The Fox News Revolution

How the network captured cable . . . and never let go

Fox had set such a high bar, in fact, that ABC, which was also toying with the idea of a 24-hour news network, backed out.

Fox’s official launch came in October 1996. A year later, according to Carry, the network had 40 percent of the cable operators in the country lined up to air the channel.

The Monica Lewinsky scandal and Bill Clinton’s impeachment trial in 1998 gave Fox its first bit of news meat, and its viewers a taste of how the network’s editorial bent differed from its competitors. By the time of the Florida election recount in December 2000, Fox was getting record ratings, and occasionally beating its chief competitor, CNN, in total prime-time household viewers. 

By 2006, Fox had reached a turning point. Carry was taking meetings with the top cable operators in the country and, for the first time, driving a hard bargain. By now, the cable operators were paying Fox News a carriage fee as they did other networks, but News Corp. executives thought their network was undervalued. The operators had to pay more. “As far as we were concerned we were the most valuable name in cable television,” says Carry. The pitch more or less worked. Carry went into the meetings asking around a dollar per subscriber. After negotiations, he walked out with around 70 cents, according to data provided by analytics firm SNL Kagan. If the Kagan numbers are accurate, it was a 120 percent markup from what Fox had been charging previously (sources close to the matter say that Kagan’s figures underestimate how much Fox is getting, and that it’s closer to $1 per viewer). “The way we resonate with our viewers is unique,” says Carry. “We took the cable operators through that.”

This year, those contracts are up for renegotiation. News Corp. COO Chase Carey has publicly indicated that Fox intends to renegotiate its subscription fees way up as it enters contract talks with cable providers this year. Carey implied that Fox considers itself roughly in league with networks like ESPN—which commands a whopping $4 per subscriber. Carry won’t divulge a target figure for Fox’s subscription negotiations, but he says, “We’re pretty confident we’re going to get additional value.”

The problem for cable operators is that, at this point, they simply cannot live without Fox News. The network’s audience is like no other—it is loyal to Fox News in a way that few audiences are loyal to anything, more like the fan base for a sports team than a cable channel. And, like sports fans, if one company doesn’t offer Fox News, viewers will simply find an alternative.

“In the case of Fox News, the viewers are completely convinced that it is the one thing that stands between our tenuous grip on democracy and total chaos and dictatorship on the left,” says a source who has worked for both Fox and competing cable news networks. “They feel it’s the only option, the only oracle, the only source of real news.”

Paul Rittenberg, executive vice president of ad sales at Fox News, echoes that point. “Our audience watches much longer and they’re much more committed to our programming,” he says. “That’s the unique selling proposition. . . . We’re the home team for people who watch a lot of Fox News.”

In public comments, Carey has turned this advantage into a threat to cable operators. Referring to ESPN, and implicitly tying it to his own network, he reportedly said, “A lot of customers [would] move if it weren’t there.”

As Fox enters negotiations, its executives are keenly aware of the power they now wield. “People may love CNN,” says the source who’s worked at Fox and its competitors. “But if a cable provider dropped CNN . . . how many people would actually stop subscribing to cable? Maybe some. If you dropped Fox News, a third of your subscribers [would leave].”