Jan 1 1998

Media Moguls on Board

Murdoch, Malone and the Cato Institute

Last fall, when News Corporation owner Rupert Murdoch joined the board of directors at the Cato Institute, the announcement went unreported in major media. Perhaps it seemed routine for one of the world’s most powerful media moguls to take a leadership post at one of the most influential think tanks in Washington.

At future meetings, Murdoch can count on rubbing elbows with his fellow media titan, John C. Malone–president and CEO of Tele-Communications Inc. (TCI), the largest U.S. cable operator–who has been on the Cato board since 1995. The two men are well acquainted, and their companies have long been intertwined in media deals involving satellite television, cable TV, program distribution and other big telecommunications ventures. Now the heads of both firms are formally helping to run a think tank which boasts that it has “actively promoted the deregulation of the television and telephone industries.”

In recent years, the Cato Institute has neared the top tier of think tanks in the United States—on Capitol Hill and in the nation’s news media. In the 1996 book No Mercy: How Conservative Think Tanks and Foundations Changed America’s Social Agenda, Jean Stefancic and Richard Delgado write that the Cato Institute “played a key role in forming the ideas and policies of the new Republican majority in Congress.” These days, “congressional committee chairmen increasingly look to Cato scholars for testimony.”

FAIR’s search of major newspaper and broadcast media in the Nexis computer database found that Cato was one of four think tanks with more than 1,000 citations in 1995 and again in 1996 (see Extra!, 7-8/97). The Brookings Institution and Heritage Foundation were in a virtual tie for first place; Cato followed closely behind third-place American Enterprise Institute.

By the time the Cato Institute celebrated its 20th anniversary at a Washington Hilton bash with 2,000 guests last spring, the Washington Post (5/2/97) was declaring that “Cato is now the hot policy shop.” The Post quoted one of the enthusiastic guests, ABC News correspondent John Stossel: “I have no official political affiliation, but I sure seem to be agreeing with them on a lot of things.” (A year earlier, Stossel had been the keynote speaker at a Cato “City Seminar” in New York.) For corporations eager to stoke the pro-privatization and anti-regulation fervor of the Cato Institute, it’s clearly a good investment.

Government beneficiaries

Broadcasters like Murdoch benefit greatly from federal giveaways. Holding frequency licenses worth fortunes, they’re now receiving free slices of a digital spectrum valued at up to $70 billion. Likewise, cable TV conglomerates—with Malone’s TCI in the lead—continue to expand under the protection of federal regulations that place severe limits on the power of municipalities to charge franchise fees for the use of public rights-of-way. While lauding the “free market,” Murdoch and Malone rely on the federal government’s aid in their quest for media monopolization. The contradiction doesn’t seem to bother the Cato Institute at all.

While it has criticized “corporate welfare,” Cato is much more intent on eliminating government programs for the poor. (See p. 22.) The annual report for 1996 trumpets a statement by Cato’s director of health and welfare studies, Michael Tanner, that “welfare has failed and cannot be reformed. It is time to end it. In its place, the civil society would rely on a reinvigorated network of private charity.”

One of Cato’s luminaries is José Piñera, co-chair of its Project on Social Security Privatization. According to Cato’s latest annual report, “the project’s work was cited by nearly every major newspaper in the United States, including the Washington Post, the New York Times, the Los Angeles Times and the Wall Street Journal.” The report says that Piñera, a former minister of labor and welfare in Chile, “oversaw the privatization of Chile’s pension system in the early 1980s”–but does not mention that at the time the Chilean government was under the dictatorship of Gen. Augusto Pinochet. Cato’s concern about intrusive government evidently does not extend to torture and murder.

In terms of commitment to human rights, Cato has found a kindred spirit in Rupert Murdoch, who is fond of floating lofty rhetoric about his Star TV satellite network. “Satellite broadcasting makes it possible for information-hungry residents of many closed societies to bypass state-controlled television,” said Murdoch, who touted new media technology as a “threat to totalitarian regimes everywhere.” But Murdoch quickly kowtowed to China’s totalitarian regime when Beijing objected to Star TV transmissions of BBC News reports about Chinese human rights abuses. In 1994, Murdoch’s network dropped the BBC from its broadcasts to Asia. “The BBC was driving them nuts,” Murdoch said (New Yorker, 11/13/95). “It’s not worth it.”

