Inside Fox Business News
Fresh from snapping up the Wall Street Journal, Rupert Murdoch sees FBN as the first step in his strategy to dominate global financial journalism. Fortune takes an exclusive behind-the-scenes look at his plan to bring Wall Street to Main Street.
(Fortune Magazine) -- On an October afternoon sticky enough to pass for midsummer, Rebecca Gomez, a veteran Fox News correspondent, and her co-star Cody Willard, a former hedge fund trader who bears a passing resemblance to Shaggy from Scooby-Doo, belly up to the bar at the Bull & Bear in Manhattan's Waldorf-Astoria Hotel. The regulars look up from their martinis when Gomez shouts, "Ten minutes, everyone. This is the first hit of FBN."
It's Oct. 5, exactly ten days before the launch of Fox Business Network, and the two hosts are working on their new show, called "Happy Hour." Already there have been headaches. When the leading business channel, CNBC, got wind of the show's format, executives at that network fired a salvo across Fox's bow by having CNBC's "Fast Money" broadcast a new live segment from Moran's, a popular Wall Street watering hole. CNBC called it ... "Happy Hour."
The next day Fox responded by offering a sneak peek at Gomez and Willard's bar talk by airing it on Neil Cavuto's Fox News Channel program, "Your World." CNBC also started referring to itself as "America's Business Channel" when word got out that Fox was pitching its new channel to advertisers as "Main Street vs. CNBC's Wall Street."
To understand how Fox Business views itself as a red-state alternative to CNBC, one has only to watch Willard toss two bucks into the tip jar at the Bull & Bear while the cameras roll. "I throw $2 in every time I say something like 'basis point,'" he says, explaining the channel's anti-jargon, anti-Wall Street vibe.
Welcome to business news Fox-style, a predictably slick yet populist take that has not only CNBC running scared, but pretty much any company whose livelihood depends on the gathering and disseminating of financial information.
The reason is that Fox Business, whose planning fell to Roger Ailes, the television genius who took Fox News from laughingstock to top-rated cable news network, is more than a challenge to just CNBC's monopoly here in the U.S.: It is the first brick in Rupert Murdoch's attempt to build a global business information Goliath.
Fox Business is launching as another key piece in this strategy, the Wall Street Journal, is entering the News Corp. (Charts, Fortune 500) fold. The $5 billion acquisition of Dow Jones (Charts) by News Corp., which was announced Aug. 1, should be a fait accompli by November or December (if the perfunctory shareholder votes and regulatory approval go as planned).
'The time is now'
Add the Wall Street Journal to Murdoch's $72 billion media conglomerate - which spans the globe from Hollywood's 20th Century Fox to the Asian satellite service Star and its European version, Sky - and it is easy to see how Willard and Gomez's barroom banter are the first steps toward an empire that could one day beam a Fox Business channel into China via Star or launch local channels in India and Eastern Europe. It is likely that will happen gradually over the next few years. "There have been inquiries but no negotiations yet," Murdoch told Fortune in a recent interview in his eighth-floor office at News Corp.'s Manhattan headquarters.
Murdoch believes that the time is now to launch a global business channel, as emerging markets are minting new investors and entrepreneurs every day. He wants to be the go-to programmer for these new capitalists. "There's this constant growth of wealth," he says. "You have 100 million people joining the world economy every year. This is the biggest development in the history of the planet almost - the speed at which this is happening. And while there certainly will be bumps, it's going to go on for another 30 years. Living standards everywhere are going to be better."
But first Fox Business has to play in Peoria. "I'm looking for a wider audience, more people in business and on Main Street," Murdoch says, "more than people who are just watching the market all the time. It will be a real business channel - a real aspirational channel, if you will." By that he means programming geared toward the small-business owner and entrepreneur as well as the average consumer fretting over his mortgage or 401(k).
And Murdoch's nothing if not ambitious: He expects to spend $300 million over the next three years to make Fox Business profitable. By that time he hopes the network will have topped CNBC in the ratings.
