Authored by Erico Matias Tavares via Sinclair & Co.,

Marty Pompadur is a reference in the global media industry, where he is involved as an investor, advisor and board member. Until recently he was global vice chairman of media and entertainment for Macquarie Capital based in New York City.

In June 1998, Mr. Pompadur became Executive Vice President of News Corporation, President of News Corporation Eastern and Central Europe and a member of News Corporation’s Executive Management Committee. In January 2000, Mr. Pompadur was appointed Chairman of News Corporation Europe. In his decade with News Corporation, he was instrumental in negotiating the merger of Stream and Telepiu to create Sky Italia in Italy, now one of the world’s most successful Pay-TV businesses and in creating and managing several successful businesses across Europe.

He started his media career at ABC, where he eventually became the youngest person ever to be appointed to the board of directors. He then left to pursue senior career opportunities with other media companies. Mr. Pompadur graduated from Williams College with a BA Degree and from the University of Michigan Law School with a LLB Degree.

E Tavares: Thank you very much for being with us today. You are a seasoned veteran of the media industry and as such we very much appreciate your views on something that is very important to citizens in free societies, and that is having access to reliable and trustworthy news and information. Based on your decades’ long experience, what have been the major changes regarding how news media operates and is disseminated? Not just in terms of technology but the actual business model and content strategies.

M Pompadur: I started in the industry in 1960. Back then we had newspapers, magazines, television and radio. Let’s concentrate on the latter two. If you were a television or radio station, distinguished from a network, you were subject to the rules and regulations of the Federal Communications Commission (“FCC”). Some of those rules stipulated that your news had to be fair and balanced, and you had to give equal time to different views. If there was a political race or some kind of a referendum going on you couldn’t just put out one side of the argument. You had to offer equal time to both sides and if you didn’t people would complain to the FCC.

Now, if you were a network – ABC, CBS and NBC in those days – you were not licensed but you were still required to be fair and balanced because their news programming went out on the stations, which insisted that they complied with their own regulations. In the case of ABC, and I think also in the case of CBS and NBC, when I got involved with them and eventually became general manager of the television network the news department did not report to us. They reported to the Board of Directors because they did not want the news department to be influenced by anything – by advertisers and so forth. That’s how it was in the “old days”.

There’s no question that even if you had to be fair and balanced and had to provide equal time people organizing the news still had their own opinions. So in occasions that would come out in a certain sense but it was still more middle of the line than it is certainly the case today. For instance, in 1968 ABC was going to be acquired by ITT. That was rejected by the FCC because they were afraid that ITT had significant international interests and as a result could try to influence the news department to protect them.

Things have dramatically changed since then. The big change occurred in television. Putting the internet aside for a minute, most people were traditionally getting their news from newspapers, in some sense from magazines like Time and Newsweek and from television. So what set the change in motion? Cable came along, first to assist in distribution. They did not have any original programming. The idea behind cable was that certain places in America did not have three TV stations; they had access to only one or perhaps two with adequate quality. So along came cable and regardless of where you were on the dial it was exactly the same quality on your cable system.

People then came up with the idea of producing their own original content, since now they had the distribution in place. And then came along HBO, CNN and so on. They are not licensed and so there was no restrictions, no limitations, no fair and balanced, no nothing. They basically could say anything they wanted, obviously subject to decency and violence and so forth, but in terms of point of view they could do what they wanted. So it depended on the owner of CNN or MSNBC or Fox News as to whether they wanted to be liberal or conservative. And this was a major, major change. And then came the internet, with outlets like BuzzFeed, Vice and others, which changed the landscape even further.

So the business has dramatically changed over the years. As far as I’m concerned, from the point of view of people getting access to accurate information, it has not changed for the better.

ET: That shift in the US started to become much more apparent in the early 1990s with news outlets becoming increasingly segmented along party / ideological lines. Do you agree with this timeline?

MP: I do agree. I’m not sure there is a specific date but it was around then.

As all these cable channels were coming up I became involved with Rupert Murdoch first as a consultant when he launched Fox News. He is conservative himself, but he decided that there was a market niche and he was thinking about how to fill it. Along came Roger Ailes, who had just left CNBC and was immediately picked up by Rupert to launch that channel. From the very beginning it was intended to be drawn along conservative lines and Rupert and Roger really executed that.

