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Fox Broadcasting Co.

Fox Broadcasting Co.

founded: 1986



Contact Information:

headquarters: 1211 avenue of the americas new york, ny 10036 phone: (212)556-2400 url: http://www.foxworld.com

OVERVIEW

In 1986 Keith Rupert Murdoch launched Fox Broadcasting Company, the first new television network in the United States since 1948. Within a decade, what started as an apparently risky broadcasting endeavor became a network capable of reaching almost 96 percent of U.S. homes through 20 stations and more than 176 affiliates. By 1996, Fox was the top-ranked television group in the United States, with 34.8 percent of market coverage. And the collection of U.S. broadcasting networks that used to be called "The Big Three" came to be known as "The Big Four": ABC, CBS, NBC, and Fox. During the "sweeps" of early 1998, for the first time ever, Fox Broadcasting rose from its fourth place position capturing 12.2 million prime time viewers dislodging ABC from its third place spot with 11.7 million viewers.



COMPANY FINANCES

Financial information about a company like Fox Broadcasting—a subsidiary of a subsidiary (Fox Inc.) of a giant corporation (News Corporation Limited)—is very difficult to obtain. Consider that News Corp. is one of the largest media empires in the world and along with owning Fox Broadcasting Company, it owns newspapers (the New York Post, four major British newspapers, dozens of Australian newspapers) TV Guide, a movie company (Twentieth Century Fox), a book publisher (HarperCollins), a 40-percent stake in a U.K. satellite pay-TV service (British Sky Broadcasting), a majority interest in STAR television, an Asian satellite TV network, an airline, the Los Angeles Dodgers, and a sheep farm. It's not surprising that details of Fox Broadcast-ing's financial costs and contributions are largely buried or entirely obscured in the enormous network of numbers and facts that make up News Corporation's financial statements.

Nonetheless, a couple of vague details are available. In 1996, News Corp.'s revenues from television totalled $3.35 billion; in 1997, this number grew to $3.70 billion. Operating income from television was $549 million in 1996 and $573 million the following year. From 1996 to 1997, News Corporation's identifiable assets in television grew tremendously, from $7.10 billion to $13.46 billion. Exactly what portion was contributed by Fox Broadcasting cannot be ascertained from the report or from the company itself.



ANALYSTS' OPINIONS

When Fox Broadcasting began delivering programming in 1986, many were skeptical about its chances of success. Brandon Tartikoff, president of NBC Entertainment, called Fox the "coat-hanger network," referring to the fairly weak UHF TV stations Fox had collected. ABC programming master Fred Silverman referred to Fox as "The Mickey Mouse network," and added that "Fox will fail."

Famously, Fox didn't fail—by 1998, for the first time, Fox bumped one of "The Big Three," ABC, for the spot of third-ranked network in the sweeps of early 1998. Sweeps are considered important for broadcasters because networks use ratings to determine advertising charges. But some, like Christopher Dixon, analyst at Paine Webber, think that network broadcasters are fighting the wrong battle. "Whether or not these broadcasters are number one or number three is a little like shuffling deck chairs on the Titanic," Dixon said. Then he added, "To me, the most interesting thing is the shift between broadcast networks as a whole and the cable industry."



HISTORY

Soon after buying the 20th Century Fox film studio in 1985 and six U.S. [Metromedia] television stations in 1986, Rupert Murdoch announced his decision to launch the Fox Broadcasting Company. In a landscape dominated by broadcast giants CBS, NBC, and ABC, Murdoch wanted Fox to become truly competitive, the country's fourth broadcast television network. Many, including the other three networks, were skeptical about Fox's chances of succeeding. Some, like then-ABC Entertainment president Brandon Stoddard, felt the television market was already too saturated for another network. "There probably is a two-network economy as it stands, so I don't know if [a fourth network] can be economically feasible," Stoddard said at the time.

On October 9, 1986, Fox broadcasted its first program, the premiere of The Late Show With Joan Rivers with guests Elton John, Cher, Pee Wee Herman, and David Lee Roth. By mid-1987, Joan Rivers left the show, which was then hosted by several guest hosts before being hosted by Arsenio Hall. Then Fox abandoned the late night slot to begin concentrating on prime time programming. In early April 1987, Fox offered its first full night of prime time shows that included an outrageous (and, to many, also hilarious) dysfunctional family, the Bundy's, in a show Fox called Married . . . With Children. The show became a subject of controversy when a Michigan woman campaigned to have it removed from the air; the free publicity helped bring the show national attention. By July of 1987, Fox added a second full night of prime-time shows.

