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China’s Blog Censorship Rules Have U.S. Parallels

Illustration by http://www.fizzzbzzzz.com

Whats the opposite of free speech? If you answered, totalitarian censorship, you are right -- and you are old.

In the Internet age, censorship is all about allowing partial, temporary free speech, then shutting it down once enough has been said. The innovator, as usual these days when it comes to nondemocratic governance, is China, where the leading microblog site, Sina Weibo, unveiled its modified censorship model this week.

Users get 80 points. Monitors will take away points for violations. These include the censors old favorite, criticizing the government. You can also lose points for spreading rumor (which I thought was the whole point of the Internet) or promoting cults (a provision apparently aimed at the banned spiritual movement Falun Gong). The monitors will also scour your comments for puns or other circumlocutions used to avoid censorship in the past. If you run out of points, youre cut off.

If free speech is so threatening, why dont the powers- that-be in China just shut down the microblogs altogether? Part of the answer is that with 324 million users, Sina Weibo has become too big to fail, or at least too much a part of normal Chinese life to be eliminated. But the deeper reason to keep the masses microblogging is that the Chinese government reaps important gains from it. This is not your fathers Communist Party. Nor your grandfathers. Chinas leadership is engaged in a complicated, risky process of trying to gain some of the advantages of democratic government without the disadvantage of putting itself up for direct election. Free speech is a crucial part of the experiment.

A major benefit of allowing people to complain on the Web is that it allows society to blow off steam. This is a venerable value of free speech, recognized by U.S. Supreme Court Justice William O. Douglas in a famous dissent in 1951, responding to the courts choice to uphold the conviction of 11 American Communists for teaching subversive ideas. The airing of ideas releases pressures which otherwise might become destructive, Douglas wrote. If such release is beneficial in a democracy, its doubly so in a place where there is no robust public sphere.

Another advantage of limited free speech is that it allows the government to gather information about public concerns. Chinese authorities cant rely on ordinary polling data, because pollsters in China cant operate freely, lest they learn of serious opposition to the government. And its impossible to spy on 1.3 billion people all the time. The microblogs serve as the abstract and brief chronicles of the time, as Hamlet called the theater.

Once the microblogs have conveyed what people are thinking, the government can respond to their concerns, as it did last summer after the Zhejiang train derailment when Premier Wen Jiabao made a special visit to the site in apparent reaction to public frustration with bureaucratic silence and denials. Responding to public opinion is the hallmark of accountable government. Without elections to provide oversight, Chinas leaders need every opportunity they can get to demonstrate that they respond to peoples concerns. Seen this way, limited free speech, followed by government action, is an important part of how the Chinese Communist Party seeks to sustain its legitimacy.

The party is utterly aware that free speech could help bring the government down. That is why it is experimenting with freedom in moderation, and using quasi-private entities like Sina Weibo as its proxies. Chinas leaders are trying to gain the advantages of free speech without paying its full price. First Amendment absolutists will probably raise their eyebrows at this. After all, Americans have been raised to believe that free speech has a life of its own; that truth is great and shall prevail.

Yet there is an extraordinary precedent for Chinas censorship model: the history of free speech in England and the U.S. before the modern era. When it was drafted, the First Amendment to the U.S. Constitution didnt contemplate the radical freedom Americans now enjoy. Its language, drawn from English precedents, was aimed essentially at prohibiting what is called prior restraint: government censorship of books and newspapers before they could be published. As with the Sina Weibo rules, once you had spoken or written, you could still be punished for what you had freely said. You were accountable under the crime of seditious libel.