It was really difficult for them particularly at that time. Cable companies did not want to add more channels. So instead of going on free of charge on the cable system, EchoStar or DirectTV, or instead of getting paid for original content, Rupert had to pay out a couple of hundred million dollars to get on cable systems with the Fox News channel. And that paid off in the end.

Now, how did he make it so successful? Obviously there was brilliant execution and he was right – there was a niche in the marketplace. What Roger in particular did though was to create media personalities for primetime; must see and must listen to personalities.

As a result, they became so strong that CNN and MSNBC had to do something about it. MSNBC decided to emulate Fox’s success on the right to the left, and they became even more liberal. If you are a liberal you watch MSNBC. CNN had a different theory, and that is to report the news whatever it is around the world. So whenever there was some kind of a terrorist act or major accident, CNN would cover it 24/7, maybe for days. Remember how they covered the Malaysian airline plane that disappeared into the Indian Ocean?

So each network had to choose a different way to pick up audience ratings and getting advertising to get more profitable.

ET: That split has become even more visible after the election of Donald Trump to the US Presidency. According to a survey by the American Enterprise Institute media partisanship is at its highest in decades. Is this something that concerns you as a media executive or is it just an inevitability given the split that is occurring in American society along the same lines?

MP: It does concern me a great deal for several different reasons.

First of all, because the internet is capturing more and more advertising revenues – and I think this year for the first time ever it will be greater than television advertising – most of it going to Facebook and Google, the old traditional ways of getting news are going out of business. Where’s Newsweek today? Where’s Time magazine? Newspapers are barely surviving. As a result, newspapers today no longer have the resources to do investigatory reporting. So who is going to do the next Watergate? Good question. Is it going to be the Washington Post or the New York Times as they continue to cut back?

Actually, what’s happened in this sector is very interesting. If you look at the Washington Post, which in my opinion used to be one of the best newspapers in the world, it was literally going out of business until Amazon’s Jeff Bezos bought it. He doesn’t care about profitability, although they are doing better now because of digital advertising, so he bought it to do investigatory reporting and to present his point of view, which is a liberal point of view. If you look at the New York Times it has always been liberal and continues to be. They are trying to do investigatory reporting although they just announced that they are cutting their editorial staff. On the whole, it’s a question mark on how long they can keep up that work and I’m really concerned about that.

On the other hand Gerry Lenfest, who is a friend of mine, bought the Philadelphia newspaper because it was going out of business and his city would be left without any local newspapers. He put it in a trust and he funded it so that the newspaper can hopefully remain in business forever and be an independent voice in that community.

There are a lot of changes taking place because of traditional newspaper and magazine advertising declining and because young people are no longer getting news that way. They are not getting it on print, they are not getting it necessarily off television. They are getting it more and more off the internet.

ET: One area where this split has created a spectacular, if regrettable, friction is between Trump’s White House and most of the mainstream media, which he regularly accuses of being “fake news”. Opinions on who is right or wrong are once again clearly divided along party lines, as shown in a recent Gallup poll. Regardless of opinions, the real loser is American society as trust in vital institutions like the government and the media is gradually eroded. This can be a dangerous slippery slope. What do you make of this?

MP: To some extent I think Trump has caused this on himself through his use of Twitter. We never had a President who expressed himself so often in the way he expresses himself, and with all due to respect to him very often he sends out contradictory messages. Therefore, it is natural for the other side to be attacking him. I think the poll is correct though. I have never seen this before.

One of the problems of people getting their news off the internet is that they don’t really question the source of the news. Is it real news, has it been investigated, has it been fact checked? I’m not saying that BuzzFeed or Vice do or don’t do any of these but clearly there is an opportunity to get out whatever news you want to get out and it gets picked up and repeated and it goes viral. And in the end people don’t know where the news came from to begin with, who wrote it and if it’s actual news or just someone’s opinion.

And again going back to the old days if it was opinion versus fact you had to label it as such. Now you don’t know the difference between the two. And that, I think, has created “fake news”.

ET: A recent study by the Shorenstein Center on Media, Politics and Public Policy at Harvard University found an unquestionable media bias against the Trump Presidency. He was the topic of 41% of all news stories during his first 100 days in office, three times the usual amount. And that coverage was broadly negative – 80% of total in fact, compared with 41% and 57% for Presidents Obama and George W Bush, respectively. On sensitive topics like immigration the media had a negative tone on Trump’s polices by a whopping 96%. Would you agree that the mainstream media has lost a lot of its objectivity and impartiality at this point? And will this change at some point?

