Carr Warns of Murdoch's 'Soft Power' With No Hard Evidence

A few weeks ago, New York Times media columnist David Carr was mocking the Rupert Murdoch media empire on The Colbert Report as a '40 billion dollar big blob of media.' He kept up the anti-Fox News line in his Monday column titled 'News Corp.'s Soft Power In the U.S.' Carr began by arguing many saw 'in horror or amusement' that 'the News Corporation regarded Britain's legal and political institutions as its own private club. That could never happen in the United States, right?'

Carr was implying heavily that it already has, insinuating that Rupert Murdoch has been soft-power-kissed by even the Clinton Justice Department, as in a 1997 acquisition of Heritage Media, a competitor in the in-store advertising business with Murdoch's News America Marketing. The man in charge of antitrust enforcement then was Joel Klein, now a Murdoch adviser.

In a passage with all the evidentiary value of a detective novel, Carr spins a mystery tale of a shocking merger approval (shocking even to participants). Clearly, Rupert was pulling strings like a puppet-master, even if the proof is more than a little bit lacking:

None of this suggests that Mr. Klein cut some sort of a deal that resulted in a job 14 years later. But the speed of the antitrust decision surprised even the people involved in the takeover. One of the participants, who declined to be identified discussing private negotiations, said he thought the sale was effectively blocked before the surprising turnaround.

"After that meeting with the San Francisco office, we all looked at each other and said, `This deal is not going to happen,' " he said.

My colleague Eric Lipton and I spent a few days trying to tease apart who made the actual decision to give the purchase the go-ahead - "It was as if a magic button had been pushed somewhere. We were all in shock," said one of the same participants in the deal - but there is no paper trail.

People who worked at the Justice Department back then either could not recollect how the decision was made or declined to share information if they knew.

A spokeswoman for the News Corporation released this statement: "Joel didn't know Mr. Murdoch at the time of the Heritage Media transaction 14 years ago. A year later, the D.O.J. under his leadership challenged the PrimeStar transaction in which News Corporation had a major interest. Any suggested inference is ludicrous."

But when it comes to Murdoch, the Times is too partisan to avoid the ludicrous-inference story.

Joel Klein's approval was a disaster, Carr reported. Murdoch's ruthless thugs would descend on competitors with threats:

"The way this whole thing got started was a horrible mistake. The government was bamboozled or worse," said Thomas J. Horton, a law professor at the University of South Dakota who used to work at the Justice Department and represented a competitor, Insignia Systems of Minneapolis, in a lawsuit against News America Marketing. "The company has a long history of behaving unethically with no regard for our system of justice or legal ethics. They are ruthless."

One of News America Marketing's other competitors was Floorgraphics, a small New Jersey company that did in-store ads. George Rebh, who founded Floorgraphics along with his brother Richard, met with Paul V. Carlucci, head of News America, in 1999 at a Manhattan restaurant, and the News Corporation executive got right to the point.

"I will destroy you," Mr. Carlucci said, according to his deposition in the Floorgraphics suit against News America, adding, "I work for a man who wants it all, and doesn't understand anybody telling him he can't have it all." (Mr. Carlucci is now the publisher of the News Corporation-owned New York Post.)

Just in case the Rebh brothers did not get the point, court records indicate that beginning in October 2003, someone working out of the Connecticut headquarters of News America Marketing gained access to the Floorgraphics computer network, which included a collection of advertisements the company had created for its customers.

The News Corporation's executives, as they have in case of phone hacking in Britain, said they had no idea that people working for them were engaged in such activity.

But in 2004, a Floorgraphics board member sent a letter to David F. DeVoe, chief financial officer of the News Corporation, detailing that Floorgraphics computers had "been breached by News America, as identified by their I.P. addresses." News America has since admitted in court to breaching its competitor's computers, but attributed it to lax security and a rogue employee.

Then Carr really turned political: the case died a slow death at the desk of the U.S. Attorney in New Jersey – a guy named Chris Christie, now the GOP Governor. Unsurprisingly, New Jersey Democrats like Sen. Frank Lautenberg and Rep. Rush Holt are demanding renewed investigations, hoping to tar Christie and Murdoch, a strategy remarkably aligned with the political agenda of The New York Times. Carr wants probes into a "broad pattern of misconduct" of Times competitors:

Given the pattern of conduct revealed recently in Britain, there is renewed interest in how News America behaved in the in-store business. Mr. Lautenberg and Mr. Holt sent a letter last month to Attorney General Eric H. Holder Jr., reminding him about the original accusations made by Floorgraphics and suggesting that the Justice Department revisit the case.

Although the statute of limitations on many of the ostensible crimes has expired, Mr. Lautenberg and others have indicated that the Senate Commerce Committee may hold hearings to investigate whether there was a broad pattern of misconduct by the News Corporation.

It's too early to say what the result of these accusations and inquiries might be. And certainly no one has credibly said that the News Corporation's employees here have hacked phones as they did in Britain, or replicated in America the kind of cozy, possibly corrupt relationships British employees fostered with officials.

Then again, maybe they didn't have to. In America, where the News Corporation does most of its business and also has a long reach into film, TV, cable and politics, the company's size and might give it a soft, less obvious power that it has been able to project to remarkable effect.

That's sheer opinion-writing genius: when you can't prove Fox News or Murdoch's other American properties did something illegal, simply insist they were so immensely, disturbingly powerful they didn't have to stoop to illegal means.