Corporations Behind Respected Conservative Think Tank

Murdoch can count on rubbing elbows with a fellow media titan. John C. Malone -- president and CEO of Tele-Communications Inc. (TCI), the largest cable operator in the United States -- has been on the Cato board since 1995. The two men are already well acquainted, since Murdoch's News Corp. has long been intertwined with TCI 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 brags that it has "actively promoted the deregulation of the television and telephone industries." The boast is not idle. In recent years, the Cato Institute has become one of the most cited and quoted think tanks in U.S. news media. (The Brookings Institution and the Heritage Foundation are in a virtual tie for first place, according to the Nexis database; Cato follows closely behind third-place American Enterprise Institute.) On Capitol Hill, the Cato Institute is now a key resource for Republican leaders.

While they're fond of lauding the "free market," Murdoch and other U.S. broadcasters are heavily reliant on government aid. 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 use of public rights-of-way. The contradiction doesn't seem to bother the Cato Institute at all.

Among the luminaries at Cato is Jose Pinera, co-chair of its Project on Social Security Privatization. Cato's latest annual report says that Pinera, 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. Evidently, Cato's concern about intrusive government 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 touts 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. "It's not worth it."

One of the interests that Murdoch shares with the Cato Institute is tobacco. Murdoch sits on the board of directors of Philip Morris. 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 has boosted its advertising account with Fox to about $75 million per year for sports and prime-time programs.

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. Levy 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, in mid-July, testifying before the Senate Judiciary Committee, 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." 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, whose title is "senior fellow in constitutional studies at the Cato Institute," has consistently received respectful media coverage -- without reference to the links between the tobacco industry he defends and the think tank that employs him.

Overall, the Cato 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." Dozens of huge corporations, eager to roll back government regulatory powers, are among Cato's largest donors.

In their recent book "No Mercy: How Conservative Think Tanks and Foundations Changed America's Social Agenda," legal scholars Jean Stefancic and Richard Delgado describe a shift in Cato's patron base over the years. Cato's main philanthropic backing had 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."

While serving on Cato's board and making personal donations, TCI's John Malone is among several media heavies behind Cato. Big donors include Bell Atlantic Network Services, BellSouth Corporation, Microsoft, NYNEX Corporation, Sun Microsystems and Viacom. News releases from the Cato Institute -- while often urging privatization of the Internet and other communications systems -- do not mention where Cato money is coming from. With rare exceptions, the news media are no more informative about Cato's sources of funding.

All in all, it's a convenient arrangement for two of the nation's mightiest media magnates and a think tank they can call home.