MP: I don’t think it’s going to change.

I don’t like to generalize but people who go into the news industry tend to be liberal. Let me give you an example of how little things can change. If I go back to when I started, we had entertainment, news and sports. We had 200 affiliates all around the country and owned seven stations at ABC. And the affiliates used to come to us and say:

“Guys, we have a problem. Most of you people at the network are from the east coast or the west coast. Most if not all of you are liberal and went to liberal universities like Brown, Princeton or Harvard. What you are doing is the following. You are #1 in sports but in news and entertainment you are programming for yourselves, to the east coast and the west coast. You have no idea what someone in Ames, Iowa, or Fargo, North Dakota, really wants to see. And you have to change that, otherwise you will become irrelevant.”

Now, fast forward to Trump’s election. The media made a big mistake, the same mistake ABC had made when I joined. I looked at Trump, I heard what he was saying and on top of it I know him personally – I was on the board of directors of a charity with him, so I know him pretty well. So when I heard him speaking on the campaign trail I said there isn’t a single minority or disabled person or woman who will vote for him. How the heck can he get elected?

What I didn’t realize, putting the electoral college aside, was the undercurrent in the middle of the country – Pennsylvania, Wisconsin, Ohio and others – who were deeply dissatisfied with their quality of life. I missed it, totally. Once again.

So I don’t think the media is going to change. In fact I think it will get worse, and I find it very distressing.

ET: You brought up the point earlier about fact-checking. With globalization and hyper-connected smartphones, newsworthy events are happening so fast that it becomes very difficult to independently verify or fact-check them. Moreover, anyone with a camera can easily setup a Youtube channel and start reporting real or fake news.

Historically, people have relied on the news media to filter and validate that information. With American’s trust in mass media at historic lows who can fulfill that role?

MP: I don’t think anybody can. I think it’s going to continue. And your point is very well taken.

Maybe technology can solve it but you can see the problems that Facebook is having first with advertisers, when they are associated in some cases not only with fake news but violence and other types of undesirable content. I believe I just read that they just hired 3,000 people to try and review all the content to make sure that stuff that is not supposed to get out there doesn’t get out there.

The reality though is that people can’t do that well. There’s too much content and there are more and more ways to distribute it. And it keeps on growing. So there has to be some marvelous technical solution to deal with this and clean it all up, but I am not optimistic. I think it will get worse.

Again, people don’t know what is fact and what is fake. They just don’t know. With all due respect to our population, they are too busy, too lazy and not educated enough to really dig deep. And what is popular today are the USA Todays of the world. People are not reading the Wall Street Journal, they are just getting soundbites. And it’s very easy when they are getting soundbites to be able to have fake news.

ET: Given your prior involvement with Fox News we can’t resist asking your opinion on the turmoil at Fox News. You mentioned that Roger Ailes, who recently passed away, was instrumental in getting that news outlet off the ground, leveraging among other things the power of media personalities.

Now key news anchors like Bill O’Reilly and Sean Hannity are claiming to be victims of coordinated smear campaigns targeting their reputation and their advertisers, irrespective of them having committed any wrongdoing. And the departure of some appear to have negatively impacted ratings, with thousands of viewers abandoning ship and liberal leaning networks taking the lead in key demographics. In your opinion what should Fox News do at this point?

MP: Good question. Again, let’s go back in time. It’s helpful to get some perspective here.

When I was at ABC there were three networks and we were #4 in news. Nobody was watching our news. There was guy named Roone Arledge who ran ABC Sports, which was #1 in sports in those days. And he also took over News eventually. He said to himself and to us in the management team that the only way he could improve the ratings was for news to become personality driven. We had to get stars. So we got Barbara Walters, Diane Sawyer, Peter Jennings and others, and from the mid-1970s we became #1 in news.

In a sense Roger Ailes and Rupert had done the same thing at Fox. They found people and brought them up. The problem is that you live or die with your big star personalities, especially today when people are so celebrity driven in the US.

Megyn Kelly just left for NBC. They lost O’Reilly. Hannity is still there, question is will he stay. So in the three-hour block primetime they lost two hours of the three hours. Now they have to replace them. And they are very vulnerable as a result. The question is will the people they put in there attract the same kind of a following? Very, very hard to do. Not impossible, especially if you have a strong bench. But the problem with having a strong bench is that once they get popular enough they can go off to a different network.

