Murdoch: CNBC ‘Obstacle’ Can Be Hurdled by Fox Business
News Corp. Chairman Says Fox Business Network Will Exceed CNBC's $4 Billion Value 'In Short Order'
By Mike Farrell -- Multichannel News, 8/8/2007 11:56:00 AM EDT
News Corp. chairman Rupert Murdoch said late Wednesday that the contract between cable financial news channel CNBC and his latest acquisition – Dow Jones & Co. – is an “obstacle” for News Corp.’s own Fox Business Network, but that there are ways that the fledgling channel can take advantage of the vast resources of Dow Jones and its flagship newspaper the Wall Street Journal.
Although CNBC’s contract with the Journal does not expire until 2012, Murdoch said on a conference call with analysts late Wednesday that the deal only involves business news and access to reporters.
“There is a lot of other news and a lot of other things we can do to associate ourselves,” Murdoch added.
FBN is slated to launch in 31.5 million homes on Oct. 15.
Murdoch has said that he plans to expand the reach of the Journal by including non-business news in an effort to compete with national general interest newspapers like the New York Times. That could mean that FBN could use Journal resources as long as they are not business-news related.
News Corp. chief operating officer Peter Chernin said that he and the rest of the News Corp. management team have been spending a lot of time with FBN executives, including FBN head Roger Ailes, to work on plans for the business network.
“We have enormous confidence in their ability to put together a terrific differentiated product that is really going to stand out in this market, generate ratings and consumer excitement on its own,” Chernin said. “And we’ll look at anything that comes from Dow Jones as gravy as it develops.”
Earlier, Chernin estimated that News Corp.’s total investment in the business channel would be between $150 million and $200 million and that the network should break even in a couple of years.
Murdoch added that he expects FBN to outpace its rival in total value, pointing to the success of Fox News Channel over its main competitor, Cable News Network.
“Some analysts have estimated that CNBC today has a valuation in excess of $4 billion,” Murdoch said. “We have every expectation that the Fox Business channel in short order will surpass that value in the same way that Fox News Channel has surpassed CNN and all other cable news operations that it competes against.”
The Dow Jones acquisition came just after the end of what was a record fiscal fourth quarter and year for News Corp., fueled by strong growth at its cable networks. For the quarter, revenue was up 9% to $7.4 billion and operating income rose 18% to $1.2 billion.
At the cable networks, operating income was up 46% to $284 million and revenue rose 17.2% to $1.1 billion, fueled mainly by gains at Fox News Channel. FNC reported a 41% rise in operating income during the quarter, spurred by higher affiliate fees and stronger advertising growth.
