Fears about Murdoch revived

His willingness to censor MySpace China portends danger of a Journal deal, critics say

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June 26, 2007|By Joseph Menn | Joseph Menn,Los Angeles Times

Fears that Rupert Murdoch would jeopardize the editorial independence of The Wall Street Journal have been a key sticking point in the News Corp. chairman's proposed $5 billion takeover of the newspaper's parent, Dow Jones & Co.

Critics mention as the latest example of those dangers Murdoch's little-noticed introduction in China of his red-hot MySpace Internet property.

Launched in April, MySpace China censors user comments on the social-networking site more than is necessary, analysts say. Its local ownership, they say, means the venture is obliged to cooperate with authorities more than it would have had to if it were based outside China.

And Murdoch has paid close personal attention to the launch, bypassing News Corp.'s chain of command. His Chinese-born wife, Wendi Deng Murdoch, who holds a master of business administration degree from Yale and is former executive at one of News Corp.'s Asian operations, was recently installed as the venture's chief of strategy, her first executive role since marrying the mogul in 1999.

"It's the first thing she's been active in," said a longtime senior News Corp. executive who socializes with the Murdochs. "Her involvement has been her husband, their two children - and now MySpace China."

News Corp. executives would not comment for this article, but company insiders say Murdoch felt safest trusting a member of his family with the delicate assignment. He sees China, with its huge population and rapidly blossoming middle class, as the final frontier for his empire, which reaches every corner of the globe through newspapers, satellite TV services, films, TV shows and networks such as Fox News and the soon-to-launch Fox Business Channel.

Like most other Western media companies, News Corp. has been frustrated by the Chinese government's reluctance to open its airwaves or theaters to outsiders. Internet companies are subject to less regulation, so Murdoch hopes that MySpace will grow on its own merits, allowing him to promote other News Corp. properties while showing the Chinese government he can be trusted as a partner.

Murdoch's relentless expansionism has become a barrier to his takeover of Dow Jones. News Corp. sees the Journal as a way to bolster the new financial news channel, but Dow Jones' controlling Bancroft family has been wary. On Friday, the Dow Jones board sent News Corp. a proposal aimed at protecting the paper's editorial integrity by keeping Murdoch at a distance from reporters, including a team that won a 2007 Pulitzer Prize for articles from China on such topics as deadly factory pollution, illegal coal mines and development in Tibet.

The plan calls for creation of a seven-member committee that could stop top editors from being fired, with two members picked by the Bancrofts, two chosen by News Corp. and three selected jointly. Resolution of the issue could clear the path to a sale.

The proposal follows protests by seven China reporters of the Journal and others over past Murdoch efforts to cozy up to the regime.

Journalist and author Seth Faison, who covered the 1989 Tiananmen Square massacre for Hong Kong's South China Morning Post when Murdoch owned it, said in a KCRW radio interview last week that a News Corp. executive pressed him to "tone down" coverage of the government because the company was trying to negotiate a television deal with Beijing at the time.

Murdoch has had his share of scrapes with the Chinese government. He owned Hong Kong-based Star TV, a satellite service that beams programs to the mainland and where Wendi Murdoch was an executive when she met her future husband.

But StarTV was banned from the country after Murdoch made remarks about technology's "unambiguous threat to authoritarian regimes." Murdoch tried in subsequent years to get back into China's good graces.

In 1994, after the Chinese authorities complained about broadcasts by the British Broadcasting Corp. critical of the government, News Corp. dropped the channel from Star TV.

"We're not proud of that decision," Murdoch said later.

The next year, News Corp. printed a worshipful biography of the late dictator Deng Xiaoping by his daughter, who was escorted to her news conference by Murdoch.

Then in 1998, News Corp. reversed a decision to publish a book critical of Beijing written by the last British governor of Hong Kong, whom the government press had derided as a "drooling idiot."

Little attention has been paid in the press to his recent expansion in China of MySpace. The fifth-most visited Web site in the U.S., , the dominant social-networking site launched a Chinese version that analysts said goes out of its way to keep users from discussing topics sensitive to the government.

Before the introduction of MySpace China, mainland residents connected to the Beverly Hills, Calif.-based MySpace.com with the same freedom of expression as users anywhere else.

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