Whose Space? Fox's Invasion of the Internet

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By Patrick Morales-Doyle, 8/31/2005

Big Media has its eyes on the internet. Since backing off of major internet ventures after a number of high-profile missteps during the initial dot-com boom of the 1990s, the "old-line" media companies are aggressively pursuing a plan to lay their claim on the internet by acquiring once-independent internet companies.

FOX LEADS THE WAY

Rupert Murdoch's News Corporation, owner of the Fox television network, is leading the way. On July 15 News Corp. announced the formation of a new internet division, Fox Interactive Media. Just days later the company bought Intermix Media, the majority shareholder of MySpace.com, for $580 million.

Over the past few weeks Murdoch has stated that News Corp. would be willing to spend between $1-2 billion on acquiring internet properties in the near future. He was quoted as saying, "through further strategic and targeted acquisitions, we can very quickly become a major player in this industry."

Fox Interactive Media has not slowed down since the MySpace buyout. In early August the News Corp. division bought Scout Media, a Seattle-based company which operates a network of over 200 sports websites which reach 2.4 million users a month.

News Corp. is also in the market for an internet search engine to compete with Yahoo and Google. They are currently in negotiations to buy the San Francisco-based internet search company Blinkx. Blinkx.com is seen as a leader in online video searches. Two other companies that News Corp. is said to be considering purchasing are IGN, which owns a network of online gaming sites and other sites which target 18-34 year old men, and Skype, a website that allows users to place phone calls over the web.

THE WEB: NEWEST COLONY IN A VAST EMPIRE

Why would one of the world's most powerful media moguls pay over half a billion dollars for something like MySpace? News Corp. plans on building a massive internet portal to compete with sites like Google and Yahoo. While the internet may have seemed like risky investment territory just a short time ago, the recent boom in internet ad sales mean it is a medium that the big media conglomerates will not ignore for long. Internet ad sales are expected to reach $16 billion in 2009, up from $6.6 billion in 2003.

Much like his 2003 purchase of DirecTV, Murdoch's plans for the internet are rooted in his philosophy of housing content and distribution under one roof. DirecTV gave Murdoch his own platform to distribute News Corp.'s many cable stations like Fox News Channel and Fox Sports Network. News Corp.'s ownership of DirecTV not only ensures that whenever they come out with a new cable channel it is guaranteed to be launched to at least 13 million households, but it also gives the company leverage when negotiating carriage on competing cable systems.

Murdoch was able to jump into the U.S. pay-TV industry in one fell swoop with his purchase of DirecTV because the cable and satellite were already highly consolidated, corporate-controlled mediums. It will not be quite that easy on the web, although the purchase of MySpace certainly helps News Corp.'s plans.

With the purchases of Intermix and Scout Media, News Corp.-owned websites now reach nearly 50 million unique users a month, up from 16 million. This gives Murdoch the sixth-largest audience on the web, which future acquisitions would only add to.

Murdoch's goal is clear: use his new web power to promote and distribute the content created in other regions of his vast media empire. As he recently stated, "News Corp. at its core is about content. The web at its core is about personal choice. What we are aiming to do is combine the two."

Unfortunately for us, Murdoch's idea of personal choice is probably something along the lines of choosing between Fox News and Fox Sports. No matter what he says about personal choice, News Corp.'s foray into the web is, at its core, about one thing: profits. Just like his approach to every other medium, Murdoch intends to bend the internet to his profit-driven will.

One advantage that MySpace gives Murdoch beyond ad revenue is the ability to track trends and find out what people are talking about online, all in the name of better marketing strategies for other News Corp. content. MySpace gives News Corp. an inside look into what young, tech-savvy people, one of the most sought-after demographics, are interested in and discussing online.

MySpace not only gives News Corp. access to watch trends as they evolve, but more startlingly, it gives them a desirable population to experiment their own "trends" on. MySpace may begin to look less like a vibrant online community and more like a corporate petri dish.

