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Can Fox Win Its Frontal Assault Against CNBC?
From top, Neil Cavuto on the set of Fox Business Network; Roger Ailes, chairman of Fox Business Network; Rupert Murdoch, chief executive of News Corporation.By BILL CARTER
The team leading the Fox Business Network into battle with CNBC, the entrenched leader in cable business news, has made no secret that it intends to do in the realm of business news exactly what the Fox News Channel did in general news. As in: conquer.
And even before today’s premiere, there are already indications of just how fiercely the battle will be waged. In a pep talk to his troops Friday afternoon, Roger Ailes, the chairman of both networks, said, “I’m not interested in anything short of a revolution.”
That is what Rupert Murdoch, the chairman of the channels’ parent, the News Corporation, expects from his latest media property — and, as Mr. Ailes put it in a telephone interview, “When Mr. Murdoch wants something, you try to deliver it.”
The question of how devoted the News Corporation properties are to doing Mr. Murdoch’s bidding hung over the protracted negotiations to acquire Dow Jones & Company this year. And already — before News Corporation officially takes possession of Dow Jones business — the same question has arisen in the increasingly ferocious jousting between Fox Business Network and CNBC.
In early September, CNBC negotiated and signed a contract with Dow Jones to buy advertising that was to run today on two Dow Jones Web sites, MarketWatch and The Wall Street Journal site (wsj.com). Last Tuesday night, CNBC’s ad buyers received a call from a Dow Jones representative saying that those ads could not run today, the first day of Fox’s competing channel.
In the case of MarketWatch, CNBC had bought both an introduction ad for the site — meaning that every user on the site today would have seen an ad for CNBC before getting to the MarketWatch home page — as well as what is called a “road block” of ads — meaning CNBC would have been the exclusive advertiser on the site’s home page today.
The decision to drop the ads from the Wall Street Journal site was even more significant because CNBC has been advertising on the site’s market data page every day since Oct. 1 and had a deal for ads to run daily for two months. The CNBC ads on the market data page were also to be removed for today only.
Buyers from Spark Communications, the ad agency that made the purchase for CNBC, said that they had an official signed contract to run the ads. The Spark buyers, who asked not to be identified because of potential future business dealings with the company, said that the Web site representatives were apologetic for breaking the contract and promised to replace the ads and give CNBC a discount on future advertising, worth almost double the value of the original ads.
Robert Christie, a spokesman for Dow Jones, did not dispute any of the details of CNBC’s advertising purchases. He said in a statement, “As is standard practice, we retain the right to adjust the precise placement and timing of online advertisements, including to accommodate links from other Web sites.”
Mr. Christie declined to say what links the site would contain today, or what ads would be replacing the ones bought by CNBC. Asked if Fox Business Network would have its own Web site linked on the Dow Jones sites, or if the channel would fill the ad space that CNBC had bought, Mr. Christie said, “As a practice, we don’t comment on our advertising clients.”
For CNBC, the conflict with Dow Jones has an additional angle. CNBC has five years remaining on a contract with The Wall Street Journal to use Journal reporters for business news exclusively on the channel. There has been some question about whether the News Corporation would try to undo that deal to get access to the Journal reporters for Fox Business Network.
If executives at NBC Universal and CNBC (both of which are owned by General Electric) had not understood the nature of the game they were getting into with Fox and the News Corporation before (and mostly they did), they said that the advertising switch made it entirely clear.
Executives said they were upset by the decision. “We have had a 10-year relationship of the highest quality with Dow Jones. As a result, this incident leaves us both surprised and disappointed,” said Alison Gollust, an NBC spokeswoman.
Not that Mr. Ailes and his staff have ever been shy about being an aggressive competitor. As Mr. Ailes put it in a telephone interview last week, sounding both enthusiastic and eager to send a message, “The games are about to begin.”
He emphasized that the ratings competition with CNBC would be uneven for some time, but implied that rocks would be flying from the start. “They have a 17-year head start. They’ve got G.E. They’ve got a lot of advantages. So it’s a David and Goliath story — but you know how that one turned out.”
Mr. Ailes was mainly referring to the big advantage CNBC enjoys in distribution. It reaches 90 million homes while Fox Business will initially reach about 30 million. But Fox Business, which itself is backed by a nearly $70-billion global media empire, will be supported by more than just a slingshot.
Still, at least one member of the Fox team acknowledged some concerns about how the new venture is going to fare.
“I’m nervous,” said Neil Cavuto, who, besides being an on-the-air star for Fox News is also the man Mr. Ailes selected to have day-to-day editorial control of the new channel as managing editor. Overcoming the distribution disparity, he said, will be “a Herculean leap.”
But like the comment about his nervousness, Mr. Cavuto, who actually exudes confidence, said that one with a smile. He is given to a certain degree of personal self-deprecation, suggesting, for example, that he might not be “the sharpest knife in the drawer.”
