SNL Kagan Looks at the Business of Fox Business

By Alex Weprin 

Research firm SNL Kagan has released a report focusing on Fox Business Network. The report examines the state of the cable channel’s business, and makes some predictions as to its growth potential.

While News Corp. COO Chase Carey said that FBN will be “cash break even” this year, SNL Kagan predicts that FBN will start generating real profits starting in 2012. That said, barring some unforeseen viewing or advertising shift, it will likely remain far behind CNBC in terms of profitability.

By 2015, SNL Kagan predicts that FBN will be available in 86.5 million households (compared to 67.7M in 2011) and will be bringing in an average monthly subscription fee of $0.14 a month (compared to $0.12 in 2011).

FBN also shares a substantial problem with CNBC: the inability to count out-of-home viewing, as noted by analyst Brad Adgate.

“The difficulty that FOX Business has and all business news has … is the limitation of getting viewing data outside of the home,” he said. “These networks are seen outside the home, whether it’s in the offices of C-level executives or in the gym or in a restaurant or bar. And none of that audience is being picked up.”

The effect of these limitations is that business news networks get lower ratings from Nielsen Holdings NV than they perhaps deserve, and therefore lower advertising revenue. And even when anecdotal evidence of out-of-home viewing is factored in, advertisers may raise questions about engagement and brand recall.

“The issue that advertisers have when you come in and talk about out-of-home viewing is, ‘Are the ads being paid attention to and are they being seen?'” Adgate said. Ads, he explained, get less attention in offices and gyms “where attentiveness or awareness of ads is a little bit lower than if you were sitting at home in front of a set.”