Tim Arango of Fortune writes Thursday that News Corp. CEO Rupert Murdoch will spend $100 million launching Fox Business Channel later this fall, but the cable network is expected to lose money for the first four years.
Arango wrote, “The company plans to spend $100 million in initial capital for the business channel, which is slated to hit the airwaves in October, a News Corp. insider told Fortune. At the same time, the company is in the process of hiring about 300 people to staff the network. (The company has never released these figures – it has only said it plans to launch the channel in the fourth quarter of 2007.)
“For News Corp., $100 million is merely a rounding error, and the outlay suggests the company is wary about wading too deeply into cable business news, an industry that has seen such high-profile flops as CNNfn and the Financial News Network, which CNBC purchased out of bankruptcy in 1991 for $115 million. (Roger Ailes, the Fox News boss, was said to be initially skeptical about launching a competitor to CNBC).
“‘$100 million is not really much to launch a typical cable network,’ says Derek Baine, an analyst at Kagan Research. By comparison, News Corp spent $400 million to launch Fox News, and it took about five years to break even.
“Baine projects that Fox will endure about $107 million in losses from Fox Business Channel before breaking even in four years. The relatively small investment is made possible in part because the channel will utilize much of the infrastructure of Fox News – the company doesn’t need to invest heavily in real estate and building fancy studios. It already has that.”
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