Benton

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