FAST FACTS: About Fox Broadcasting Co.


Ownership: Fox Broadcasting Co. is a subsidiary of Fox Inc., which is a subsidiary of News Corporation Limited, a publicly owned multinational corporation traded on the New York Stock Exchange.

Ticker symbol: Fox Broadcasting's ultimate parent's ticker is NWS.

Officers: K. Rupert Murdoch, Chmn. & CEO News Corporation Ltd., 67; Chase Carey, COO & Exec. VP Fox Inc., 44; David Hill, Pres. & CEO Fox Broadcasting

Employees: more than 500

Principal Subsidiary Companies: Fox Broadcasting's subsidiaries include Los Angeles-based FNM Films Inc.

Chief Competitors: Fox Broadcasting Co. has as its main competitors the three other major television networks: National Broadcasting Company, Inc. (NBC), the top-ranked television network in the late 1990s, owned by industrial giant General Electric Company; CBS Corporation, formerly Westinghouse Electric, the second-ranked network toward the end of the twentieth century; and Capital Cities/ABC, Inc., subsidiary of entertainment and media behemoth Walt Disney Corporation.




More controversial than other networks, Fox attracted an audience and a collection of popular shows, including 21 Jump Street, The Tracey Ullman Show, America's Most Wanted, and, in 1990, The Simpsons. In 1990, the Academy of Television Arts & Sciences voted to give Fox a three-year contract to broadcast the Emmy Awards, breaking with the show's traditional rotation between the three networks. In an effort to expand its share of the youth market, Fox launched the Fox Children's Network in 1990. The partnership with affiliate stations provided younger viewers with both animated and live-action programming. By 1997, the renamed Fox Kids Network enjoyed its fourth year as the top-rated children's program on broadcast television.

By June of 1993 Fox was offering an entire week's worth of prime-time programming. In May of the following year, the network took a serious step toward achieving a significant presence in major cities throughout the United States: the network bought a minority stake in New World Communications Group Inc. and then switched most of the company's stations from CBS to Fox, unquestionably the largest affiliation switch in the history of television broadcasting. As a result, in many of the areas in which Fox had been broadcasting on a UHF signal, the network could now transmit on a stronger VHF platform, providing a better channel position and the ability to reach a larger audience. Two years later, in July of 1996, Rupert Murdoch acquired the remaining 80 percent of New World Communications Group Inc. for $2.5 billion. With 22 owned-and-operated television stations, the Fox Television Station Group became the single largest group of television stations in the United States, reaching 10 of the 11 largest markets—at least 35 percent of the nation's television audience.




STRATEGY

From its early days, Fox showed it would not be like the other networks. When it launched its first night of prime time television on April 5, 1987, Fox did not offer traditional family television. Instead, its first night of prime time programming marked the debut of Married . . . With Children and The Tracey Ullman Show. Instead of representing a conventional, wholesome household, Married . . . With Children introduced viewers to an uncouth, dysfunctional family called the Bundys. The show would go on to win several Emmy Awards and would become the longest-running situation comedy on American television. That same night, The Tracey Ullman Show debuted, introducing the brash young comedienne and an animated segment called "The Simpsons." With its teen cop series 21 Jump Street, the network demonstrated it wasn't afraid to take on serious life issues such as drugs, prostitution, and child abuse, and it perhaps gained some respect for the public service spots that ended most of its 21 Jump Street shows. This aggressive approach to television programming paid off. By mid-1987, 113 affiliates joined the network and Fox attracted some major advertisers like Bristol-Myers, General Foods, and Johnson & Johnson.

In 1990, the network expanded its blunt, irreverent take on American home life with its debut of The Simpsons. Spun off from The Tracey Ullman Show, The Simpsons became the first Fox show to beat out its competition on the other networks. In the fall of 1990, Fox moved its animated sitcom to a Thursday night slot to take on NBC's top-rated comedy, The Cosby Show. While The Simpsons didn't beat out The Cosby Show in ratings, it did hurt NBC's ratings and helped establish Fox's image as a major force—especially with the youth market. Fox has become a main vehicle for advertisers wishing to reach the 18 to 34 age group. Many of its shows are youth-targeted or youth-oriented like The Simpsons, Beverly Hills 90210, The X-Files, Mad-TV, and Melrose Place.

