Fox Rules: A brash blend of TV news and entertainment is hot with viewers

The world won't know until May 21 whether Ruben, Clay, or Kimberley will ascend to celebrity nirvana, courtesy of American Idol. But the biggest winner has already been chosen: Fox Broadcasting. Thanks to Idol, as well as Joe Millionaire, Fox hijacked the February ratings "sweeps" and could run off with the May ones; it came very close to unseating NBC this season as the top destination for the 18-to-49-year-old crowd coveted by advertisers. This week, as the major broadcast networks gather in New York to unveil their lineups and sell commercial time for the fall season, Fox is expected to make the biggest gains, increasing its take by 16 percent over last year to $1.55 billion. That is more than double the growth rate of the overall market, which is expected to rise about 7 percent to $8.6 billion.

Such performance is the kind executives like to take out for a stroll around HQ. But these days it's tough to get a brag in edgewise at the Fox Entertainment Group, part of Rupert Murdoch's $18 billion media colossus, News Corp. In addition to Fox Broadcasting's prime-time accomplishments, the Fox News Channel trounced CNN to win the 24-hour cable news ratings war during the war in Iraq and is winning the peace as well. At cable networks FX and Fox Sports Net, subscribers and ratings are up strongly. And the movie studio Twentieth Century Fox not only broke the $1 billion mark at the box office last year for the first time but has also started off the summer with a $155 million worldwide opening for X-Men 2. That's the biggest global bow in film history. "It's weird," says News Corp.'s chief operating officer, Peter Chernin. "Everything seems to be clicking all at once."

But get ready for the encore. Murdoch, already the world's most powerful media mogul, is about to acquire DirecTV, the world's second-largest satellite network. The $6.6 billion purchase would give the Aussie multibillionaire the U.S. platform he has been seeking for years to distribute Fox news and entertainment.

In addition, the Federal Communications Commission is expected to vote next month to relax rules that limit media ownership. That will give Fox, which has been bumping up against the ownership ceiling in several markets where it has newspapers and local TV stations, even more room to grow. "Clearly, the company is firing on all cylinders," says independent media analyst Christopher Dixon, noting that Fox Entertainment's stock was the top media performer in 2002. "But it's still all about what comes next."

Right now, the network's prime-time success hinges almost exclusively on the performance of two shows, Idol and Millionaire. Without them, Fox would be last in the 18-to-49 category. The network, which is still in the red from the soft advertising market of the past two years, "desperately needs to find some successful half-hour comedies and hourlong dramas to cover the holes in its schedule," says Brad Adgate, a vice president at Horizon Media, a large ad-buying firm in New York. "It can't depend on reality TV" (box, Page 38).

That said, Fox, which brought the world When Animals Attack and Caught Red Handed: Cops' 15 Greatest Take Downs, has been masterful in using Idol for cross-promotion and leading viewers to other shows such as 24, The Bernie Mac Show, and That '70s Show, all of whose ratings have increased. Idol so seamlessly blends entertainment and marketing that it's hard to tell where the show stops and the commercials begin. In a recent episode, the Idols stormed the red carpet at the premiere of X-Men 2 (a Fox movie), hit the set of Boston Public (a Fox TV show), and performed their new Fox-backed single "What the World Needs Now." Kelly Clarkson, the first Idol winner, dropped by during a number by Justin Guarini (another Idol alum), who stars with her in the new Fox film From Justin to Kelly.

That barely left time for the paying advertisers, who are ponying up fees of $500,000 for a 30-second spot. "You can't survive in the marketplace without having one of these phenoms on your schedule," says Sandy Grushow, chairman of Fox Television Entertainment Group. "The danger is overdoing it."

Fox has had less success with shows such as Married by America (a bomb) and Mr. Personality, featuring Monica Lewinsky and a band of masked men who compete for the attention of a beautiful woman. Although the show opened big, ratings have steadily dropped off.

