In House of Representatives, an Arithmetic Problem

Markets were down sharply on Friday after Speaker John A. Boehner's tax plan failed to reach a vote in the House on Thursday evening. No Democrats were prepared to support the bill, and Mr. Boehner told reporters that his plan also lacked sufficient votes among Republicans.

A variety of smart political observers have suggested that the markets are misreading the situation. Instead, they say, the failure of Mr. Boehner's bill makes a deal to avert the so-called fiscal cliff more likely because it has now become clear that any deal will need to rely upon the support of at least some Democrats, which could ease passage through the Democratic-controlled Senate.

Perhaps this is correct. Mr. Boehner has said that the White House and Senator Harry Reid, the majority leader, will now have to take the lead in negotiations. The chance that a fiscal deal will be secured on terms that Democrats find favorable may have increased.

But the chance that there will not be a deal at all may also have increased, or at least not one before protracted negotiations that could harm the economy. The difficulty is in finding any winning coalition of votes in the House of Representatives.

In the diagram below, I've charted the major coalitions in the incoming 113th Congress, which will convene on Jan. 3. The new House of Representatives will have 233 Republicans and 200 Democrats. Two seats remain vacant, which means that 217 of 433 votes will be required to pass a bill.

Of the 233 Republicans, 51 will be members of the Tea Party Caucus, give or take a few depending on which first-term members of Congress join the coalition. The other 182 are what I will call Establishment Republicans.

As Keith T. Poole of the Voteview blog points out, the Tea Party Caucus wasn't solely responsible for Mr. Boehner's failure to pass his bill. A significant number of Tea Party Caucus members were thought to support his plan, while some of the opposition came from representatives who do not formally associate themselves with the Tea Party.

Nonetheless, it seems clear that Mr. Boehner lacks the confidence of roughly three dozen Republican members of the House, and possibly more. Erick Erickson, of the blog RedState, identified 34 Republicans whom he said opposed Mr. Boehner's bill and another 12 whom he identified as being on the fence.

Say that Mr. Boehner cannot count on the support of 34 of his Republicans when it comes to passing major fiscal policy legislation. That means he would need to identify 18 Democrats who would vote along with the Republicans who remained with him.

Here's the problem: it might be hard to round up those 18 Democrats.

The reason is that most of the Democrats who remain in the House are quite liberal.

In fact, the once-powerful Blue Dog Caucus, a coalition of moderate Democrats, will have only 14 members in the new Congress. The centrist Democrats who once filled its ranks fared very poorly in the 2010 midterm elections, while others retired or were harmed by redistricting or by primary battles. Although Republicans have moved more to the right than Democrats have moved to the left in recent years, ac cording to measures like those developed by Mr. Poole, the attrition in the Democratic Party has nevertheless contributed to moving the two parties even further apart.

What that means is that if Mr. Boehner has a significant number of Republican defections, as he did on Thursday night, he will need to win the support of at least some liberal Democrats. And a bill that wins the support of some liberal Democrats will be an even harder sell to Mr. Boehner's Republicans. For each vote that he picks up from the left, he could risk losing another from his right flank.

Perhaps cooler heads will prevail in these negotiations. But a majority of the incoming House â€" 237 of 433 members â€" will be either Tea Party Republicans or liberal Democrats, leaving only 196 members who are either Establishment Republicans or Blue Dog Democrats and who might form a functional center-right coalition.

Moreover, the House is likely to engage in repeated battles over fiscal policy during the next two years: not just the over the fiscal cliff, but also over the debt ceiling, annual budgeting plans and whatever stabilization measures might be proposed in the event of another economic downturn.

If Mr. Boehner is having as much trouble whipping votes as he did on Thursday night, reducing the pool from which he might be able to draw together a compromise, this arithmetic problem could turn out to be intractable at some point.

The Breakfast Meeting: Instagram in Retreat, and \'Jersey Shore\' Signs Off

The photo-sharing app Instagram on Thursday completed a full retreat from its proposed new terms of service that led to instant outcry from users, Nicole Perlroth and Jenna Wortham reported. The question, however, was whether the move came too late from Instagram, which was acquired this year by Facebook and is under the same pressure as its parent company to generate advertising revenue. The proposed changes included a clause that suggested Instagram would share users' data - like their favorite places, bands, restaurants and hobbies - with Facebook and its advertisers to direct ads more precisely. In the interim, other services, including Flickr, which coincidentally has just introduced a new app, appeared to be gaining followers.