Announcing that Murdoch had joined its board, a Cato news release (9/22/97) praised him as “a strong advocate of the free market” and quoted his stirring words: “I start from a simple principle: In every area of economic activity in which competition is attainable, it is much to be preferred to monopoly.” (This from someone with 70 percent penetration of the newspaper market in Australia.)

Smoking hired guns

Murdoch sits on the board of directors of Philip Morris, the tobacco giant recently inducted into INFACT’s Hall of Shame “for exerting undue influence over public policy-making” with the help of 240 registered federal and state lobbyists—spending as much as $2 million per month to lobby federal officials. Murdoch publications such as TV Guide reap enormous profits from cigarette ads. And Murdoch’s Fox Broadcasting is cozy with Philip Morris subsidiary Miller Brewing Co., which recently boosted its advertising account with Fox to about $75 million per year for sports and primetime programs (Advertising Age, 6/16/97).

But Murdoch is just one of many Cato links to Big Tobacco. Although news reporting and media commentaries often include the Cato Institute’s assessments of tobacco-related issues, Cato’s direct ties to tobacco rarely get mentioned. For years, the list of Cato’s large contributors has included Philip Morris and R.J. Reynolds.

As it happens, Cato is a fierce tiger when it comes to advocating for oppressed tobacco firms. Last summer, a Cato “Policy Analysis” by senior fellow Robert A. Levy denounced state lawsuits against tobacco companies to recover Medicaid costs for treating people with smoking-related diseases. He claimed that anti-tobacco politicians were “willing to deny due process to a single industry selected for its deep pockets and public image rather than its legal culpability.”

A month later, testifying before the Senate Judiciary Committee (7/16/97), Levy sounded a similar theme, calling a proposed tobacco settlement “a shameful document, extorted by public officials who have perverted the rule of law to tap the deep pockets of a feckless and friendless industry.” For good measure, Levy excoriated newly proposed restrictions on tobacco advertising as “draconian.” And he went ballistic over the idea that tobacco firms should provide funds for the health care of children without insurance: “To hold a single industry financially liable is no more than a bald transfer of wealth from a disfavored to a favored group.”

Such pronouncements from the lips of tobacco company lawyers are likely to be taken with outsized grains of salt by the public. But Levy has consistently received respectful media coverage—without reference to the links between the tobacco industry he defends and the think tank that employs him.

So, in a news article that appeared a week before Levy testified on Capitol Hill, the Chicago Tribune (7/10/97) devoted several paragraphs to Levy’s views, quoting his claims that federal efforts to regulate tobacco have been counterproductive. The article identified the Cato Institute only as “a libertarian think tank in the capital”—though it could have just as accurately been described as an advocacy group paid by the tobacco industry.

The next month, when the San Diego Union-Tribune published a 1,100-word op-ed article by Levy under the headline “Rule of Law Is a Loser in Tobacco War” (8/31/97), the identifying blurb mentioned Levy’s post at Cato–but not Cato’s relationship with tobacco companies. In that piece, Levy (“a senior fellow in constitutional studies at the Cato Institute”) lambasted “an $11 billion settlement of Florida’s war against the tobacco industry.” He called the settlement “shameful” because “it strips a currently unfashionable industry of basic protections the rest of us take for granted.” Ten days later, in USA Today (9/10/97), Levy surfaced again as a concerned legal scholar writing an opinion piece that decried the persecution of tobacco firms and blasted “our pervasive regulatory state.”

‘Funny funding’

Major media outlets have routinely turned a blind eye to the corporate financial backing for Cato and other large think tanks in Washington. Few reporters or pundits focus on the conflicts of interest involved.

A report by Public Citizen illuminated the industry money behind the major think tanks campaigning to strip regulatory authority from the Food and Drug Administration: “Seven think tanks–the American Enterprise Institute, the Cato Institute, the Competitive Enterprise Institute, the Heritage Foundation, the Hudson Institute, the Progress and Freedom Foundation and the Washington Legal Foundation–received at least $3.5 million between 1992 and 1995 from drug, medical device, biotechnology and tobacco manufacturers and their corporate foundations.” But mainstream journalists paid scant attention to who was paying the piper. “Some of the country’s most renowned think tanks, frequently cited by the American media, are carrying water for the drug, medical device, biotechnology and tobacco industries,” the public interest group reported (Public Citizen, Fall/96).

