MURDOCH'S European challenge

Europe is proving a challenging market for the Murdoch media empire which already spans Australia, UK, US and China.

At a recent conference, in Birmingham, attended by 400 European media and communications leaders, Rupert Murdoch, head of News International, defined the gathering as a "defining moment for European audio-visual history."

This was a big claim even for a man accustomed to making headlines.

The conference was held to help develop strategies to enhance the competitiveness of the European industry in the global market place. Topics discussed included the launch of digital TV, the future of film, video and multimedia, intellectual property and the growth of the Internet in the digital age.

European Commissioner for culture and audio-visual policy, Marcelino Oreja, said that the conference brought together the themes of commerce, culture and communications for the 21st century.

He said that the audio-visual sector played a special and increasing role in society and the EU should aim to create the conditions for a competitive audio-visual industry. The transition to an all-digital environment in Europe was essential, he said, and the European Commission is committed to ensuring the development of it.

The EU audio-visual market is the largest in the world, and its AV industry produced more films than the US in 1996. Cinema attendance in the EU is increasing and the video market expanding rapidly.

Last year Murdoch's UK-based BSkyB satellite pay-TV service, which will soon go digital, failed to form a joint venture with Kirch Group in German pay-TV. "We remain receptive to any other opportunitites," says Mr Murdoch. His recent bid to buy pay-TV stations in Italy seems to have failed, but a second approach to Kirch is promising.

In 1989 Sky which has 6.8 million subscribers, created Europe's first 24-hour news channel, Sky News. The service has established itself as the third force in UK television news broadcasting.

Murdoch now fears that his challenge to the BBC - which has a UK and global TV news service - is being seriously undermined. The BBC, which is publicly funded, has introduced a 24-hour news channel and is allowed to give it free to cable-TV companies. This puts Murdoch's Sky News at risk and he is fighting back.

He told the Birmingham conference that the media policy debate in Europe now includes the "myth" that his group, News International, "owns an unhealthy amount of European media."

Murdoch controls two daily and two Sunday newspapers of the 20 national newspapers available in the UK, Europe's fourth largest economy. They have 20 percent of the total British newspaper market.

Murdoch has a 40 percent stake in BSkyB which represents five percent of all television viewing in Britain. The News International group owns just under half a small television channel in Germany and has a share in several all-music radio stations in Holland and Sweden.

Murdoch's European activities attract only 4 percent of the time that readers, views and listeners devote to media in Great Britain and much less in Continental Europe.

Mr Murdoch controls the Twentieth Century Fox studio in Hollywood, which is having a titanic success with "Titanic", and is sensitive about charges in Europe, particularly in France, about cultural domination by Hollywood. His BSkyB satellite network broadcasts mainly American entertainment.

On a non-Titanic scale, Fox also commissioned and developed a very non-Hollywood success, "The Full Monty", which may become the most profitable British film ever made.

BSkyB buys films from European makers and distributors such as Artificial Eye, Rank and Polygram. It plans to produce two original films in Europe in 1998/99 and aims to make up to 12 originals there each year. Sky One, the general entertainment channel of BSkyB, says it has trebled its European content over the last five years.

Murdoch's main message to Europeans is that digitalisation, in both production and transmission, will facilitate global trade in media. He says "with thousands of digital transmission channels, broadcasters will be crying out for content", as long as regulators and legislators recognise and permit its potential.

"The revolutionised media landscape of the 21st century requires a re-examination of the current structure of regulation. It was originally designed to cope with scarcity and market power. Abundance of spectrum and consumer enfranchisement change everything," he says.

"We should not restrict the new technologies, particularly in their free-wheeling, exploratory years. If we do, they will never realise their full potential."

Mr Murdoch said that "on the brink of the new digital age", Europe's "restrictive, sectoral approach of the past is giving way to a view that more realistically addresses the new technologies and the demands of the public."

He said "protectionist initiatives" should give way to "an open, competitive environment and a flexible regime that encourages competition and investment to realise the enormous potential of the new digital information age."

Murdoch says "market-based solutions" are the best way ahead and points to European media strengths.

Three of the five biggest record companies in the world are European: Bertelsmann of Germany is the world's largest publisher and Canal-Plus of France is one of the largest pay-TV operators in the world. The UK is the world leader in digital compression and the BBC is launching its first US channel.

Mr Murdoch concludes "European media are robust, proliferating and capable of taking on the world and winning, Europeans are media literate, keen to embrace new media ideas, specialist channels, new kinds of programming on new distribution platforms and new concepts in learning and understanding."

COPYRIGHT 1998 First Charlton Communications Pty Ltd.
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