CHRONOLOGY: Key Dates for Fox Broadcasting Co.


1985:

Rupert Murdoch purchases the 20th Century Fox film studio and announces his plans for a television network

1986:

Fox broadcasts its first program, The Late ShowWith Joan Rivers

1987:

Fox offers its first full night of prime time shows

1990:

The Academy of Television Arts & Sciences gives Fox a three-year contract to broadcast the Emmy Awards; The Simpsons debuts

1993:

Fox is offering a full weeks worth of prime time programming

1994:

Murdoch purchases New World Communications Group Inc. and switches most of the company's stations from CBS to Fox

1996:

Fox Television Station Group becomes the single largest group of television stations in the United States




INFLUENCES

Since the early 1980s when only about 25 percent of U.S. homes subscribed to cable services, the cable television industry experienced incredible growth. By the late 1980s, the percentage of U.S. homes with cable services more than doubled. By 1997, cable reached 70 percent, or about 65 million U.S. homes. To compete with the expanding reach of cable television, some think network broadcasters need to increase sports coverage, particularly of high profile events like National Football League events and the Olympics. Indeed, when CBS covered the Nagano Winter Olympics in 1998, it dominated the Nielsen Media Research ratings. For Fox, an increase in major sports broadcasting came in 1993, when, to the shock of the industry, it succeeded in luring the National Football League from CBS. For almost $1.6 billion, the network bought four years' worth of broadcast rights. The following year Fox Sports signed a five-year contract with the National Hockey League, and in 1996 it began a five-year deal with Major League Baseball.

Fox also began making inroads into cable when, in October 1996, the Fox News Channel began cable broadcasting with its News Channel. Unfortunately for the company, their earlier distribution plans with Time Warner Inc. fell through a month earlier—the media monolith backed out of plans for Fox distribution on its New York City cable services. Time Warner was then in the process of merging with Turner Broadcasting, whose Cable News Network (CNN) was a direct competitor to Fox News. CNN was to be carried on Time Warner's cable along with the new 24-hour news station, MSNBC. This meant a loss of more than 1 million homes for Fox. Fox quickly filed a federal anti-trust lawsuit against Time Warner, requesting the court block the merger of Time Warner and Turner Broadcasting and award Fox $1 billion in damages. In spite of the unexpected reduction in distribution, that year Fox News Channel was ranked twelfth among the top cable channels.

AY, CARAMBA!

He's an underachiever and "proud of it," as he (and thousands of T-shirts) will tell you. He gets himself into a lot of trouble and is a perpetual prankster. Once he filled the school groundkeeper's shack with creamed corn to get back at him for taking his skateboard. Another time he cut off the head of the statue of the town founder. You can often find this little good-for-nothing after school writing one of several admonishments on the blackboard: I will not belch the national anthem; I will not call my teacher "hot cakes;" the principal's toupee is not a Frisbee; spitwads are not free speech; I will not bury the new kid. Prank phone calls to the local watering hole are one of his bad habits—"Is Oliver there? Oliver Clothesoff?" If you make an issue of his less-than-perfect behavior, he'll tell you to "don't have a cow, man!" or perhaps "Eat my shorts!" His father, a rather slow-witted chap, is often driven to choking the boy because of his misbehavior. This 1990's Dennis the Menace was once tried for killing his principal and once made the unfortunate miscalculation of selling his soul for $5.

Lisa, the little brat's sister and the brain of the family (but then, considering the family, that's not saying much), believes she has an explanation for her brother's delinquent deeds: "That little hell-raiser is the spawn of every shrieking commercial, every brain-rotting soda pop, every teacher who cares less about young minds than about cashing their big, fat paychecks." But, as Time magazine points out, "the kid knows right from wrong; he just likes wrong better."

Despite of all his misdeeds and bratty behavior (or maybe because of it) TV Guide named him one of the top 50 greatest TV stars of all time, and Time named him one of the twentieth-century's most influential artists and entertainers—putting him next to Picasso, T.S. Eliot, James Joyce, Frank Sinatra, and the Beatles.

