Fox News Gets Down to Business

Secures distribution deal with Time Warner Cable for long-awaited channel

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As launches go, Fox News' business channel must hold the record for longest gestation period in cable history. News Corp. Chairman-CEO Rupert Murdoch floated the idea of a business-oriented spinoff back in 2004. Since then, Chief Operating Officer Peter Chernin and Fox News Chairman Roger Ailes have consistently said a business service wouldn't move ahead until it had sufficient distribution. Now apparently it does.

Just last week, Fox News finally got the go-ahead from Time Warner Cable executives and secured access to the critical New York market. The new channel will be carried on basic systems in Gotham-hitting those influential Madison Avenue and Wall Street viewers-and on Time Warner's digital tiers in other markets. Coming on the heels of a carriage deal with Comcast, the biggest piece of the distribution puzzle is in place.

The agreement Fox News and Time Warner signed during New Year's weekend is part of a huge four-pronged deal and wraps up years of wrangling between two parties with a contentious history. They have been close to a deal at least twice, but discussions broke down over who had more leverage. Fox News needed to get the business channel off the ground, while Time Warner Cable needed Fox News to stay on air, and its contract was coming to an end in 2007.

When News Corp. was trying to launch Fox News a decade ago, Time Warner opted to carry MSNBC instead, and a war ensued between Mr. Murdoch and then-Time Warner Chairman Gerald Levin. In 1996, Time Warner was celebrating its acquisition of Turner Broadcasting, which houses Fox News rival CNN, and News Corp. was offering to pay cable operators for Fox News in return for access.

This time, things were different. A Time Warner spokesman confirmed that the Fox News deal involved four elements: retransmission consent for Fox-owned and -operated stations, carriage of the business service, an extension of the Fox News contract and carriage of the Fox Reality channel.

Executives familiar with the talks said Fox News won a great deal. "They're getting 75› [per subscriber] for Fox News-that's a breathtaking amount," one cable veteran said. "That's the highest for a non-sports channel I've ever heard of. They're jumping from 25› to 75›. The fact that Fox Business got dragged along at roughly 15›, that's a big number for a very narrow service."

According to reports, News Corp. executives began negotiations at the $1 mark. Now, with both channels in hand for a total of 85› a subscriber, both Fox News and Time Warner Cable can claim victory, according to commentators.

DirecTV has said nothing about its agreements to carry the Fox News business channel, but it's hard to believe Mr. Murdoch would have sold News Corp.'s interest in the satellite service to Liberty Media Chairman John Malone without a clause including the channel.

Observers are predicting a midyear launch date, but in reality few people really know when the service might start. One observer suggested April 15 might be a good time to begin.

The question for many in the advertising community: What need is there for another business service, whenever it arrives? Competition for business-oriented consumers is sharp, not only among TV channels but at the major search giants, Google and Yahoo. In fact, Yahoo just partnered with Fox News to provide business-related video on its Yahoo Finance page. Business magazines, which include Fortune, Forbes, BusinessWeek and soon Conde Nast's Portfolio, have struggled to hold on to ad dollars as more news migrates online.

The arrival of a new competitor in the field may have a positive effect for media buyers, possibly working to depress overall prices if, as some suggest, Fox News Senior VP-Advertising Paul Rittenberg decides to package it with Fox News.

Gary Carr, senior VP-director of broadcast services at media agency TargetCast TCM, said: "I'm not sure I'd bet against Roger Ailes, and we all laughed when he started Fox News. But does the world need another business channel?"
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