It's going to be a tough fight, but one worth the risk for Murdoch. He and Ailes will have to go after CNBC's upscale and highly educated viewers and top-name advertisers because that's where the money is. CNBC brings in$245 million a year in advertising, according to SNLKagan. It has a 57% operating margin and operating profits of $335.3 million. (Cable operators also pay it 27 cents a month for each subscriber.)
Murdoch and Ailes are starting out with one big disadvantage, though. Initially, FBN will be seen in just over 30 million homes--about one-third of CNBC's reach and less even than Bloomberg TV's. And will those viewers want what FBN is offering? Murdoch has said the new channel will be for "Main Street," distinguishing it from what he calls CNBC's Wall Street focus. But Fox's populist programming may not go over so well with business executives. "The question isn't whether we're ready for Fox Business [but] are they ready for us," says CNBC President Mark Hoffman.
Over the past 20 years, Murdoch, of course, has successfully taken on not just CNN but the Big Three TV networks and ESPN, too. His gains weren't easy, cheap, or quick. Murdoch is fine with that. He waited nearly a decade and lost $2 billion before British Sky Broadcasting took off. Today, News Corp. sits atop nearly $8 billion in cash. If Murdoch wants to spend half a billion on FBN before turning a profit, as analysts project, he can afford to.
For now, Murdoch and Ailes have been operating in stealth. It has only been in the past few weeks that FBN salespeople have approached advertisers, and even then they haven't yielded much information about the programming. The 19-slide PowerPoint presentation, which BusinessWeek has viewed, focuses mainly on the success of Fox News. "I'm just not sure what their strategy is," says Chris Geraci, a senior executive at media buyer OMD.STAR SEARCHChances are, though, that Fox's channel could end up looking a lot like CNBC, at least during the trading day. Hoffman acknowledges that Ailes--who ran the channel for three years before he left for Fox in 1996--tried to entice superstar Jim Cramer, whose high-voltage persona has helped boost prime-time ratings at CNBC. Ailes will probably approach the network's other brand name, Maria Bartiromo, whom he first put on air in 1993, when her contract expires in two years. (Bartiromo is also a BusinessWeek columnist.) And he may be interested in hiring Liz Claman, the former CNBC anchor, after her noncompete agreement ends in mid-October. For now, FBN's headliner is "tear up your credit card" radio financial guru Dave Ramsey, who will have a prime-time show. Ailes declined to comment.
Over at CNBC, Jeff Zucker, the head of NBC Universal, is using the high-profile Today show to promote his business channel. And CNBC is likely to focus anew on prime time with shows like American Greed and the edgier Fast Money with Dylan Ratigan, which it will move to the important 5 p.m. slot.
But the real conundrum for CNBC is its relationship with The Wall Street Journal now that Murdoch is buying Dow Jones & Co., the paper's owner, for $5 billion. CNBC has a contract, which lasts five more years, that gives it exclusive access to Journal reporters for straight business news. Murdoch, however, says they can appear on FBN to talk about topics such as personal finance. And, though neither side will say anything now, Murdoch is probably calculating how much he will have to pay to end the arrangement with CNBC altogether. By Ronald Grover and Diane Brady, with Burt Helm