By this time you've probably figured out that the above-mentioned scalawag is none other than Bart Simpson, the impish star of Fox's hit animated series of the 1990s, the Simpsons, a cartoon tale about a dysfunctional family living in a dysfunctional town in a dysfunctional universe. Bart became the cultural icon of 1990s—he was the role model of slackers everywhere ("I will not fake my way through life" he was once forced to write on the blackboard). He was also a big boost to Fox, helping propel it to full-fledged network status. The Simpsons became the longest running prime time cartoon in history and also won several Emmy's. Eventually it became no longer cool to shout "Cowabunga, man!" or "Ay, caramba!", and Bart's popularity gave way to the likes of Beavis and Butthead and the foul-mouthed tykes of South Park, but one suspects that the little yellow rascal from Springfield will outlast them all.




CURRENT TRENDS

In September 1997, Fox Broadcasting and Miller Brewing Company reached an unusual agreement. Each week during an NFL game's two-minute-warning, Fox will broadcast an "NFL/Miller Lite vignette," which will take a behind-the-scenes look at unusual NFL fans. Miller Brewing's vice president in charge of marketing, Jack Roony, explained that "[t]hese vignettes will be a celebration of the super fan, the die-hard 'take-your-shirt-off, paint-your- face' fanatic." Moreover, throughout the season Miller will air weekly features on Fox at prime-time. The multi-year agreement specifies that Miller, in conjunction with Fox, will create the weekly features incorporating the "Miller Time" theme while promoting Fox's upcoming programming. Fox has given Miller exclusive beer advertising for all Major League Baseball games broadcasted by Fox, including the 1998 and 2000 World Series games and the 1999 American League Championship series.



PRODUCTS

In addition to news, sports, and children's programming, Fox offers some of the most successful shows on television. Fox's 1997 lineup included tremendously popular shows like Ally McBeal and The X-Files. Other top-rated prime time Fox programs have included America's Most Wanted, COPS, Beverly Hills 90210, and Mel-rose Place. Some of Fox's more controversial programs include specials like "When Stunts Go Bad" and "Breaking the Magician's Code: Magic's Biggest Secrets Revealed." When Fox planned to air its third show revealing magicians' secrets on May 5, 1998, a coalition of over 1,000 magicians from the Society of American Magicians, the International Brotherhood of Magicians, and elsewhere, filed legal action, urged a viewer boycott, and organized free magic shows at public venues around the country at the time of the broadcast. The coalition denounced the program's host, who was dubbed "the Masked Magician," because he wears a costume concealing his face while he exposes secrets behind magic tricks. According to the magicians, the Fox specials threaten the careers of some magicians—since the specials started airing in November 1997, some magicians have lost jobs and some have had to give up elaborate illusions that cost them a tremendous amount of time and money to learn. Magician Andre Cole went to court in Los Angeles in late April 1998 to try to obtain a temporary restraining order to keep Fox from exposing the secret behind his patented "Table of Death" illusion. Cole's request was denied. Veteran magician Chuck Jones said, "This has not affected me personally. But I worry about the amateur magicians who spend $1,000 or so on one prop, and then it's exposed on these specials. Now they can't use it anymore."




SOURCES OF INFORMATION

Bibliography

braxton, greg. "magicians wish fox special would vanish." los angeles times, 1 may 1998.

business rankings annual. detroit, mi: gale research, 1998.

fox broadcasting home page. 1 june 1998. available at http://www.foxworld.com.

"fox sweeps abc aside." cnnfn, 6 march 1998.

fox tenth anniversary: a decade of revolutionizing television. new york: fox broadcasting co., 31 march 1997. available at http://www.foxworld.com/presroom.htm#tenth.

frank, allan dodds. "tv titans square off." cnnfn, 9 october 1996. available at http://www.cnnfn.com.

lazich, robert s., ed. market share reporter- 1998, detroit, mi: gale research, 1997.

"miller brewing teams with fox in groundbreaking agreement." business wire, 28 august 1997.

"the news corporation limited." hoover's online. 1 june 1998. available at http://www.hoovers.com.

paeth, greg. "fox in the penthouse after 10 years, the 'coat-hanger network' is sitting pretty." rocky mountain news, 5 april 1997.

schwartz, shelly. "abc shelves ellen." cnnfn, 24 april 1998.

"s&p description: new corp. inc." standard & poor's, 7 april 1998.

wian, casey. "murdoch enters new world." cnnfn, 17 july 1996.


For an annual report:

on the internet at: http://www.newscorp.com


For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. fox broadcasting's primary sic is:

4833 television broadcasting

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