There’s an additional problem for Fox. Finding stars that are conservative and who can replace the two that they lost is a real challenge. And you don’t have Ailes there anymore. Rupert is still as active as ever but you have dissention in the family because the two sons who are getting more involved in the business are very liberal and very “green”. When Rupert leaves – or rather, IF he ever leaves – I’m not sure Fox News will remain a conservative voice because that goes against where the kids’ heads are. But that’s a whole different story.

ET: That’s very interesting. However, people will not stop being conservative even if primetime cable becomes 100% liberal. For argument’s sake we could say that 50% of Americans are conservative so it’s a big number. Where will they go to get their news? Is radio the alternative? There are a lot of conservative stars there, like Rush Limbaugh, Michael Savage, Ben Shapiro, Laura Ingraham, Alex Jones and even Sean Hannity himself.

MP: When Ailes got fired some of us thought that he would start another conservative channel. Doesn’t have to be a cable channel, it could be delivered over the internet, and rather inexpensively at that. But now he is gone.

However, there’s Bill O’Reilly out there. And Sinclair Broadcasting, which is in the process of acquiring Tribune Company. The owner is very conservative and his outlet will target New York, LA, Chicago and other television stations covering, say, 70% of the US. He will compete with Fox News and he will do it very effectively.

So I think you will find that there will be a competitor, perhaps delivered over the internet rather than via cable or television channel. There will be competition because Fox News is vulnerable and as you pointed out the ratings of CNN, MSNBC and others are increasing particularly in the demographics the advertisers want. Fox News has a real problem.

ET: While we have focused thus far on the US, you also have extensive experience abroad, and still travel all over the world for business. Some European governments have intervened to censor what they deem to be fake news or even offensive speech. Some outlets like Facebook, pursuant to what we just discussed, could face millions in fines if they fail to comply.

What do you make of this? Is this concerning for things like freedom of speech and expression which are hallmarks of free and democratic societies?

MP: Well, it’s a new world. In the old days, before the internet, radio and television, certainly the latter, was local, local, local. Or by country at least. It did not cross from one country to another.

You did not have a Facebook that could be seen globally. But today you are sitting in Germany and people are watching Facebook and you can’t control it because the content is emanating out of the US or wherever. If you don’t like what is there, what do you do? Do you turn off Facebook, or Google like the Chinese have tried to do in their country, or do you pass laws that might be viewed as the beginning of censorship? These are very good questions and I’m not sure I have the right answer.

Here’s some interesting context. I first visited Russia in 1989 when it was still communist and then in 1991, when communism fell. There were 11 television networks then, run, owned and controlled by eight different people. Today there are 11 television networks supposedly controlled by three people. One Russian oligarch has two, Gazprom Media Group has four I think and National Media Group has five. But basically it’s all Putin. If you wonder why his popularity rating is as high as it is in Russia the main reason is that all the news on television is propaganda.

In China you have CCTV. There is an evening news show, I believe at 7 pm, that everyone there literally must watch if they want to get any news. And you have, I don’t know, it must be a million censors who look at everything that goes out, which must be approved by them.

So autocratic rulers have realized that the way to control the country is through television. Forget radio, forget print; it’s television. But now you have the “damn” internet, and they are saying to themselves how can we control this? And so you are going to see regulations within these countries intended to control the internet. How can they do it? I don’t have a good answer for that, but they will try.

ET: Finally, in your opinion where is this all going? How can trust in the media be restored across much of the Western world given what’s going on? You pointed out that societies governed by autocratic rulers restrict as much as possible access to real information. What will happen to our free societies in the West if we go down that path? And who can lead any positive change in this regard, the people, the government or the news outlets?

MP: Unfortunately I’m very pessimistic about that. And cynical.

With all due respect to the people, they tend to be passive or just not active enough. So it has to be some combination involving the government, because at least in the US you have a system of checks and balances – the executive, the judiciary and the legislative – so we have a better chance of getting it right, or at least making sure it doesn’t get out of control.

I think it is a serious, serious problem and I don’t think it will get better, in fact the opposite.

ET: Thank you very much for sharing your insights. This has been phenomenal.

MP: Thank you. All the best.