At Fox News' inception, Mr. Ailes says, he was determined to have a sizeable audience even during quiet news periods and then grow that audience when a crisis arose. "I had a clear vision of what I needed to do strategically to do that and never wavered," he says. "We built a business from the ground up and passed CNN."
Under the stewardship of Chairman-CEO Mr. Ailes, News Corp.'s Fox News Channel now reaches more than 80 million homes, surpassing CNN in 24-hour and prime-time ratings this year. It is also showing significant growth in ad revenue despite a down marketplace to earn the distinction of Advertising Age's TV Marketer of the Year.
When the network launched in October 1996, no one thought Fox News would ever challenge, let alone overtake, the mighty CNN.
"Personally, I think by being more engaging and interpretative, Fox News has struck a chord with viewers," says Bob Bernstein, senior VP-media director at Interpublic Group of Cos.' Foote, Cone & Belding Worldwide, Chicago.
"Like them or not, Bill O'Reilly, [Sean] Hannity and [Alan] Colmes, and the people on Fox News Channel in the morning push viewers to react to leaders in current events and they have an approachability," he says.
Fox News portrays itself as the "fair and balanced" brand of cable news with the tagline "We report. You decide." But many TV critics beg to differ. Its loudmouth, key prime-time hosts such as Neil Cavuto, John Gibson and especially Bill O'Reilly all offer opinionated programming, which may be Mr. Ailes' secret weapon to sustain ratings in between major news events.
When Ad Age asked Mr. O'Reilly early this year if a more accurate tagline for the network might be "We report. We decide," he said: "Well, you are probably right. The prime-time shows are opinionated. But in the daytime we do regular news, and that still makes sense."
"Fox News' model is more along the lines of talk radio" than TV news, says Steven Rosenbaum, president of CameraPlanet, an independent newsgathering organization. Like a tabloid newspaper, Fox News understands the value of entertaining people, he says. "Every day, they do some-thing edgy, shocking and daring that makes people go `Hmm.' "
"Fox News' marketing and particular style of journalism is an unqualified commercial success," says John Rash, senior VP-director of broadcast negotiations at Interpublic Group of Cos.' Campbell Mithun, Minneapolis.
He credits the network's ability to build an intensely loyal audience with having identified viewers who believe that most American journalists have liberal views. "The very nature of Fox's journalistic and marketing position inspires loyalty, and [it's] able to retain it."
However, TV watchdog groups argue that shows like the "The O'Reilly Factor" take news entertainment too far. Mr. O'Reilly is successful because his program is "blood sport," says Emily Whitfield, media relations director for the American Civil Liberties Union. ACLU President Nadine Strossen, who is also a professor at New York Law School, has appeared on Fox News' "Hannity & Colmes," but Ms. Whitfield says it's declined an offer for her to appear on the "The O'Reilly Factor" because of an unfriendly atmosphere. "They get people on there and they savage them," she says.
Paul Vitello, a columnist for New York Newsday, appeared on "The O'Reilly Factor" recently because of a controversial column he wrote. He says the show has a lot in common with the Roman Colosseum, where some gladiators were picked to win and others to die: "You go out there and try to remain alive for 5 minutes."
It was with breaking news on Sept. 11, 2001, however, that Fox News began to take off. Previously, during any major news event such as the Persian Gulf War and the O.J. Simpson trial, viewers turned to CNN.
"When America was attacked and we went to war, all news viewing shot up and folks found the Fox News Channel," Mr. Bernstein says.
RISING TO THE OCCASION
Mr. Ailes agrees. "Our little news division rose to the occasion and delivered, so that our audience didn't go elsewhere."
The result is that Fox News now retains or grows its audience when there's breaking news. Fox News finished the third quarter with a commanding lead in 24-hour ratings-a 0.7 rating, and 626,000 viewers, compared to CNN's 0.5 rating, and 516,000 viewers, according to Nielsen Media Research.
In prime time, the results are more dramatic with Fox News averaging a 1.1 rating, while CNN's prime-time ratings were down 30% to an average 0.8, according to Nielsen. And while CNN does make up ground during breaking news, its lead is slipping lately. During the D.C. sniper news event in mid-October, Fox News held on to a 1.2 share during prime time, while CNN came up with 1 share, according to Nielsen.
Money is following the viewers, too. In the first half of 2002, Fox News ad revenue nearly doubled to $235 million from $124 million during the first half of 2001, according to Nielsen Monitor-Plus. While CNN's ad revenue fell 28% to $260.5 million in 2001, Fox News saw its revenue rise 64% during that same period, reaching $269.6 million. Fox News Channel has doubled its ad sales each year for the last three years and will generate more ad revenue in the current quarter than CNN, according to Fox News estimates.
FCB's Mr. Bernstein says the bigger surprise is that much of the growth for Fox News comes from younger viewers and that the channel has helped grow the news genre audience in cable television.
`do not talk down'
Mr. Ailes credits News Corp. Chairman-CEO Rupert Murdoch with the vision and money to create Fox News, but it's the execution of Mr. Ailes, 62, and his team that has put together this cable juggernaut.
"We do not talk down to the audience," he says. "We know the audience has reasonable doubts about government, media and life in general. We don't mind reflecting that. ... If you would call us populist, then there is a streak of that."
Fox News spends about $8 million annually on marketing, with Mr. Ailes known to write most of the channel's promotional copy and handle marketing himself.
"There is no vice president of marketing. I set the stage for this and do it myself," he says. "I know the consumer, and the American people were underserved by news and media."
Now that the channel is No. 1 in the news category, it is Mr. Ailes alone who is working on what to do next, marketing-wise.
"I'm working on that now and I'm working on it alone. I don't know how or what I'm going to do yet. We will never change from the consistent belief that consumers want fair and balanced news. That is a brand given to us. But we may add or embellish on that," he says.
Mr. Ailes is the son of a factory foreman in Ohio, but has found his calling in entertainment, politics and news at different times in his life: As a consultant, he had a hand in helping elect three U.S. presidents-Richard Nixon, Ronald Reagan and George H. Bush. He's also had stints as a producer for the old "Mike Douglas Show," and as president of General Electric Co.'s CNBC from 1993-96, where he helped establish the network as leading source of business news.
At CNBC, he created a "Talk All-Stars" concept using personalities such as Tim Russert, Geraldo Rivera, Chris Matthews and Dee Dee Myers to help increase prime-time ratings.
After Mr. Murdoch lured him to Fox News in 1996, Mr. Ailes used a similar strategy by programming "Fox News Live" with a hard-news format from 9 a.m. to 4 p.m. (ET), followed by a prime-time lineup with 1-hour news, political and debate programs including "The O'Reilly Factor," which is now the highest-rated cable news program.
The lineup includes "Hannity & Colmes" with conservative radio commentator Sean Hannity and liberal radio talk show host Alan Colmes; "The Fox Report With Shepard Smith"; "Special Report With Brit Hume"; "On the Record With Greta Van Susteren"; and "Your World With Neil Cavuto."
The folks at Fox News, including Mr. Ailes, rarely miss a chance to have fun. He indulges in guerrilla marketing, such as buying space on the billboard across from the offices of CNN or using mobile billboards to drive by CNN's studio.
"There's a certain amount of fun we have spending our marketing dollars," he says. "I tell my folks if you are not having fun coming to work, then do something else. Sell insurance if you want to be bored."
CONTRIBUTING: PAT RIEDMAN