Old Man and the Sky: The Brazilian Antitrust Implications for Rupert Murdoch's Expansion of the Sky Global Satellite Network

By Drake, Geoffrey | Vanderbilt Journal of Transnational Law, October 2004 | Go to article overview

Old Man and the Sky: The Brazilian Antitrust Implications for Rupert Murdoch's Expansion of the Sky Global Satellite Network


Drake, Geoffrey, Vanderbilt Journal of Transnational Law


ABSTRACT

To expand its global satellite network to the United States, Rupert Murdoch's News Corporation purchased DirecTV in 2003. Brazil's antitrust regulatory body, CADE, has expressed concern about a potential monopoly in the Brazilian satellite market controlled by Murdoch because News' Sky Latin America competes directly with DirecTV. If News opts to combine the two Brazilian satellite services, it will consolidate control of ninety-five percent of Brazil's satellite market, leaving satellite and cable competitors at a disadvantage. The Author argues that CADE should conditionally approve the acquisition because of the combination's ability to benefit Brazilian consumers, the government, and News Corporation itself through lower costs, lower subscription prices, and higher subscription numbers. At the same time, because of the negative market effects that may potentially arise from News Corporation's monopoly, CADE should place certain behavioral conditions on its approval of the combination.

TABLE OF CONTENTS

  I. INTRODUCTION
 II. THE DEVELOPMENT OF BRAZIL'S ANTITRUST REGIME
     A. Conselho Administrativo De Defensa
        Economica (CADE)
     B. National Telecommunications Agency
       (ANATEL)
III. THE BRAZILIAN ANTITRUST EXPERIENCE: CADE
     SHOWING ITS TEETH
     A. The Toothpaste Decision: Leaving a
        Monetary Cavity in the Pockets of
        Brazilian Consumers
     B. The Beer Decisions: Leaving a Bitter Taste
        in the Mouths of Foreign Investors
     C. The Chocolate Decision: Not So Sweet
        for International Mergers
 IV. BRAZILIAN ANTITRUST IMPLICATIONS FOR THE
     NEWS-HUGHES COMBINATION
     A. The U.S. 's Rejection of the EchoStar-Hughes
        Combination
     B. The U.S.'s Approval of the News-Hughes
        Combination
     C. Recommendations for CADE's Final Ruling:
        Conditioning Approval of the News-Hughes
        Brazilian Venture on News' Adherence
        to Behavioral Requirements
        1. Benefits of the News-Hughes
           Brazilian Combination
        2. Concerns About the News-Hughes
           Brazilian Combination
        3. Recommendation: Conditional
           Approval
  V. CONCLUSION

I. INTRODUCTION

Rupert Murdoch "revolutionized the economy of sports, of animated films, children's programming, broadcast news, and television networks. [He] led television's trend to get down and dirty. And [he] has ended up in a race to win absolute control of a [global] media empire...." (1) Conceived as an Australian newspaper company, News Corporation (News), under Murdoch's leadership, "spans far and wide, setting foot on every continent except Africa and Antarctica." (2) With worldwide revenues totaling $12.8 billion, News "truly owns an 'unrivaled platform' that combines unparalleled entertainment and news media-market coverage across the globe." (8) In the United States, News owns the Twentieth Century Fox movie studio; Fox Broadcasting, including thirty-five Fox network stations; Fox Sports; Fox Entertainment; cable channels such as Fox News Channel, Fox Movie Channel, and FX; as well as newspapers such as the New York Post. (4) In Asia, News owns STAR TV satellite television, Channel [V] Music Networks, and ESPN STAR. (5) In Australia, News owns FoxTEL, a subscription television service, Sky News Australia, and Sky Channel. (6) In Japan, News owns eleven percent of Sky PerfecTV! satellite television and eighty percent of News Broadcasting Japan. (7) In Britain, News owns forty percent of British Sky Broadcasting (BSkyB), "the world's leading satellite pay television operator" with over 6.5 million subscribers and more than sixteen million viewers. (8) In Latin America, News operates Sky Latin America and cable channels Canal Fox, Fox Kids Latin America, and Fox Sports Americas. (9) Murdoch's holdings enable consumers across the globe to gain access to television, movies, news, and sports programming as never before.

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