Fox coy on plans for its pending business channel

Distribution deals may be key, but critics also ask if space is saturated

By Published on .

Most Popular
It's been more than a year since News Corp. first floated the idea of spinning out a business channel from its highly successful cable service, Fox News Channel. Since then there's been little news of the still unnamed cable channel's progress and Fox News Channel Chairman-CEO Roger Ailes is now ensconced in another venture, a second Fox-owned broadcast network, My Network TV.

But don't take that to mean the project is dead; as Mr. Ailes commented last April to New Yorker media writer Ken Auletta, "We are committed until we are not committed." News Corp. is keeping the competition-namely CNN and MSNBC-on its toes. "I keep telling Rupert, 'Quit saying the channel will launch,' " he said to Mr. Auletta. And it appears boss Mr. Murdoch has taken note; there's been barely a peep since, though the question is raised on each quarterly call with Wall Street. Officially PR reps for Fox News are silent about a launch, but things are unlikely to stay that way.

deals start to expire

Come fall, Fox News Channel carriage deals with the cable and satellite operators start to expire. Given Fox News' strong ratings, the company will no doubt be looking for significant rate hikes. Fox News is reportedly paid 25› per subscriber.

Speaking on a conference call with analysts earlier this year, News Corp. President-Chief Operating Officer Peter Chernin said: "In terms of Fox News affiliations, our first deals come up for negotiation, I believe, in the fall. I think DirecTV in September and Cablevision in October. And then generally, roll out pretty sequentially through the next three years. "

Mr. Chernin also gave analysts further clues about the business channel on a recent call. "We want to do this in a really careful way. We want to have enough subs lined up. ... We invested well over $1 billion to get the news channel launched, and we don't want to go through that again. ... We ought to be able to launch the [business] news channel at a much more modest investment and one of the ways to achieve that is that is to have a lot of distribution lined up before we commit to launch and we are ... doing negotiations."

The key distributor for the Fox business channel will be Time Warner Cable, and as Fox executives have hinted, those talks are likely to be discussed at the highest levels, between Mr. Murdoch, News Corp. chairman-CEO, and Dick Parsons, his opposite at Time Warner. Of course, TW owns CNN and would not want to hurt its own news brand or lose any face. For Fox News to launch a business channel after CNN was forced to close its own CNNfn service would cause bruised egos at the company's headquarters in New York.

While agency media buyers say there are plenty of places to buy business news-CNBC and Bloomberg, among them-the ad pie is pretty big. In 2005 Fox News took in $454 million in ad revenue, up from $309 million in 2004. Fox no doubt has its eye on CNBC's ad dollars. The NBC Universal-backed business news service booked $307 million in ad revenue in 2005, down 11.7% from '04. Even though its Nielsen ratings are tiny (it scored only a 0.1 household rating in 2004 vs. a 0.6 for CNN and a 1.1 for Fox News), CNBC is the place to reach the high rollers.

How the business channel might look is a mystery, but industry watchers say that Fox News VP-Business News Neil Cavuto will likely play a major role. Cable news industry blogs are rife with speculation about whether CNBC names such as Maria Bartiromo might jump ship. For now, guessing about Fox News business plans is like playing the stock market; it's hard to know what's going to go down.

Larry Blasius, director-negotiations, Magna Global, thinks there could be a place for yet another business channel. "Possibly, from my perspective, the more competition the better," Mr. Blasius says. "The question is what kind of viewership will it get?"
In this article: