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MURDOCH, MCI ANNOUNCE $2B JOINT INTERACTIVE DEAL
Published May 11, 1995
"In what could be the most potent alliance yet between a telephone company and a media firm," MCI Communications announced Wednesday that it will invest up to $2B in Rupert Murdoch's News Corp. to form a joint venture to deliver electronic information services, according to Jube Shiver in this morning's L.A. TIMES. The deal calls for a 50-50 joint venture company that will distribute News Corp. TV shows, movies and published materials via MCI's network -- "though it was not at all clear exactly how this will work, since MCI's network does not extend all the way to individual households -- at least not yet" (L.A. TIMES, 5/11). The first venture between the two is likely to be an online service for business drawing on Murdoch's "international news gathering apparatus" (Schatz & Pessah, N.Y. NEWSDAY, 5/11). In addition, Delphi, News Corp.'s commercial online service, "is expected to be folded into MCI's information services business" (Steve Lohr, N.Y. TIMES, 5/11). FOOTBALL AS LEVERAGE: Both MCI Chair Bert Roberts and Murdoch said the alliance would provide the leverage necessary for transmission deals with cable companies or regional bells. Murdoch: "We have a lot of bargaining strength and we have a lot of money. ... (Bell Atlantic) is not going to be supplying (programs) to people in Washington without the Redskins games" (WASHINGTON POST, 5/11). REAX: MCI's cash infusion "enables Murdoch to resume the role of an aggressive buyer of media properties that he relinquished after the company's 1990 liquidity crisis" (DAILY VARIETY, 5/11). News Corp. "is positioning itself for the day when broadcasters can deliver digital television into people's homes" (Cassandra Burrell, SAN FRANCISCO CHRONICLE, 5/11). MCI Exec VP Tim Price: "We just got a big-time content provider" (N.Y. TIMES, 5/11). Roberts: "Until now, no one has put together the right building blocks -- programming, network intelligence, distribution and merchandising -- to offer new media services on a global scale" (FINANCIAL TIMES, 5/11). The "potentially powerful alliance of content and distribution could well force other media and communication giants into similar deals, lest they be left behind in multimedia wars" (Keller & Landro, WALL STREET JOURNAL, 5/11). "The deal marks one of the most startling alliances yet in the communications industry" (Andrews & Fabrikant, N.Y. TIMES, 5/11).