Targeted marketing campaigns are nothing new. We know that advertisements are placed on TV shows based on what type of people watch them. You probably won't see a 50 Cent ad on 60 Minutes, but you probably would on MTV. We also know that every time you turn on the TV you are going to have millions of different products pushed on you by way of advertising and product placement.

The question is: does it have to be the same for the internet?

The expansion into the internet actually takes it a step further. Unlike a television or radio station, sites like MySpace really are online communities. These are the places where people go to keep in touch and listen to music and chat with friends. The News Corp. purchase takes this social community and reduces it to just another commercial venture, another way for them to make money and sell you stuff. These media companies have pushed their way not just into what we see or hear, but actually the conversations and relationships we have with each other. It's taken what was our space and turned it into their space.

And what they choose to do with that space is probably a lot different than what you or I would choose.

GOODBYE CREATIVITY, HELLO CONSUMERISM

Murdoch, CEO and Chairman of News Corporation, is the head of one of the world's largest media empires. News Corp.'s holdings include the Fox TV network, the New York Post, TV Guide, DirecTV, HarperCollins Publishers and Fox News Channel. Murdoch's empire also includes major film and television production companies, nearly three dozen local U.S. TV stations, over two dozen newspapers and a handful of magazines. (For a complete list of News Corp.'s holdings click here.) According to its website (as of June 30, 2005) News Corp. has total assets of $55 billion and approximately $24 billion in annual revenues.

Throughout his career Murdoch has been criticized for using his newspapers and television stations as platforms for him to promote his own business interests and distribute right-wing political views, often in direct opposition to journalistic objectivity. Perhaps the most notable examples of this can be seen in the ultra-patriotic news coverage of News Corp. assets like Fox News Channel and the New York Post and the far right commentators that dominate their editorial content. Murdoch-owned news outlets like Fox News were accused of giving favorable coverage to the Bush administration and the military leading up to and during the war in Iraq in order to curry favor as they lobbied the government to further deregulate media ownership rules. This is nothing new though for Murdoch whose newspapers have pushed right-wing causes in the UK and Australia for decades.

In addition to promoting right-wing causes in these somewhat-mainstream avenues, News Corp. is also the publisher of the ultraconservative D.C.-based publication, The Weekly Standard, which is headed by William Kristol of the far-right think tank, Project for a New American Century. But perhaps what is more troublesome than Murdoch's personal politics are his own designs for power. In a January 2004 BusinessWeek article, shortly after his acquisition of the leading U.S. satellite provider DirecTV, Murdoch was quoted as saying, "Don't worry. We don't want to take over the world. We just want a piece of it."

Not only does News Corp. have a dubious political track record but they also have a history of getting into an industry and quickly setting trends. Much has been said about the "Fox Effect" that Fox News Channel had on other TV news programs. Murdoch first made a name for himself as a newspaperman in Australia and the UK. In both places his papers were notorious for their lowbrow, sleazy approach and big banner headlines. He brought this same style to the New York Post in the 1980s. In the 90s he made waves when he established Fox as a viable fourth network in what had been a three-network TV market in the U.S. Fox made a name for itself through its shocking and sleazy "When Animals Attack"-style programs.

WHAT THE FUTURE HOLDS

News Corp. is not likely to be alone among the old-media companies laying claim on the internet. Analysts have pegged 2005 to be a big year for media acquisitions. As a January 2005 article in Forbes put it, "the Internet and interactive TV are rapidly altering the media landscape, and the old-line companies will need some new traveling companions."

No matter what Murdoch, or any other big media CEO for that matter, says about personal choice or consumer empowerment, it's really all about business. News Corp. is a $55 billion dollar company. They don't care about internet innovation any more than they care about objectivity in the newsroom. What they care about is profits. If it's profitable they'll stick with it, and if it's not, they won't. MySpace is yet another way for them to sell their Fox-branded products and give their advertisers that much more access to your eyes and ears.

While the MySpace purchase doesn't necessarily mean the end of the internet as we know it, it doesn't bode well. It means that media giants are once again starting to pay attention to the internet, and not in a nice way. It means they'll be using all of their corporate power to squeeze every last cent they can out of it. And it means that even more of what was our space, will now be corporate space.

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