The TV business-news market is a rich revenue source that's likely to get richer with the Oct. 15 launch of News Corp.'s Fox Business Network.
It's a niche market that draws upscale viewers. Published ratings may look small, but that's because they don't cover out-of-home viewers on Wall Street and in offices nationwide who watch cable business news as a matter of necessity. They're influential, hard-to-reach viewers whom advertisers covet.
"In the business channel environment, you don't have to have very big numbers to be successful," said Mark Fratrik, a vice president at research firm BIA Financial Network.
Fox Business Network will enter a milieu that's been dominated by CNBC, whose top-rated daytime show "Street Signs" drew 290,000 viewers in July, according to Nielsen Media Research.
News Corp. Chairman Rupert Murdoch and Fox News Chairman Roger Ailes waited to launch Fox Business Network until they had commitments of at least 30 million initial subscribers, compared with CNBC's 92 million. They're spoiling to grow the channel, replicating the success they had with Fox News Channel, an upstart that has developed into the most-watched cable news channel.
In doing so, they'll probably stimulate the ad market in cable business news and lure some ad money away from CNBC, Mr. Fratrik said.
"I believe the pie will get bigger just because you have more sales people out there looking for new advertisers and increased advertising revenues," he said, estimating the range of the market's growth as less than a doubling of revenue.
Various analysts estimate NBC Universal's CNBC last year earned some $300 million in ad revenues, perhaps a quarter of that from infomercials and other time buys, and $380 million in subscriber fees from cable and satellite distributors. Parent company General Electric does not break out revenues for CNBC.
Bloomberg, which runs a business TV channel as an adjunct to its real-time financial information service, is estimated to have made between $50 million and $100 million from ads and subscription fees. As a private company, Bloomberg isn't required to release financial information. Bloomberg TV reaches 49 million households in the U.S., plus 88 million homes with a 5-8 a.m. block on E!
Fox Business Network has been coy about programming and talent details, so it is difficult to handicap how it will perform against the established players. News Corp. declined to comment on its plans for the channel.
TV news observers noted that last week, when the Dow Jones Industrial Average passed the 14,000 mark, there was a team of attractive women reporting from Wall Street for Fox News' "Your World" anchored by Fox business news managing editor Neil Cavuto. Mr. Cavuto will make coverage decisions for Fox Business Network.
Fox News already has a popular Saturday block of business-themed shows. Indeed, the channel's five business programs are the most-watched business shows on cable, with averages ranging from 874,000 viewers for "Your World" on weekdays to 802,000 for "Cashin' In" on Saturday.
Fox News Channel approaches its launch as News Corp. is one vote away from acquiring Dow Jones & Co., a financial news empire that includes the Wall Street Journal, for $5 billion. It remains unclear whether there is any wiggle room for Fox Business Network to capitalize directly on such an acquisition before 2012, when Dow Jones' exclusive agreement with CNBC expires.
Mr. Murdoch and Mr. Ailes will be building on the success of Fox News, which became a driver of the increasingly rich Fox cable empire, racking up what Kagan Media projects will be $506.7 million in ad revenues in 2007.
CNN is forecast to take in $466.8 million this year and MSNBC may take in $156.1 million, according to Kagan.
They're entering a market where others have withdrawn. CNN gave up on the TV business news niche after nine years when it shuttered CNNfn, a joint venture with sister Time Warner business publications.
Although it made a profit in its final year, CNNfn was, according to industry sources familiar with the digital cable operation, hobbled by having only 40 million subscribers. The rapid explosion of digital cable has made niche channels a more viable enterprise.
In the meantime, CNN has diminished the presence of business news on its flagship channel, partly to clarify its focus. More recently, Lou Dobbs -- the face of cable business news for the better part of CNN's first two decades -- wanted to remake himself as crusader on political issues.
There is no unanimity among securities analysts on how soon Fox Business Network might reasonably expect to break even.
Richard Greenfield of Pali Research recently predicted the new network, which will include multiple platforms, will lose $75 million or so in its first year and then turn "rapidly to profitability" in its second year.
Spencer Wang of Bear Stearns, on the other hand, said it will take Fox Business Network four years to break even, which is a timetable consistent with many cable startups.
Mr. Fratrik thinks Mr. Greenfield's projection is "a little bullish on the break-even point in terms of year."