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China’s Blog Censorship Rules Have U.S. Parallels

New Frontier Media Files Federal Lawsuit Against Hosken Consolidated Investments, Longkloof Limited, Marcel Golding …

BOULDER, Colo., May 31, 2012 /PRNewswire/ --New Frontier Media, Inc. (NOOF), a leading provider of transactional television services and distributor of general motion picture entertainment, today announced that it has filed a lawsuit in the United States District Court for the District of Colorado against the publicly-traded South African conglomerate, Hosken Consolidated Investments Limited (Johannesburg Stock Exchange: HCI), its Executive Chairman Marcel Golding, Longkloof Limited, Mile End Limited, Sabido Investments, Adam Rothstein, Eric Doctorow, Mahomed Khalik Ismail Sheriff, Willem Deon Nel, and Barbara Wall alleging violations of the U.S. federal securities laws. In the complaint, New Frontier Media alleges that Hosken, Longkloof, Marcel Golding, Adam Rothstein and the other defendants have been acting as a "group" in connection with their involvement in a hostile takeover offer for the Company and a threatened proxy contest against the Company. The suit alleges that the defendants violated Section 13(d) of the Securities Exchange Act of 1934 by not properly reporting their identity and activities as a "group," including that they have failed to disclose that their efforts to acquire control of the Company, whether through a hostile takeover offer or a proxy contest for control of the Company's Board, are being directed and coordinated by Adam Rothstein. The suit also alleges that the purported notice of director nominations provided to New Frontier Media by a Hosken affiliate does not comply with the advance notice of nomination requirements contained in the Company's Amended and Restated Bylaws since it does not disclose Adam Rothstein's involvement in the threatened proxy contest or provide any of the disclosures required by the Bylaws to be made with respect to Adam Rothstein. The suit seeks declaratory and injunctive relief.

As previously announced earlier this month, New Frontier Media has received a purported notice of nomination from a Hosken affiliate that it intends to nominate four individuals, including two employees of a Hosken affiliate, for election to the New Frontier Media Board of Directors at the Company's 2012 Annual Meeting of Shareholders. The notice was received by the Company on April 26, 2012, with only one day remaining before the closing of the advance notice period on April 27, 2012, which period is determined by the Bylaws. At the time, New Frontier Media indicated that it was continuing to review the notice to determine whether the notice complies with New Frontier Media's Bylaws and applicable law.

New Frontier Media believes that the defendants' threatened proxy contest, together with its numerous inflammatory statements attacking the Company, is an attempt to pressure the Company to pre-empt its on-going process for reviewing strategic alternatives, give favorable consideration to the Hosken / Rothstein group's unsolicited, non-binding, conditional acquisition proposal and, accordingly, further the self-interested agenda of the Hosken / Rothstein group to gain control of New Frontier Media.

Since receiving the purported notice of nomination, the Special Committee of independent directors that is overseeing the review of strategic alternatives available for the Company has been, with the assistance of its counsel, reviewing the purported notice of nomination against the requirements of New Frontier Media's Bylaws. As a result of such review, the Special Committee believes that the purported notice does not comply with the Bylaws and that it is necessary and appropriate, due to the significant potential for uncertainty and confusion and the need for the Company to incur substantial expenses to plan for a proxy contest, to have this promptly confirmed with a judicial determination.

The Special Committee also issued the following statement regarding the lawsuit filed in federal court:

"The Special Committee believes that Hosken, Rothstein, Golding and the other members of their group have not been forthright in their communications with our shareholders. The Special Committee is fully committed to protecting the interests of all New Frontier Media shareholders and we intend to aggressively pursue this legal action to protect our shareholders.

The Special Committee also believes that a prompt determination whether Hosken's purported notice of nominations has been validly made is necessary to avoid the unnecessary and substantial expense and confusion that will otherwise be involved in planning for a proxy contest at the 2012 Annual Meeting, preparing the applicable documents required by the U.S. Securities and Exchange Commission in connection with a proxy contest at the 2012 Annual Meeting and holding the 2012 Annual Meeting. The Special Committee also believes that the pendency of the proxy contest has the potential to chill the interest of some potential buyers and will interfere with the Special Committee's goal of maximizing value for all shareholders of the Company.