The Boston Globe on Thursday appointed a new editor, Brian McGrory, a Bosto n-area native who began his connection to the newspaper as a paperboy, Christine Haughney reports. He has been a columnist, White House correspondent and metro editor in his 23 years there, yet was something of an unexpected choice. Mr. McGrory succeeds Martin Baron, who was picked to be the next editor of The Washington Post. “After Marty Baron's extremely successful tenure here, we don't need any overhaul,” said Christopher M. Mayer, the publisher of The Globe, which is owned by The New York Times Company.

Gil Friesen, who helped establish A&M Records with the band leader Herb Alpert and music promoter Jerry Moss, in the 1960s, died in Los Angeles on Dec. 13 at age 75, Paul Vitello writes. He was one of the first employees at the record company, which took the A from Alpert, and the M from Moss - Mr. Friesen, Mr. Alpert said, was the ampersand in the middle. He encouraged the company to produce movies too, and later became a founding partner of the Classic Sports cable channel, which was sold to ESPN in 1997 for $175 million. Thus, Mr. Vitello writes, he became known in Hollywood as one of the few executives with entrepreneurial successes in music, film and TV.

On Thursday night, the MTV series “Jersey Shore” signed off after a six-season run that introduced characters like the Situation and Snooki. The real Jersey Shore has been in people's thoughts because of the destruction there from Hurricane Sandy; expect the show and its cast to quickly fade away, never to return, Ken Tucker writes for Entertainment Weekly. At the top of the piece, he frames his question: †œWhat is ‘Jersey Shore' 's lasting significance, its enduring impact?” His answer: “Absolutely none.” You would be forgiven for stopping right there, but he continues:

But by any measure, there is nothing about Jersey Shore that merits enshrining it in any category of TV history other than “Time Killer.” As I can attest in preparing to write this piece, it doesn't hold up as entertaining in reruns; it already plays like one of those ancient artifacts of papyrus - a newspaper, I believe they were called - that has been crumpled and tossed to the air.

I wrote that @JustinBieber has millions more followers than @Pontifex. @oss_romano says #Pope has more retweets per follower than Bieber!

- Rachel Donadio - NYT (@RachelDonadio) 21 Dec 12

Noam Cohen edits and writes for the Media Decoder blog. Follow @noamcohen on Twitter.

Re-emerging BMG Buys Rights to \'80s Hits From Culture Club and the Like

2:51 p.m. | Updated BMG Rights Management, which in just four years has become a major music-publishing company, has expanded once again with a $90 million deal for some 30,000 songs, including a slew of 1980s hits by Culture Club, Tears for Fears and the Human League.

And in a separate deal that will contribute to the re-emergence of BMG - and its parent company, the German media giant Bertelsmann - as a power in the music business, the company is also in the advanced stages of a deal to buy Mute Records, a one-time independent label whose catalog includes albums by Depeche Mode and Moby. That deal, which is estimated to be worth between $11 million and $15 million, is not signed but nearly completed, according to several people briefed on the negotiations who were not authorized to speak about it.

In a statement on Friday announcing the publishing deal, Hartwig Masuch, BMG's chief executive, said he wa s “delighted to have won the opportunity to represent the writers of those songs and demonstrate to them BMG's commitment to 21st-century service.”

Both deals came about as a result of the $4.1 billion breakup of EMI last year. Sony led an investor group in a $2.2 billion bid for EMI's publishing assets, and the Universal Music Group bought the record labels for $1.9 billion. But in their review of the deals this year, European regulators required divestments from both as a condition of approval.

In a statement, Universal said it had “begun the sale process” of Mute with BMG. A spokesman for BMG declined to comment.

The publishing assets had been part of EMI and Sony/ATV, and in addition to the '80s hits include rights to songs by contemporary artists like Robbie Williams, Amy Winehouse and Duffy, as well as some rights to a number of Nirvana songs. The copyrights for music publishing are for the music and lyrics unde rlying each song, as opposed to recordings, and it is not uncommon for multiple publishers to have ownership or administration interests in a single song.

BMG did not give a price for the deal, but several people with direct knowledge said it was for about $90 million. That is significantly lower than the estimates reported when the auction began several months ago, when the songs were reported to be valued at well over $100 million. But other dynamics in the EMI sales may have contributed to the change.

The Warner Music Group was said to be the only major bidder to oppose BMG in the publishing deal, but Warner is said to be more interested in the some of the larger assets being sold as a result of Universal's $1.9 billion takeover of EMI's record labels. Those assets include Parlophone, one of EMI's flagship labels, whose artists include Coldplay and Kylie Minogue.

BMG Rights is a joint venture between the German media giant Bertelsmann and Kohlberg Kravis Roberts, and was founded in 2008 after Bertelsmann sold its music interests - also once known as BMG, for Bertelsmann Music Group - to Sony and Universal.

