[The Murky MCI Sky]
Satellite TV: Foreign operators face FCC scrutiny
TUESDAY MAY 6 1997
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By Richard Waters in New York and Christopher Parkes in Los Angeles
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The Clinton administration yesterday ordered a review of whether foreign companies should be allowed to operate satellite television services in the US.
The move raised a question over Mr Rupert Murdoch's ambitions to become one of the leading forces in the business through his News Corporation.
The review could also complicate the attempt by British Telecommunications to take control of MCI, the second biggest US long-distance telephone carrier and the company which successfully bid last year for a licence to offer direct broadcast satellite (DBS) services.
The Federal Communications Commission granted MCI its licence before its planned merger with BT was announced last November.
However, the agency later confirmed the licence, on the grounds that it did not fall within the scope of foreign ownership restrictions which apply to foreign control of broadcast or telecommunications services in the US.
But in a joint letter yesterday, the State Department, Commerce Department and the Office of the Trade Representative asked the FCC to reconsider the issue.
While saying they "understand" the FCC's earlier interpretation, the three departments added: "We believe that significant policy questions continue to exist regarding foreign ownership of DBS subscription services on US licenced satellites."
MCI said it did not believe the review would delay its planned merger with BT, which is still dependent on approval for BT to take control of the MCI's US telecommunications licences. "It's quite reasonable that the executive
branch would want to examine the foreign ownership of direct broadcast satellite," MCI said.
By raising questions about control of satellite television, however, US regulators could greatly complicate what is already a politically contentious acquisition of a leading US company.
Yesterday's request for a review also raised questions over Mr Murdoch's ambitions to expand his television interests in the US.
In their letter to the FCC, the three government agencies also named "News Corporation, an Australian company" among the foreign interests considering involvement in satellite television.
The FCC investigation could take six months, the Commerce Department said. But it would not necessarily delay the current federal review of BT's takeover of MCI.
c Copyright the Financial Times Limited 1997
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