Not all media outlets have given short shrift to those realities. Under the headline “FDA’s Detractors Get Funny Funding,” the Tennessean newspaper editorialized (7/29/96): “The think tanks named in the report, including the Cato Institute, the Heritage Foundation and the American Enterprise Institute, have produced a steady stream of anti-FDA sentiment, including op-ed pieces and reports over the last several years.” The newspaper noted “a tremendous difference between an independent think tank, which does legitimate research, and a quasi-academic mouthpiece financed by a regulated industry.”

Clearly, the Cato Institute falls in the latter category. The Institute’s yearly funding has climbed above $8 million, more than twice what it was in 1992. The organization’s most recent annual report exults: “We’ve moved into a beautiful new $13.7 million headquarters at 1000 Massachusetts Avenue and have only $1 million in debt remaining on it as we enter 1997.” Dozens of huge corporations, eager to roll back government regulatory powers, are among Cato’s largest donors.

In their book No Mercy, University of Colorado Law School scholars Stefancic and Delgado describe a shift in Cato’s patron base over the years. Cato’s main philanthropic backing has come from the right-wing Koch, Lambe and Sarah Scaife foundations. But today, Cato “receives most of its financial support from entrepreneurs, securities and commodities traders, and corporations such as oil and gas companies, Federal Express and Philip Morris that abhor government regulation.”

Financial firms now kicking in big checks to Cato include American Express, Chase Manhattan Bank, Chemical Bank, Citicorp/Citibank, Commonwealth Fund, Prudential Securities and Salomon Brothers. Energy conglomerates include: Chevron Companies, Exxon Company, Shell Oil Company and Tenneco Gas, as well as the American Petroleum Institute, Amoco Foundation and Atlantic Richfield Foundation. Cato’s pharmaceutical donors include Eli Lilly & Company, Merck & Company and Pfizer, Inc.

Friends in the media

While serving on Cato’s board and making personal donations, TCI‘s John Malone is among many other media and telecommunications heavies behind Cato. Big donors include Bell Atlantic Network Services, BellSouth Corporation, Digital Equipment Corporation, GTE Corporation, Microsoft Corporation, Netscape Communications Corporation, NYNEX Corporation, Sun Microsystems and Viacom International. It’s understandable that Cato’s news releases–while constantly urging privatization of the Internet and other communications systems–do not mention where Cato money is coming from. But it’s inexcusable that media coverage seldom includes such information.

Even when Malone makes a public appearance for the Cato Institute, reporters seem uninclined to shed light on the array of corporate funding that makes Cato possible. When Malone spoke on “Telecommunications in the 21st Century” at a Cato seminar luncheon in Denver, a pair of articles in the next day’s Denver Post (11/15/96) gave extensive coverage to Malone’s comments–and identified Cato only as “a libertarian think tank.”

Cato’s newest board member, Rupert Murdoch, is a global media giant whose U.S. possessions include the Fox television network, TV Guide, the tabloid New York Post, HarperCollins book publishers and the 20th Century Fox movie studios. Along the way, lax federal regulation has swelled the profits of Murdoch’s News Corp., now a $28 billion conglomerate. As a 1997 New York Times article noted (3/31/97), his 10-year-old Fox TV network “could never have succeeded if it had not received generous treatment at the Federal Communications Commission.”

Naturally, turning such big governmental wheels requires lots of political grease. In 1996, Murdoch donated $1 million to the California Republican Party, while News Corp. gave another $654,700 in “soft money” to the national GOP. In Murdoch’s native Australia, News Corp. dominates the mass media. In Britain, Murdoch controls more than a third of daily newspaper circulation along with much of cable and satellite television. While using his media outlets to push for the slashing of government social services, Murdoch was a pioneer in union-busting within the newspaper industry.

Murdoch is likely to have a long and harmonious presence on the Cato Institute’s board of directors.

Research assistance: Peter Hart