And then the light goes on and the knife is suddenly quite pointed and Mr. Cavuto is ready to compete with the usual News Corporation intensity.
Mr. Ailes and his colleagues have already looked to score points on CNBC, asking questions about its ratings, noting all the infomercials that CNBC runs on weekends for what Mr. Ailes called “nose tweezers and pimple squeezers” (although Fox also plans to run infomercials), as well as CNBC’s recent decision to label itself “America’s Business Network,” in a line that sounds like it was lifted from the Fox marketing strategy.
CNBC’s president, Mark Hoffman, acknowledged that the game is on, one that he said had played out in similar fashion when Fox News took on CNN. The tactics, he said, are the same: go after the competitor hard, with what he charged was incorrect information.
Mr. Hoffman acknowledged that he has been on the phone almost incessantly in recent weeks, taking calls responding to information being put out by Fox Business.
CNBC, like other business news channels, has never been a ratings powerhouse, but it has made the argument to advertisers that its strong point is daytime out-of-home viewing by professionals in offices. It also emphasizes that its viewers are largely affluent and highly educated. Although NBC Universal does not break out earnings for CNBC, media analysts have estimated the network’s annual profit at about $300 million a year.
Other competitors have arisen in the past, chiefly Bloomberg Television and CNNfn. Bloomberg TV remains a successful provider of financial news, though it does not have close to CNBC’s reach in television homes. CNNfn went out of business in 2004.
Derek Blaine, a media analyst for SNL Kagan, said of CNBC, “We have them forecast to be up 15 percent in ad sales for the year. The ratings have been higher for them this year. There’s no question they’re having a great year.”
But Mr. Blaine cautioned against seeing the fight purely in terms of Fox vs. CNBC. “People are seeing this as a replay of Fox News vs. CNN, and I don’t really think this is the case,” Mr. Blaine said. He said he expected the Fox Business Network would not try to replicate what CNBC does in seeking out the most-involved-investor viewers and instead would reach out to smaller investors and viewers not seeking arcane details of profits and losses and takeovers.”
“Cavuto in his one-hour programs on Fox News has a much more sticky audience. I like that strategy for this channel,” Mr. Blaine said.
The top management at Fox Business Network should be well positioned to challenge CNBC, because almost all of them have worked at there at some point. Mr. Ailes ran CNBC from 1993 to 1996. Mr. Cavuto was there for the start of CNBC in 1989 and stayed for seven years as a reporter and host. Alexis Glick, who will be one of the featured anchors on the new channel during its morning shows (she bills herself as a “player coach” because she also has a vice president title) had her television start on CNBC’s Squawk Box when she was a trader at Morgan Stanley.
And Kevin Magee, who has been executive vice president at Fox News Channel and is adding the same title at Fox Business, is also a CNBC alumnus, having been an executive producer there.
Mr. Magee said the new channel was not trying to load up too heavily on former CNBC staff members. “We don’t want to be seen as CNBC-lite,” he said. Instead, Fox Business is looking to carve out its own identity.
“Hopefully, we’ll expand the pie, because if all we do is cut CNBC’s pie in half, we’ll both be in trouble,” Mr. Magee said.
Although Fox has not been specific about many details of how it plans to distinguish itself, Mr. Magee did say that Fox will fill its screen with even more information than CNBC does. “But we’ll keep the look crisp and clean,” he said.
Fox will rely on some stars from Fox News, chiefly Mr. Cavuto, who will have a show at 6 p.m. weekdays. Last week, the channel announced that it had hired the former Hewlett-Packard chief executive, Carleton S. Fiorina, as a regular contributor.
The general idea for the channel, according to several members of its management team, is to make business news more easily embraced by a larger number of viewers. Ms. Glick and Mr. Magee both used the word “demystify” to describe the effort, with Ms. Glick adding, “We believe we can deliver business news in a Foxy way.” That, she explained, means “we need to be entertaining.”
Neil Cavuto and Alexis Glick of the Fox Business Network. Both had previously been on CNBC.
Mr. Cavuto, who has become the ratings leader in television business news by following a formula for his shows on Fox News that relies on combining Main Street and Wall Street, expects to be doing a lot more of that.
“The seeds are already there,” he said in an interview in his Fox News office. “You look at what we do already: keeping things in English, avoiding market jargon, avoiding big words, never using stock analysts.”
One thing Fox will not have initially is ratings. Mr. Ailes said that because of the start-up size of the network, Nielsen Research would not be reporting its ratings publicly (Fox will receive some data internally) for what could be more than six months.
But Mr. Ailes had one last shoe to drop on CNBC before this morning’s 5 a.m. start of Fox Business Network.
“I think it’s amusing that since we talked about bringing Wall Street to Main Street, CNBC started mentioning Main Street about 400,000 times,” he said. “But really it was all a head-fake. We’re really going after Wall Street, too.”