Since then, the revived BMG has quickly become a force through acquisitions of publishers like Bug, Cherry Lane and Chrysalis. It says that it manages the copyrights for more than one million songs, and it is estimated to have about $400 million in revenue next year.

Ben Sisario writes about the music industry. Follow @sisario on Twitter.

In Filing, News Corp. Says Publishing Business Showed $2.1 Billion Loss

Potential investors got a glimpse of the financial challenges that Rupert Murdoch's soon-to-be spun-off publishing company could face. In a regulatory filing, News Corporation said its publishing businesses lost $2.1 billion in the fiscal year that ended June 30.

The disclosure was filed to the Securities and Exchange Commission on Friday, as the media conglomerate prepares to split its publishing assets from its more lucrative entertainment segments. The new, stand-alone company will retain the name News Corporation and include newspapers like The Wall Street Journal, The New York Post and The Times of London; the HarperCollins book publisher; and a handful of fast-growing Australian pay-television assets.

The entertainment company, which will be called the Fox Group, will include 20th Century Fox studios, Fox Broadcasting and cable channels like Fox News and FX. That company has annual revenue of more than $23 billion.

The losses in the publishing busin ess came largely from $2.8 billion in impairment and restructuring charges, mostly related to the closure of The News of the World tabloid in Britain, which was shut down in July 2011 after revelations of widespread phone hacking. Revenue at the publishing business fell to $8.65 billion in fiscal year 2012, from $9.1 billion a year earlier.

The S.E.C. Form 10 filing moves the company closer toward the split and gives shareholders a better idea of what the stand-alone publishing company, called “New News Corporation” in the report, will look like financially when the spinoff is completed in mid-2013.

The company warned investors that “newspaper and advertising circulation revenues have been declining, reflecting general trends in the newspaper industry.” In addition to industrywide headwinds, the company said illegal activity at its British newspapers “could damage New News Corporation's reputation and might impair its abil ity to conduct its business.”

As additional civil lawsuits related to phone hacking are filed in Britain, News Corporation said it “is not able to predict the ultimate outcome or cost associated with these investigations.”

The fallout from the phone hacking scandal, and an investor base that increasingly expressed disapproval of the newspaper business, prompted Mr. Murdoch to announce the split of his $60 billion media conglomerate in June.

“The filing of the Form 10 is another important step forward in the evolution of our company and in the establishment of two independent global leaders in Fox Group and the new News Corporation,” said Mr. Murdoch, who serves as chairman and chief executive of the combined News Corporation.

Earlier this month Mr. Murdoch said Robert Thomson, a confidant and the former managing editor at The Wall Street Journal, would serve as chief executive of the new News Corporation. Mr. Murdoch will continue to serve a s chairman of both companies and chief executive of the Fox Group.

In his new role Mr. Thomson, 51, will have a base salary of $2 million with a performance-based $2 million bonus, according to the filing.

In addition to hundreds of newspapers on several continents, the publishing company will also include Australia's RealEstate.com.au; Fox Sports in Australia; 50 percent of Foxtel, the No. 1 pay-TV provider in Australia; and 44 percent of Sky Network Television in New Zealand. Analysts expect those businesses to drive profits and support some of the weaker newspapers.

Fox Sports had revenue of $3.6 billion and Foxtel of $2.5 billion in 2012. Those results were not included in the publishing company's 2012 earnings, but will contribute to the new company's bottom line.

For Scott Brown, a Third Round in the Battle Against Partisan Gravity

In 2010, Scott Brown became the first Republican elected to represent Massachusetts in the United States Senate since Edward Brooke in 1972. Mr. Brown's victory, in a special election for the seat formerly held by Edward M. Kennedy, was full of substantive and symbolic significance, costing Democrats their 60-seat Senate majority and threatening the passage of the national health care bill that Mr. Kennedy had once championed.

But this November, Mr. Brown was the only incumbent senator to lose his general election bid, falling to Elizabeth Warren by seven percentage points. (Another incumbent, Richard G. Lugar of Indiana, lost in the Republican primary.) Mr. Brown may soon get a third opportunity to overcome the odds that any Republican faces when running for federal office in Massachusetts.

If President Obama names Senator John Kerry to be his s ecretary of state, and Mr. Kerry is confirmed by the Senate, then Massachusetts will hold a special election in summer 2013 to fill out the remaining year and a half of Mr. Kerry's term. Whoever wins the special election would then stand for election to a full six-year term in November 2014.

Mr. Brown has not yet officially confirmed his interest in the Senate race. There is a chance that he could run instead for governor, an office that has historically given Massachusetts Republicans better chances of success. (Massachusetts voters elected Republicans as governor for four consecutive terms from 1990 through 2002, before the Democrat Deval Patrick won office in 2006.)

