How Fox Business is beating CNBC by embracing politics
Roger Ailes never thought Fox Business Network would work.
When Rupert Murdoch asked the former Fox News CEO to launch the network, Ailes voiced his doubts to the executive chairman of 21st Century Fox, saying, "The world doesn't need another business network."
"Rupert Murdoch was smarter than both of us in retrospect," Neil Cavuto, senior vice president and managing editor of business news, told Business Insider.
"His view - a patient, long-term view - was that the other guys sucked, so that we were going to suck less, and then we were going to do a lot better."
A decade since the network's inception, Fox Business Network believes it is in perhaps in its best position yet.
Despite sexual-harassment scandals that have roiled FBN and its sister network, over the past three years the network's Nielsen ratings ratings have skyrocketed.
For critics of the network, its success has little to do with a growing interest in the way FBN covers the markets and more to do with its lineup of right-leaning programming and embrace of President Donald Trump's economic and cultural vision.
On Monday, "Fox & Friends Weekend" anchor Pete Hegseth appeared on "Fox & Friends Early" to slam Sgt. Bowe Bergdahl, who pleaded guilty to desertion and misbehavior for walking off his base in Afghanistan in 2009.
"The least he could do is serve behind bars for the rest of his life," Hegseth said. "Most of us would say he should be put to death for it. This was a treasonous act."
A few hours later on FBN's "Varney & Co.," Hegseth made virtually identical remarks.
"Frankly, a lot of us feel like he's a traitor who should be executed. Life in prison is the least this guy should get," he said.
The moment typified what some critics and others view as a key formula to FBN's success: Its embrace of the political red meat that tantalizes cable news viewers.
FBN beat CNBC - the longtime television business news juggernaut - in total viewers for a week for the first time in September 2016, a milestone that it has repeated consistently for the past year. The network is profitable and has 17 times the number of advertisers it did when it launched a decade ago, and has won some key recent business news days, including on Snapchat IPO's and when the DOW crossed recent milestones.
FBN's competitors privately acknowledge the network's success in wooing a larger viewing audience. But critics, including more than a half-dozen former employees, suggest that the network has gotten there by deviating from its implied purpose.
"The question is, how much longer can you call it a business network?" one former top-level employee asked, in order to speak freely about their experience at FBN.
'A contradiction we lived with'
FBN first hit the air on October 15, 2007, launching with the goal of "demystifying" televised business news for regular viewers, betting that if the network eschewed business jargon, it'd make financial news more easily understandable and digestible.
"We didn't assume that everybody is a chief financial officer, and knows what fed funds futures are," longtime anchor Liz Claman - who decamped from CNBC and joined the network in its infancy - said in a phone interview.
But almost immediately, the network faced problems.
Many critics wrote off Fox Business as unserious, and in its first several years, the network went through a number of major lineup changes.
The network's early-morning shows failed to attract ratings, so in 2009 FBN hired controversial shock jock Don Imus, which resulted in an immediate viewership boon but ceded airtime to a host with little interest in serious markets news that drove rival business radio and television programs in the same time slot.
It wasn't just the early-morning shows that were in trouble. In 2012, the network canceled its entire primetime lineup, choosing to replay its daytime lineup in the evening.
Part of the turnover was the result of an internal identity crisis as the fledgling network was figuring out how seriously to embrace the ratings force that had made Fox News' opinion programs successful - a heavy diet of politics news and a right-leaning political agenda.
A number of earlier higher-ups were more committed to traditional business coverage with a Fox News tint.
In an internal memo in 2011, then executive vice president Kevin Magee urged staffers not to "imitate our sibling network" because audiences would choose Fox News over Fox Business Network.
But at the same time the network was seeing positive ratings for shows led by some of their most opinionated hosts, including Imus, Lou Dobbs - who decamped from CNN after embracing birther conspiracies and hardline anti-illegal-immigration positions - and Stuart Varney, a right-leaning veteran of CNBC and CNN who has been critical of The New York Times and Hollywood.
"There was a contradiction we lived with," one former top Fox Business staffer said.
Over the past several years, the network has more fully embraced political coverage and opinion segments.
The network shook up its leadership structure, promoting Gary Schreier and Tom Bowman to senior vice president of programming and vice president of programming. Former colleagues said they were stronger producers for politics and general topics than their predecessors.
It has also become a bigger pipeline to Fox News. Though hosts such as Varney and Cavuto have had a presence on both networks for years, others such as Melissa Francis have taken roles unrelated to business on FBN's larger sister network. Other hosts like Maria Bartiromo have weekend shows on Fox News, a sort of dual citizenship that former network higher-ups were initially hesitant to give to many hosts.
Earlier this year, The Daily Beast found that the network used phrases like "liberal media" and "left-wing media" more than Fox News during the same time frame.
A similar audit last week of the use of the same terms yielded essentially identical results between Fox News and FBN, though the vast majority of the uses of the terms were on Fox News' "Hannity" and FBN's "Lou Dobbs Tonight."
And according to an Adweek analysis earlier this month, Trump was mentioned 390 times during FBN's program day, compared to 172 times on CNBC.
"It's been a network that's been shameless in a way that even Fox News has never been," said John Whitehouse, who monitors the network for Media Matters, the left-leaning media watchdog. "Whatever journalism you have at Fox News, if you take that journalism out, you have a wildly pro-Trump network."
Many of the top figures at the network say that FBN hasn't shifted to covering politics more so than any other network, noting that some hosts like Cavuto have criticized the president.
