Let’s all calm down about the catastrophic geo-politico-media-financial import of Al Jazeera buying Current.
It is easy to see the purchase of Current TV by Al Jazeera for a reported $500 million as simply the latest in a dreary set of data points. Yet another sign of decline: we’re progressively selling our birthright and assets to foreigners who may not share our values and interests.
But foreign direct investment has been an important contributor to the recapitalization of post-bust America. And I’m not simply talking about the central banks of China and Japan buying U.S. government debt. The flow of funds into the U.S.—purchasing companies, factories, real estate, building new entities from scratch—has been relentless. The U.S. generally leads the world in foreign direct investment. According to the Organization for International Investment, FDI rose from $158.6 billion in 2009 to $236.2 billion in 2010, and fell slightly to $228 billion in 2011. Of course, the FDI crown will not be ours forever. As recently as 2010, the U.S. received twice as much FDI as China did. In the first half of 2012, the OECD notes (PDF), FDI in the U.S. was running at a slower pace than in 2011, and the U.S. was trailing China.
Think of Fiat buying Chrysler, Indian outsourcer Inofsys opening software development centers in the U.S., Russian oligarchs buying trophy assets like insanely expensive condominiums and NBA franchises. Here’s a nice list from CNBC on iconic brands that are now foreign-owned.
FDI is part of the larger story of how engagement with the world has helped the U.S. rise from the depths of the financial crisis. Exports are up about 50 percent on a monthly basis since the low of April 2009. (The steady flow of FDI is, in fact, a key pillar of anti-declinist arguments, like the one I made in my book, Better, Stronger, Faster)
Why are foreign companies so willing and eager to pay so much to get into the U.S.? For all America’s problems, no other country boasts the same combination of size and wealth. No other country has as many well off consumers as the U.S. does. Having a presence in the U.S. market is incredibly valuable. It’s hard to be big in the world if you are not going to be big in the United States. What’s more, despite all the squawks you here, the U.S. is a remarkably secure place to invest. Property rights are protected, our system is relatively uncorrupt, and the government isn’t likely to snatch your business and pack you off to jail if you cause trouble. We don’t have coups, and the U.S. dollar is an extremely stable currency by global standards.
This transaction shows that the eyeballs of Americans remain remarkably valuable. Think about it. In purchasing Current, Al Jazeera is simply doing what many foreigners are doing these days: paying a high market price to gain access to what it views as a very valuable market. It has paid $500 million to have access to 40 million eyeballs—or $12.50 per subscriber.
Nationalism and investment don’t mix particularly well. And despite the occasional squawks you hear—the Japanese are buying Rockefeller Center! A Belgium-based firm controlled by Brazilians is purchasing Anheuser-Busch!—foreign direct investment is generally not controversial. Of course, it’s easy to understand why the larger presence of Al Jazeera might be distressing to some. It’s a media property owned by a government that doesn’t share U.S. values and attitudes toward a free press. But guess what, such properties are already on our shores. The cable dial includes Russia Today, an English-language television network that is essentially owned by the Russian government. China Daily, backed by a government-controlled company, publishes inserts that run in newspapers like the Washington Post.
In purchasing Current, Al Jazeera is simply doing what many foreigners are doing these days: paying a high market price to gain access to what it views as a very valuable market.
Back in the day, Mel Karmazin, the recently departed head of Sirius Radio, ran Infinity Broadcasting, the radio company that owned the Howard Stern and Don Imus shows. And when it was criticized for airing vulgarity, Karmazin had a canned response that he would give to every journalist, including me. Infinity Broadcasting, he suggested, was so smart and powerful that it had forced the electronics industry to install something called an on/off switch on every radio. And it had further empowered people to use that switch.
Just so, cable boxes come with clickers. And Americans spend most of their time not watching the programming produced by any single network. The other day, I started scrolling through the offerings on my Cablevision system (which does not include Current) and came across dozens of channels, in hosts of foreign languages, on a range of topics, that I had never heard of, and will never watch. Those who don’t like what Al Jazeera is airing are entirely free not to click on it. And pretty much everybody will pursue that option. In the cable business, if you can get a million viewers—one third of one percent of the American population—to tune in to your programming, you’re a hero. So, in essence, Al Jazeera is paying nearly half a billion dollars to U.S. investors for the right to be ignored, scrolled past, and clicked through by discerning American viewers. That’s not a bad deal for Current’s owners, or for the American economy at large.