But a poll released on Thursday provided encouraging news to Mr. Brown. The survey, conducted by The MassINC Polling Group for WBUR, found Mr. Brown leading a series of potential Democratic opponents for the Senat e seat by margins ranging from seven percentage points (against Mr. Patrick) to 27 (against Representative Stephen Lynch).

Polls conducted this early in an election cycle are often tests of name recognition as much as anything and need to be evaluated carefully for that reason. But in Mr. Brown's case, it is not just that Massachusetts voters know him: they also like him. In the poll, 58 percent of voters said they had a favorable view of Mr. Brown, and 28 percent an unfavorable one.

And yet there is this quandary: if Mr. Brown is so popular, how did he lose his re-election bid last month?

The exit poll from this year's Senate race provides plenty of hints as to why. Sixty percent of Election Day voters said they had a favorable opinion of Mr. Brown - but almost one-quarter of those voters chose Ms. Warren anyway.

For a candidate to lose an elect ion despite a 60 percent favorability rating, at least one of two things must be true. Either the voters like his opponent even better - or they like the candidate as a person, but have too many policy disagreements with him.

The answer could determine if Mr. Brown is a favorite or an underdog should he decide to run for the Senate again. If voters saw something extraordinary in Ms. Warren, then Mr. Brown might be expected to prevail against a more mediocre opponent, as he did in 2010 against the Democratic attorney general, Martha Coakley. If instead it was something more intrinsic to the problem that any Republican faces in Massachusetts, then even a lesser-known Democrat could potentially catch up to and surpass Mr. Brown in the polls, as Ms. Warren did.

Ms. Warren, indeed, had trailed Mr. Brown by 17 points in the first poll conducted of their match-up in March 2011 - a deficit similar to the one that Mr. Brown's potential Democratic opponents face in the WBUR poll now.

Although Ms. Warren commands enthusiastic support from some Democrats in Massachusetts and elsewhere for her vigorous defenses of liberalism, and raised an incredible $41 million in individual contributions, she also had some flaws as a candidate. Having never run for office, Ms. Warren stumbled at times early in the race, embroiling herself in a controversy about how she had represented her Native American heritage.

Ms. Warren's favorability rating - 56 percent among Election Day voters - was perfectly adequate but not extraordinary, and was slightly worse than Mr. Brown's. And 37 percent of voters said they thought Ms. Warren was too liberal, even in Massachusetts. (In the exit poll, 34 percent of voter s said Mr. Brown was too conservative.)

But such is the intrinsic advantage that Democrats hold in Massachusetts that Ms. Warren won the election despite having the support of only about 4 in 10 independent voters. For a Democrat to lose in Massachusetts, she must perform even worse than this - as Ms. Coakley did in 2010, when she carried only 21 percent of the independent vote. A “generic” Democrat who avoided the mistakes that Ms. Coakley made (like insulting the former Boston Red Sox star pitcher, Curt Schilling) would thus seem to stand a reasonably good chance against Mr. Brown.

There are other circumstances, however, that could work in Mr. Brown's favor. Most important is the abbreviated timing of the special election.

There was no one moment at which Ms. Warren sudden ly leapt ahead of Mr. Brown in the polls. Instead, she slowly wore him down over a campaign that lasted for almost 14 months, overcoming her initial errors to return the focus to Mr. Brown's policy positions.

In a special election campaign that lasted only a few months, the Democratic candidate would not have that luxury. And because the Democratic nominee will probably face a competitive primary, while Mr. Brown probably will not, that would give the Democratic nominee even less time to focus on the general election campaign.

Ordinarily, it is an advantage for a candidate to run as an incumbent - but Mr. Brown could potentially benefit from not having to take difficult votes in the Senate and instead drawing more distance between himself and national Republicans. This week, he stated his support for a ban on assault weapons, breaking with Republican orthodoxy.

The overall political environment is not likely to be as favorable for Democrats in the special elections as it was this November (although it will probably also not be so unfavorable to them as in 2010). And there could be an element of sympathy for Mr. Brown among some swing voters: this is a man they like reasonably well. Are they willing to reject him twice in the span of less than a year?

Despite all that, it is difficult to view Mr. Brown as much better than even money: he is a Republican in Massachusetts who lost an election by a reasonably clear margin just last month. And if Mr. Brown wins, he could well face another competitive election in November 2014, when Democrats will have more chance to gear up from the race â€" and when Mr. Patrick will h ave finished his second term as governor and might be more likely to run for the Senate.

One thing is for certain: if Mr. Brown is the senator from Massachusetts in January 2015, he will have earned it, having run for office four times in less than five years.