We remain very disappointed that the Hosken / Rothstein group has made it abundantly clear that it is unwilling to participate on an equal footing with all other bidders in the Special Committee's process for maximizing shareholder value and, instead, has chosen to launch a costly, disruptive and distracting proxy contest to place four of their hand-picked candidates on the New Frontier Media's six-member Board in an apparent attempt to obtain control of the Company. Their recent actions, including their refusal to execute our form of bidder confidentiality agreement, their inflammatory press releases and their refusal to withdraw their costly, disruptive and distracting proxy contest, make clear that, rather than constructively engaging with the Special Committee and accepting our invitation to participate in our process to maximize shareholder value on an equal footing with all other bidders, the Hosken / Rothstein group is attempting to pressure the Special Committee to pre-empt its process and grant the Hosken / Rothstein group's unsolicited, non-binding, conditional acquisition proposal preferential treatment, even if such treatment would deprive other New Frontier Media shareholders of the opportunity to obtain maximum value for their shares.

However, the Special Committee and the other members of the New Frontier Media Board will not be distracted from acting in the best interests of, and maximizing value for, all shareholders. We will also not be deterred from our goal of providing a level playing field for all potential buyers of the Company. Our Board would prefer to avoid a costly and disruptive proxy contest and focus our full attention on realizing New Frontier Media's significant potential. However, we will not stand idly by while the Hosken / Rothstein group pursues their own self-interested agenda to gain control of New Frontier Media."

In connection with New Frontier Media's lawsuit filed today in the U.S. District Court for the District of Colorado against Hosken, Rothstein, Golding and the other defendants named therein, the Special Committee is being assisted by its legal advisor, Alston & Bird LLP.

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New Frontier Media Files Federal Lawsuit Against Hosken Consolidated Investments, Longkloof Limited, Marcel Golding ...

Liberty Tells U.S. It Wants to Take Control of Sirius XM Radio

By Todd Shields and Alex Sherman - 2012-06-01T04:01:00Z

John Malones Liberty Media Corp. (LMCA), the holder of interests in businesses ranging from cable programmer Starz LLC to the Atlanta Braves baseball team, told U.S. regulators it wants to take over Sirius XM Radio Inc.

Liberty plans to assert control of the largest U.S. satellite radio provider after receiving approval from the Federal Communications Commission, the Englewood, Colorado-based company said in a filing yesterday. Liberty has asked the FCC to reconsider the agencys May 4 dismissal of its application for permission to take control, according to a filing with the Securities and Exchange Commission.

Libertys move has fueled speculation Malone wants to spin off his stake in New York-based Sirius, led by Chief Executive Officer Mel Karmazin. Liberty will probably execute a so-called Reverse Morris Trust, which involves splitting off its Sirius (SIRI) stake as a separate entity and giving its stockholders the option to hold or sell their Sirius shares, according to James Ratcliffe, an analyst at Barclays Capital Inc. in New York.

To execute the spinoff, Liberty must have Siriuss board approval. Sirius is in talks with Liberty about the companys ownership interest, according to a separate filing by Sirius. It said Sirius doesnt expect to disclose developments in the discussions.

Courtnee Ulrich, a Liberty spokeswoman, didnt respond to a telephone call and e-mail. Patrick Reilly, a Sirius spokesman, declined to comment.

Malone, Libertys chairman, saved Sirius from bankruptcy in 2009 with a $530 million loan. Liberty boosted its stake in Sirius to 46.2 percent from 40 percent last month.

Libertys interest in a Reverse Morris Trust is to save on capital gains taxes, said analyst Brett Harriss, a Gabelli & Co. analyst in Rye, New York. Distributing Sirius shares to Liberty stockholders through a spinoff instead of selling them on the open market lets the company avoid paying taxes on the sale, he said.

Liberty would also have the right to change management at the company if it gains control of the board. Malone may not want to remove Karmazin, who helped turn around the company since taking over in 2008, said Harriss, who has a hold rating on Sirius shares.

All the comments that Liberty has made toward Mel have been positive, and Mels done a good job increasing the companys profitability, Harriss said in an interview. That being said, I could see a situation where there could be conflicting personalities. These are two high-powered guys in Mel and John.

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Liberty Tells U.S. It Wants to Take Control of Sirius XM Radio

Sirius XM Can't Shake Free of Liberty

By Rick Aristotle Munarriz | More Articles May 31, 2012 |

Liberty Media (Nasdaq: LMCA) has sunk its fangs into Sirius XM Radio (Nasdaq: SIRI) , and it's really just a matter of time before the digestion process begins.

