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Steven Pearlstein

. . . And Another Thing

By Steven Pearlstein
Wednesday, December 8, 2004; Page E01

Love him or hate him, you know that Rupert Murdoch will come out on top of any deal.

That was the news buried in Monday's announcement about the sale of 50 percent of Hughes Network Systems in a deal that values the company at about $360 million. Murdoch had picked up the network service operations as part of the $6.5 billion deal by which he won control of DirecTV last year. Now he's been able to recoup about $5 billion of that from the sale of PanAmSat, Hughes Network and other assets. That means Murdoch was able to buy control of DirecTV and two state-of-the art satellites for about $2 billion -- the bargain of the decade. And he cleverly structured the various assets sales to keep them largely tax-free.

_____Past Columns_____
A Culture Of Subsidies Inflates Costs (The Washington Post, Dec 1, 2004)
A Prescription For Antitrust Violations (The Washington Post, Nov 24, 2004)
Making the Best Of Globalization In Hagerstown (The Washington Post, Nov 19, 2004)
Column Archive

Meanwhile, back in Germantown, Pradman Kaul and his team at Hughes Network Systems are breathing a sigh of relief. They've emerged from Murdoch's dealmaking with knowledgeable new owners in Apollo Management and a profitable ongoing business providing satellite links for global companies. Most important, they'll get a second shot at launching a satellite-based interactive broadband service to compete with cable and telephone providers. Although Murdoch was able to hijack the first two "Spaceway" satellites, a third is in production, backed by a $375 million debt pool to finance it.

They're calling it "Snow Removal," a ham-handed effort by at least some in the White House to replace John Snow at the Treasury. Already, three of the possible replacements have picked up editorial endorsements -- Bob Novak has weighed in for former senator Phil Gramm, my Post colleague Sebastian Mallaby has sung the praises of trade negotiator Robert Zoellick, while George Will has put forward Alan Greenspan as a dark-horse candidate. At the risk of souring his chances, I'd like to put in a plug for budget chief Josh Bolten, a lock-lipped Bush lieutenant who is clever enough to keep the really kooky ideas off the table, articulate enough to manage a thoughtful public debate, and respected enough by business to build coalitions and actually get things done.

There have long been suspicions that the Emmy awards, at least as they relate to news programs, are nothing but a marketing gimmick dreamed up by the television industry. This might explain last week's Emmy conferred on Lou Dobbs for his endless series of rants against outsourcing. Don't get me wrong -- there's reason to be skeptical of the conventional economic wisdom that trade is always good and more trade is better. But by mindlessly denouncing the importation of everything that could be produced here -- and claiming to be the first journalist in America to dare to take on this issue -- the CNN anchor has become nothing more than a self-important huckster peddling economic nonsense.

Federal Communications Commission Chairman Michael K. Powell bristles whenever it is suggested that he's in the pocket of the telecom industry. So, you'd think when he had a chance to appoint a Consumer Advisory Committee to act as something as a counterweight to industry lobbying, he wouldn't have handed more than a third of the 35 seats over to representatives from the likes of AT&T, BellSouth, the National Association of Broadcasters and the National Cable & Telecommunications Association. Since then these reps have ensured that the panel, which operates through consensus, has rarely challenged the industry or taken a clear stand on any of the industry's intramural battles.

At the panel's last meeting, for example, the working group on consumer complaints reported it not only couldn't agree on how to make phone and cable bills clearer -- it couldn't even agree to do a consumer survey to determine how confusing they are. And the working group on competition threw in the towel completely after failing to come up with definition for "competitive market."

Next time, Powell might consider this radical idea: Appoint 35 ordinary consumers with no hidden agendas and no axes to grind.

Steven Pearlstein can be reached at pearlsteins@washpost.com.

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