Conservative tilt. No such problems can be found at Fox News, which is No. 1 among cable news and only recently slipped out of the top spot among all cable networks during prime time. With its heavily conservative roster of talk-show hosts (Sean Hannity and Bill O'Reilly), it has been accused of being an extension of the Bush administration. Others have charged that Murdoch uses the network to butter up the Bush folks in return for favorable treatment from regulators.

But while Fox clearly does have more conservatives on air than CNN or MSNBC (a fact the network does not dispute), that alone does not explain its current popularity. "Fox News has figured how to move from news to an entertaining discussion of the news, full of shouting and loud opinions, without losing viewers," says Tim Brooks, the senior vice president for research at Lifetime Television. "The average CNN viewer drops in for 10 minutes and leaves; the average Fox viewer hangs around for 20 to 25 minutes."

Fox also has created so-called appointment television--not an easy accomplishment on a news network--where viewers tune in specifically to see, say, The O'Reilly Factor (the top cable news show with 4.6 million viewers nightly) as they once did for Larry King Live, now in sixth place with 2.7 million. Although the war coverage cost all the networks in advertising dollars, Fox's ad revenue is expected to climb 50 percent this year.

But all of that pales in comparison with what might be coming. The DirecTV deal will give Murdoch not only a U.S. platform and 11 million new subscribers to add to his growing worldwide network but also leverage that few can match in both the $72 billion pay-TV industry and in cable programming.

With a satellite network, Fox will have a protected outlet for its own programming, particularly sports. But Murdoch, who says the deal will create more than $700 million in savings, also will be able to wrangle better deals with the big cable companies whom Fox must pay for carriage of its programming. Murdoch can push them to give him a good price in return for distribution on DirecTV. "It is a transformative deal that will have an impact throughout the media business," says Dennis McAlpine, an entertainment analyst. "That's why Rupert has lusted after it for so long."

Bulking up. But deals of their dreams have been the undoing of media moguls before, and integrating DirecTV with News Corp.'s other properties will be no small task. "There's a big difference between looking at the company and actually being in there," says Chernin. "This is a huge, huge undertaking for us, and there's a lot to learn."

Fox may also be about to learn what it's like to be in even greater control of the national news appetite. Next month, the FCC is expected to lift the ban on cross-ownership between newspapers and television. Current restrictions forbid a company from owning two of the top television stations or a TV station and large daily newspaper in the same city. There also are bans on owning stations across the country that reach more than 35 percent of the national audience.

When it was suggested to Chernin that he might like to have any of the superhuman powers of the mutants in Fox's hit movie X-Men 2 to take the company into the future, he shied away from choosing among them. Perhaps that's because he knows that Fox will need them all.

The added benefit besides being less costly was more stations and an incredible picture on a ten year old set that is now 13 going on 14 (I keep hoping it will just die of old age) versus the cable.

Also, inspite of some really bad storms, we have only lost the signal at the most about a minute with our dish. The cable was down all the time. Some drunk would run into a telephone and take out the cable, a lawyer used his chain saw to take out a damaged tree and took out some signal inhancer setup. We had no cable for 3 days over a Christmas holiday. The squirrels love to chew on the cable. Our old dog loved the cable and chewed it all the time.

So besides getting Fox on Dish, we get a great picture and the system is so reliable not happens except when my two year old grandson pulls the card out and tries to program the cable box.

Good news, Bob !! Thanks.

Please let me know if you want ON or OFF my General Interest ping list!. . .don't be shy.

Murdoch and the jacka$$ commentators on FOX news and entertainment are digging their own grave. Britt et al, are an embarassment, slobbering for war, preaching for blind obedience.

So I can safely assume that nobody has ever accused you of being a Bush-Bot.

And I take it that you rate CNN (post #1 text), Al-Jazeera and the New York Times as more credible sources, too.

The free market has moved FOX News to the TOP, and CNN has lost market share to them in a big way. I think it's because folks are seeing the light of day regarding Liberal Media Bias. Just my opinion, of course . . .

Hard to argue with the FRee market.

Very well said.

Hard to argue with the FRee market.

Yep.

Very well said.

Thank you. Good morning !

Have a cup while you FReep !

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