As expected, Liberty Media is once again trying to take de facto control of the satellite radio operator. A fresh 13D SEC filing petitions regulators to once again consider the proposal.

What has changed since being rebuffed on May 4 for Liberty Media? Well, through a few transactions the company has beefed up its stake from a simply 40% preferred share position to an effective 46.2% stake. Liberty Media now has effective control of nearly 3 billion of Sirius XM's 6.5 billion shares outstanding. Is the FCC really going to make it jump through the final few hoops? There's a big difference between simply having the 40% preferred share stake that is has held for more than three years and making active moves to own more shares.

The filing details that Sirius XM plans to convert nearly half of its preferred stake into common stock and move to take a majority of the company's board seats.

It's at that point where investors and analysts alike can speculate on what Liberty Media will do with FCC-sanctioned control of the satellite radio giant, though a popular suggestion is that it will follow in the 2009 footsteps of what it did with DIRECTV (Nasdaq: DTV) . Through a Reverse Morris Trust transaction, Liberty Media would be able to spin out the business in a tax-advantaged manner.

This is obviously not the kind of news that Sirius XM investors were hoping to hear when they thought that Liberty Media would have to pay a juicy premium to take control of Sirius XM. However, there are no indications that Liberty Media wants to replace the company's leadership or disrupt the media heavyweight's trajectory. As Sirius XM's largest investor -- by far -- its best interests are aligned with shareholders.

Sirius XM was never about scoring a near-term pop, no matter what you hear on Channel 2 (the pop music-driven Sirius XM Hits 1 channel).

Running of the bullsI remain bullish on Sirius XM's future. It should come as no surprise that I'm promoting the CAPScall initiative for accountability by reiterating my bullish call on Sirius XM for Motley Fool CAPS.

XM Satellite Radio was a Rule Breakers recommendation before the Sirius XM merger. It's now gone from the scorecard, but if you want to discover the newsletter service's next rule-breaking multibagger, a free report reveals all.

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Sirius XM Can't Shake Free of Liberty

Liberty Media Steps Up Efforts To Take Control Of Sirius XM Radio

(RTTNews.com) - Liberty Media Corp. (LMCA, LMCB) said Thursday that it intends to assert control of satellite radio company Sirius XM Radio Inc. (SIRI), upon receiving approval from the Federal Communications Commission or FCC.

In a filing with the Securities and Exchange Commission, Englewood, Colorado-based Liberty Media said it has asked the FCC to reconsider the agency's previous dismissal of its application for permission take control of Sirius.

In early May, the FCC rejected Liberty Media's application for approval to take de facto control of Sirius, saying that the application was "defective". The rejection represented a major setback to Liberty Media and its chairman John Malone.

John Malone'sLiberty Media, Sirius's largest shareholder, made its application in March to take over the company's operating licenses. Earlier in May, Liberty Media boosted its stake in Sirius to 46.2 percent from 40 percent.

Liberty Media said in the SEC filing that it plans to convert almost one-half of the preferred stock it owns in Sirius, giving it a stake of 32 percent of the total outstanding shares of common stock.

Liberty Media also said that "as soon as practicable", it intends to nominate for elections persons to serve on Sirius' board, such that persons nominated by the company will constitute a majority of the board of directors.

Liberty Media added that it will vote all of its shares of common stock in favor of such nominees. The company already holds 5 of the 13 board seats in Sirius.

In response, New York-based Sirius said in a SEC filing on Thursday that it has been in talks with Liberty to explore possible transaction with respect to Liberty's stake in Sirius.

However, Sirius added that it has not reached an agreement with respect to a specific transaction that would be mutually beneficial to its common and preferred stockholders. There is no assurance that these discussions will result in any specific action or transaction, Sirius noted.

Sirius, led by CEO Mel Karmazin, said it has not been informed of any actions by Liberty Media to take control of its board. The company noted that new directors could not be added to its board without a special meeting that can only be called by two members of the current board of directors or the company's chief executive.

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Liberty Media Steps Up Efforts To Take Control Of Sirius XM Radio