The still-unfolding juicy headlines about the defamation lawsuit by Dominion Voting Systems Corp. against Fox News have revealed numerous explosive internal communications from Fox News executives and on-air hosts, up to and including its boss of all bosses — Rupert Murdoch.
Fox News is depicted as akin to Frankenstein letting loose on the world to convey knowingly false statements about fraud in the 2020 presidential election. From Dominion’s perspective, the only way to stop this monster would be by having a jury hear the damning facts in the case, then require Fox to pay damages that will be in the billions of dollars (especially if punitive damages are added to the total).
But lost in all the current drama is a more fundamental question — why did Fox News get started at the very beginning at all? That brief history is worth retelling, especially because of its interesting political twist.
Let’s travel back to 1996 when Democrat Bill Clinton was president. Since 1980, the only 24-hour cable news channel was CNN. Despite it monopolizing this format, CNN had not achieved financial success since the year it launched. This led to its urgent need to stay afloat by having Time Warner Cable, the nation’s second-largest cable system operator, rescue CNN by taking majority financial control.
At that point, the Federal Trade Commission opened an investigation to determine whether this change in ownership might require CNN to agree to some binding terms to have the acquisition obtain FTC approval. The regulators developed a theory that under this new arrangement, Time Warner Cable would favor CNN in its economic self-interest and thus prevent any other cable news network from being carried on its cable systems. In other words, this bundling of content and conduit would choke off cable news competition in the future, thus violating federal antitrust law.
The agency subsequently approved the deal in early 1997 by a 3-2 vote among the FTC commissioners, with the Democratic majority narrowly prevailing. FTC Chairman Robert Pitofsky, appointed by President Clinton, said that “the goal was to protect the competitive process and not to dictate winners and losers.”
The two Republican-appointed FTC commissioners dissented, however. Commissioner Mary L. Azcuenaga said that “to reach this result, the majority adopts a highly questionable market definition, ignores any consideration of efficiencies and blindly assumes difficulty of entry in the antitrust sense in the face of overwhelming evidence to the contrary. The decision of the majority also departs from more general principles of antitrust law by favoring competitors over competition and contrived theory over facts.”
She was joined in disagreement by Commissioner Roscoe B. Starek III. He was “neither convinced that increased program bundling is a likely consequence of this transaction nor persuaded that any such bundling would be anticompetitive.”
This government decision was essential to Fox News, then an upstart, because without it, Time Warner Cable and other large cable companies might have just ignored the sales pitch that Rupert Murdoch was making — “fair and balanced” news (with the tagline, “We Report, You Decide”) would be an attractive counterweight to the “liberal bias” of CNN.
With one additional FTC vote siding instead with commissioners Azcuenaga and Starek’s views, Fox News probably would not have been able to gain a foothold in the marketplace when it launched. Ironically, the network aligned most strongly with unfettered capitalism took advantage of government power behind it to force open competition that might not otherwise have taken hold naturally.
Fox News (as well as MSNBC ) had launched before the FTC decision, yet it had not attracted sufficient interest from cable system operators that would have made it a viable marketplace competitor to CNN. The FTC decision thus was pivotal for Fox News.
This alternative history would make the current Dominion-Fox News lawsuit just a figment of our collective imagination. Perhaps more important, it also might have prevented the creation of the deep political divisions our nation has endured in the intervening years.
