The Frontline documentary — Murdoch’s Scandal — premiered last night on PBS, and it’s must-see TV.
Many sections deserve to be highlighted, but let’s start with this one — a quote from Lord John Prescott, Britain’s Deputy Prime Minister from 1997 until 2007. Here’s what he tells Frontline correspondent Lowell Bergman about the relationship between Murdoch’s TV business — BSkyB in particular — and Murdoch’s newspaper operations:
Worth repeating: Murdoch makes boatloads of money from television, which keeps his newspapers running, and it’s the newspapers that give him political power.
Among Murdoch’s television holdings: the National Geographic Channel, which has been making boatloads of money.
During the past ten years, News Corp’s cable network division (which includes a constellation of channels around the world) has generated enormous income growth for News Corp. In FY 2002 (the year after the National Geographic Channel launched in the United States), cable TV brought in just $199 million — or 10% — of News Corp’s total income. By FY 2011, cable television’s income had grown to $2.76 billion, or 50% of the total. See the green boxes, below.
from Frontline’s How Does News Corp Makes Its Money
How much did the National Geographic Channel contribute to that total? You can’t tell from the News Corp 2011 Annual Report, but the National Geographic Society’s Form 990 can give us a very rough idea.
The problem is how to calculate the income generated by two separate National Geographic Channels — one is international (NGC-I), the other is based in the United States (NGC-US). News Corp owns 52% of NGC-I, and 70% percent of NGC-US; that gives National Geographic shares of 48% and 30%, respectively. For this back-of-the-envelope calculation, let’s split the difference and assume National Geographic has roughly a 40% stake in the two combined entities.
Now, go to the 990: In 2010, National Geographic’s “share of total income” was $184 million. If that’s a 40% share, then the Channels’ total income is $459 million — with News Corp’s 60% share of income at $275 million. That represents 10% of $2.76 billion generated by News Corp’s cable networks in 2011. (Again, these numbers are very rough estimates based on limited financial information.)
Also from the 990: National Geographic’s “share of end-of-year assets” is more than $1.4 billion. Which means the National Geographic Society — a 501(c)3 organization that enjoys a tax exemption courtesy of the American people — has helped News Corp build an asset that’s worth more than $3.5 billion… and possibly more than $5 billion.
“The barons of the media are the biggest beasts in the modern jungle.
They laugh at the law. They sneer at parliaments.
They have the power to hurt us, and they do with gusto and precision.”
— Tom Watson, Labour Member of Parliament (in Murdoch’s Scandal)
Think about that quote, and the National Geographic Society’s role as a financial enabler of the Murdoch empire, as you watch this jaw-dropping documentary: