"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).
