Put Rupert Murdoch, Ted Turner, Gerald Levin, and John Malone in a room, and you're bound to get one of two results: a brilliant business deal or an episode of Ultimate Fighting.
Although the latter would satisfy a widespread gratuitous desire to see the rich and powerful pummel each other, the confirmation that Murdoch's News Corp. is indeed talking with PrimeStar Partners LP raises another question: How will the regulators react?
One sticky issue could be foreign ownership. ASkyB is a partnership of News Corp., an Australian company, and MCI Communications Corp., which soon may become part of British Telecommunications in a merger proposed late last year.
Even though a recent ruling by the FCC's International Bureau held that foreign ownership restrictions don't apply to direct broadcast satellite companies, several parties have since appealed it and a final decision is pending. At issue is MCI's rights to the last US orbital slot for DBS services, which it won in an auction last year for US$682.5 million.
Ironically enough, the challengers of that ruling include PrimeStar stakeholder Time Warner and would-be News Corp. partner EchoStar Communications Corp. When EchoStar was courting ASkyB, it had been reportedly planning to abandon its appeal for obvious reasons. But now it's not so sure. And now that Time Warner might benefit from allowing MCI to hold onto its license, it may withdraw its petition.
None of the companies have commented on any of these possibilities, but one FCC source who requested anonymity said these sudden changes in legal posturing that coincide with the business deal of the week are irritating.
"The commissioners aren't stupid," he said. "They're going to get some idea of what the level of conviction is here. Everybody's eyes are open on this."
But none of this may ultimately matter. This deal may not go through anyway. Laments an official at Time Warner: "There are a lot of details that need to be worked out, but for now we are on board."
Time Warner had been the main stumbling block over the last couple of weeks, mainly because it has much to lose by letting ASkyB on board. For one thing, Time Warner competes directly with News Corp.'s theatrical movies and cable channels. But News Corp. since has agreed to a non-voting stake and not to require that Time Warner carry any of News Corp.'s content on its cable TV systems.