FBN higher-ups publicly attribute the network's success to increased visibility during the presidential debates and a broader availability. The network launched a decade ago in 30 million homes; it now reaches 80 million.
Bowman, the vice president of programming at FBN, said in an interview with Business Insider that their "approach to business news has changed," saying the network had spent years "trying to do CNBC at their own game." But he pushed back against the notion that FBN was changing its mission to cover politics.
"We don't have an agenda," Bowman said. "We were just covering the news and covering things that people care about, and they care about their pockets.
"If we're going to be labeled as doing too much politics, I think that's very unfair," he added. "A businessman in the White House focusing on economic issues is a great story and a great storyline for business."
Schreier, the senior vice president of programming, pointed out that the network continues to nab major business guests, and said that if competitors were critical of FBN's editorial decisions to cover the Trump administration closely, they were "really being critical of themselves being slower."
'Hunting season'
While there was a push and pull over politics over the years, one goal was always clear: Murdoch and Ailes' commitment to beating CNBC.
In the press tour before Fox Business' launch, then-CEO Ailes repeatedly targeted the network he used to helm, saying CNBC's audience was FBN's prime target, mocking the infomercials the network ran on the weekends and accusing it of stealing ideas from FBN before it even launched.
On its first day on the air, FBN reporter Liz Macdonald stood outside CNBC's headquarters in New Jersey and declared it was "hunting season."
CNBC was initially frightened of its competitor, having seen how Ailes helped shape CNBC and push Fox News ahead of CNN and MSNBC.
"CNBC got extremely concerned," Claman said of her time at CNBC in the months before FBN's launch. "Every once in a while, someone from the management floor would run down and say, 'Going into every break, start saying "America's Business Network,"' because they thought that's how Fox would attack a successful business network."
Still, the timing was difficult for FBN. The network was starting out during the early stages of the recession.
CNBC's ratings rose during the financial crisis as it embraced politics, allowing its hosts to take more opinionated stances and increasing coverage of Washington's response to economic crises brought on by the collapse of the housing market in 2008. But over the past year the network's ratings have stagnated.
Last quarter, FBN averaged 187,000 total viewers for its business-day programming, which it measures between 9:30 a.m. and 5 p.m., while CNBC averaged 152,000 during the same period and dipped 30% from the same quarter last year in advertisers' coveted demographic of 25- to 54-year-old viewers.
For CNBC the caveats abound.
In total day programming, the network continues to beat FBN among younger viewers, which matter more to advertisers. CNBC beats FBN in the traditional prime-time evening hours, and "Squawk Box" beats FBN's "Mornings With Maria," which occupies a key time slot before the markets open.
In 2015, CNBC abandoned Nielsen ratings, a measurement system that many in the television industry believe is an inaccurate tool for measuring ratings, saying they did not accurately measure where CNBC believes its daytime audience is - in offices, executive suites, and on trading floors.
Instead, CNBC switched to Cogent and IPSOS, which show that CNBC reaches an audience that is younger than the audience that tunes into FBN. A recent IPSOS study claimed that, by its measurements, CNBC had a more than 53% share of total business-news viewership, more than Bloomberg and FBN combined.
Still, FBN insists that CNBC happened to abandon Nielsen at the moment when it was most beneficial for it to use other ratings sources. Indeed, the longtime business leader had no problem mocking Fox Business about its Nielsen ratings when Fox's numbers were poor.
"I do find it interesting that the very same people who were touting their own success, their own ratings and rubbing our noses in the dirt - when the numbers change for them, all of a sudden the data wasn't quite right," Cavuto said. "I'd love to say ... there are different ways to score a baseball game or different ways to score a football game. But it's generally who has the most points."
FBN has also continued to fill its lineup with talent from CNBC.
"They all feel like they survived a jailbreak," Cavuto said of CNBC ex-pats working at FBN. "You know, before they were making hostage tapes and now they're able to just be real. No one is policing their emotions."
'Their success was sort of overshadowed by whatever else was going on'
Despite its ability to tout its ratings dominance over CNBC, FBN still faces a number of problems.
Prominent Trump supporter and TV pundit Scottie Nell Hughes sued Fox News last month, claiming she was raped by FBN anchor Charles Payne and subsequently blacklisted by the network. The lawsuit came after Payne was suspended from FBN for two months after harassment allegations but was cleared to return to the air (though the circumstances of the internal investigation remain private).
FBN higher-ups said that the departure of Ailes, former host Eric Bolling, and others amid harassment allegations have affected staff.
"It's impacted the rank and file," Bowman, the vice president of programming, said. "What we've tried to do as managers is have an open-door policy and just tell the staff that they should keep their head down and work and do their jobs, and some things are beyond their control.
"I really think the only drawback that the staff probably saw was that their success was sort of overshadowed by whatever else was going on."
But FBN likely faces a larger industry-wide problem in the coming years.
The easy accessibility of to-the-second markets information online has cannibalized some of the audience for televised markets information during the peak hours of investing. Fewer physical investors also helped contribute to a ratings dip across all the networks just a few years ago as more investing decisions have been made by algorithms.
FBN president Brian Jones said his No. 1 concern was attracting a younger audience, as the average Fox Business Network viewer is 68 years old and programs in key demographics are even older. According to Nielsen, the median age for "Mornings With Maria," in the coveted 6 a.m. slot, was over 73 last quarter.
"It's a problem," Bowman said. "A lot of people in your generation are cutting cords and they don't rely on television ... So our challenge is in developing younger talent."