Fox Business will launch in about 30 million homes (about a third of CNBC's reach). But with CNBC's ratings down significantly from the dot-com boom - when its programming was like crack for day traders - it's hardly a guarantee that so-called Main Street has an appetite for populist-tinged business news.
Nevertheless, that is the direction the channel is going. Fox Business's programming day will begin at 5 A.M. with "Fox Business Morning," featuring live reporting from London. From 6 A.M. to 10 A.M., Fox will broadcast "Money for Breakfast," hosted by Alexis Glick, a former host on NBC's "Today Show" who also has an executive role at FBN as vice president of business news. The rest of the trading day is under the rubric "Fox Business Live" and will feature anchors and reporters covering the day's business news populist-style. At 5 P.M. is "Happy Hour" at the Bull & Bear, followed by the network's signature show, "Cavuto," which will be a recap of the day. (Cavuto will also maintain his on-air duties at the Fox News Channel.)
Among the guests the channel has lined up for its first week are eBay CEO Meg Whitman, New York Stock Exchange CEO John Thain, the oil tycoon T. Boone Pickens, and the former pro golfer turned entrepreneur Greg Norman.
Fox recently made a high-profile move by hiring former Hewlett-Packard chairman and CEO Carly Fiorina as a paid contributor. "I think there's a huge hunger for more understanding and access to the markets, business, and economic issues," she told Fortune. "I've seen that from the reception of my book ["Tough Choices: A Memoir"]. While the public may not understand all aspects of business, they know the economy is the driver of our way of life and the foundation of our power."
Winning over Main St. and Madison Ave.
Murdoch and his team may be onto something. "It would be so cool if we could have a channel that was more geared toward the individual," says Lynn Ostrom, who runs the Crow River investment club in Minneapolis. Its 13 members meet once a month in her living room to discuss stocks. "There isn't anything. Everybody out here in Main Street knows [CNBC's morning show] Squawk Box is all hype, but it is the only thing we have." Instead, her group, which includes a landscaper, two nurses, a carpenter, and a retired insurance underwriter, tends to ignore CNBC and use websites like stockcentral.com and manifestinvesting.com for stock tips.
Finding an audience is one challenge. Connecting with advertisers is another. With Fox Business, advertisers are mainly taking a wait-and-see approach. "Once we know the programming, we'll be better able to determine potential demand," says Gibbs Haljun, a managing partner of Mediaedge:cia, a division of advertising giant WPP. "There are certain types of advertisers that look for business programming, whether it is B2B or even a corporate-messaging standpoint."
In a PowerPoint presentation being shown to potential advertisers, Fox Business touts the success of the Fox News Channel and stresses the initial skepticism toward that network when it was launched in 1996. The sales pitch also notes that Fox News already has the top five business news shows on cable - programs like "Bulls & Bears," "Cavuto on Business," and "Cashin In," which all bring in more viewers than any show on CNBC. For example, in the third quarter Fox News' Saturday morning show "Bulls & Bears" averaged 833,000 viewers, according to Nielsen. CNBC's highest-rated program in the third quarter was the game show "Deal or No Deal," an NBC program that CNBC replays in the evening, which averaged 415,000 viewers.
CNBC is no weakling, though. In the third quarter of 2007 its ratings were up 32% from the prior year during the business day. And it is wildly lucrative for its owner, General Electric (Charts, Fortune 500): Advertisers pay to reach the network's educated and wealthy audience, and the channel brings in roughly $250 million a year in advertising revenue.
But that's not the whole story: Cable companies pay CNBC roughly 30 cents per subscriber per month. (FBN, by contrast, will initially receive 12 cents to 15 cents per subscriber.) With 90 million homes, that brings in an additional $324 million a year in revenue from carriage fees for CNBC.
When Murdoch looks at the competition, he sees plenty of opportunity and views himself as the prototypical Fox Business viewer. He claims not to watch CNBC. "It's something you have on and you have the sound muted," he says.
In contrast, he wants people to watch Fox Business with the sound on, or as Cavuto, the Fox News anchor who will bring his star power to the business channel, puts it, "What we try to do in broadcasting is provide those aha! moments and get people to talk - and hopefully watch a network with the sound up."