Rupert Murdoch’s winning, $5 billion bid to acquire Dow Jones & Co. and crown jewel Wall Street Journal last week provides a big lift to News Corp.’s Fox Business Network (FBN), set to debut Oct. 15. It also presents unique challenges for CNBC, which has dominated cable business news throughout its 18-year history.
CNBC has grown considerably the past couple of years under the leadership of President Mark Hoffman, reportedly generating $350 million profit on $530 million in revenue last year. CNBC reaches 95 million homes in the U.S. and 390 million worldwide, versus 30 million for FBN at the outset.
If the FBN insurgency is successful, CNBC will be forced into a market-share battle: Its premium ad dollars will be challenged, expenses will likely rise, and its huge profit margins will shrink. Both operations have sought cable shelf space by being bundled with their companies’ premium channels.
Murdoch bought instant branding and credibility with the Journal, which FBN will likely leverage to land prized interviews. CNBC’s longstanding agreement to access the Journal’s news, editors and reporters runs through 2012. But it has also reportedly held early talks to form an alliance with the Financial Times group.
Murdoch and his news chief, Roger Ailes, who launched CNBC, have been guarded about the FBN format, although some expect it to mirror Fox News and be more advocacy- and populist-minded than upscale CNBC.
Talking with B&C’s Jim Benson, Hoffman addresses some of the key issues confronting CNBC as it faces its greatest challenge yet.
Are you prepared for FBN’s arrival?
We have spent the last 2½ years on getting better and delivering a better product. We have gone from having 45 guests a day to well over 100 guests a day in the U.S. and more than 850 interviews around the world every week. Worldwide, we’re doing more than 850 interviews each day. We’re now much more of a vertically integrated business network. I don’t take competition lightly. We will compete.
Why watch CNBC versus Fox?
I can’t address Fox, but we’re focused on a well-defined goal every day—to be fast, accurate, actionable and unbiased. We are an investor network. We always frame the biggest business stories of the day and the inherent conflict of business. That resonates with our audience, which is the wealthiest audience out there.
When you say “unbiased,” is that a shot at Murdoch’s Fox News?
No. When money is at stake, you want to get it straight.
Does this new competition impact CNBC’s growth plans?
We’re staying true to what we’ve been focused on for the last 18 years and really focused on the last couple of years, which is the investor. We have never been complacent, whether we have had competition or not.
Do you plan to make any on-air changes in format or personnel?
We’re not looking to make any personnel changes, and I can’t get into a format discussion. But when you look at where we were two years ago, a year ago and where we are today—we’ve added a business magazine show called Business Nation, increased the amount of long-form programming and documentaries (such as the recent Inside McDonald’s)—what we’ve accomplished has been remarkable.
How do you think having FBN will impact your talent costs?
I wouldn’t be surprised if our people are getting calls. We have an exceptional, talented group of people on the air and behind the scenes, so it makes perfect sense to me that, if you are trying to start a new business network, you would try to find the best people.
What about ad rates?
We’ve had an extraordinarily good upfront so far.
Murdoch has implied that FBN will be more business-friendly than CNBC—that you go after business scandals too aggressively?
There is nothing more business-friendly than getting it right.
Will CNBC’s contract with Dow Jones’ reporters and editors on-air be affected by this deal?
My view is that we’ve had a 10-year run that has been extraordinarily strong, with real quality content, and I expect it to keep going.
Are there any exclusives to your agreement? Do you think Murdoch will try to get out of it?
I can’t comment on any details of our contractual obligations. We don’t expect to see that, and we wouldn’t expect to.