The Success Story of the Fox Broadcasting Corporation - Case Study Example

The Rise of FOX broadcasting network In March of 1986 the world was introduced to the Fox Broadcasting Corporation. Despite only having a few popularprograms for the first few years, Fox quickly grew and reached parity with CBS, NBC and ABC. By 1993, Fox was offering seven full nights of programming. There have been many explanations offered for rapid Fox’s success. Some of the explanations are more lengthy and detailed than others. However, it is generally agreed that no specific events can be singled out as the root cause of Fox’s success. Rather, Fox’s success is derived from a combination of internal and external factors. This paper will touch on a few of some of the major ones, while making passing reference to some of the less prominent factors. Many have credited Fox’s early success to Barry Diller, now regarded as one of America’s most notable media executives. Diller’s strategic decisions, while criticised by many in the early days of the Fox Broadcasting Corporation, turned out to prove fruitful. Diller challenged customary television conventions and engaged in new and unique tactics to become competitive. Taking a gamble, in 1988 Diller “blindsided the big three [CBS, NBC and ABC] by debuting his new line-up weeks before the traditional mid-September start of the TV season” (Grover and Duffy, 1990, p. 3). This move, one of Diller’s earliest calculated decisions, was not necessarily designed to deliver a crushing blow to the competition. Rather, it was designed to give viewers who would normally dedicate themselves to programming on CBS, NBC and ABC, the opportunity to sample Fox’s product. The exercise was largely deemed as successful. Diller’s head start on the competition introduced millions of Americans to Fox’s original new and programming, showcasing shows like The Simpsons. Many of Fox’s early challenges were financial in nature. It took Rupert Murdoch, founder of the Fox Broadcasting Corporation, over $2 billion in debt financing to get the network off the ground. This move “put the continued financial health of Murdochs company in question” (Harvard Business School, 1993, p.1). However, with Diller in charge, Fox was able to take advantage of the growing frustrations advertisers were expressing with CBS, NBC and ABC. The ‘big three’ were losing viewers consistently, yet raising their advertising prices. Advertisers were “particularly incensed by 1990’s summertime buying spree, when NBC and ABC announced they would ignore traditional ratings guarantees - while asking for double digit rate increases” (Grover and Duffy, 1990, p. 5). However, despite the competitive rates, Fox’s biggest draw for advertisers was its “young, free spending audience” (Grover and Duffy, 1990, p. 5). By 1990, by promoting edgier new programs like its flagship animated show The Simpsons, Fox had grabbed nearly 50 percent of views from ages 12 to 34. While Diller’s early moves were pivotal in putting Fox on the map, it can be argued that the greatest internal factor leading to Fox’s rise occurred after his departure from the company. In December of 1993, after Diller left the station, Fox surprised the media establishment by winning the bid for the premier portion of the National Football League’s (NFL) television package. For Fox, this move catapulted the network into the ‘big leagues’ and placed Fox on a more level playing field with CBS, NBC and ABC. Fox had outbid ABC for the rights to Monday Night Football in 1987 as well, but at the time the NFL dismissed Fox as an upstart amateur station and gave it little chance of survival. Fox’s negotiation team, led by Chase Carey, Fox’s chief operating officer and Lucy Sulhaney, head of Fox network, “dazzled them [the NFL] with demographics: the network’s strong audience of 18 year old to 34 year old males and young women, groups the NFL wanted to shore up” (How Fox Stole the Football from CBS, Wall Street Journal, 1993, p. 2). Thus far, we have focused exclusively on some of the major internal factors that have aided Fox in its rise to the top. As much as the sound strategic moves of Diller, Carey, Sulhaney and others should be credited with Fox’s success, there were a number of external factors at play as well that are worthy of mention. The late 1960s saw Cable operators, often resigned to rural areas, begin to pressure the Federal Communications Commission (FCC) to allow them to expand their operations. Basic cable service “comprised local and distant broadcast stations and advertiser-supported channels (like MTV and the Cable News Network)” (Harvard Business School, 1993, p.5). Operators had to petition their local and state governments to receive franchises to install their cables and lease utility poles to power their lines. Cable operators eventually took the FCC to court “over its restrictions on their services: including signal carriage rules, that required them to carry broadcasts from local television stations but limited the importation of distant stations; access rules that forced operators to make channels and production facilities available for public, political and educational programs; and "anti-siphoning" rules that prevented "pay cable" from carrying any series programs, movies over two years old, or sporting events already aired on network television” (Harvard Business School, 1993, p.5-6). In 1978, the Supreme Court ruled in favour of the cable operators. The ruling paved the way for upstart cable stations, like Fox, to achieve success. FCC deregulations played a role in Fox’s rise as well. At the pressure of the CBS, NBC, ABC and Fox, the FCC opted to eliminate its financial interest and syndication rules in 1993. The ruling, as it was portrayed in the media, saw Fox emerge the “biggest and clearest winner” (Jessel, 1990, p.1). Without the exemption, Fox would have been “restricted to 15 hours of prime time per week – the point at which it would be subject to financial restrictions” (Jessel, 1990, p.1). In short, Fox was now able to acquire syndication rights for all their programs. This move also allowed Fox to syndicate overseas. Fox’s success was also enhanced by the growth of independent broadcast stations. This meant Fox would be able to sell its product in local markets. While, in many cases, there would be no official relationship between the Fox broadcasting Corporation and its local affiliates, they would provide them with content and breaking news. In 1994, Fox shocked the media world by signing 12 new local stations, including eight that were previously affiliated with CBS. Fox sealed the deal by “pledging to invest $500 million in New World, which owns seven television stations plans to acquire eight more” (Carter, 1994, p.1). In exchange, Fox agreed to “initiate a partnership with New World to produce and syndicate programs for their stations and others” (Carter, 1994, p.1). Much of Fox’s success has come from the Fox Broadcasting Corporations ability to attract and maintain a youthful demographic. This has been successful not only in terms of ratings, but also in terms of advertising. Advertisers viewed Fox’s free-spending audience as a prime target and were willing to pay for air time. However, Fox’s success cannot be attributed to this alone. Externally, a number of factors came together that created a seemingly “perfect storm” for Fox. Fortunately for Fox, their success was accelerated greatly by the expanding role of independent broadcast stations, the expansion of cable television and the deregulating efforts of the FCC. While no one can deny the important role Fox’s key decision makers made in the early days that enabled the corporation to snatch a large percentage of the youth demographic, to dismiss the external factors at play would be a significant oversight. Any proper explanation of Fox’s rise needs to contain a balanced recognition of both internal and external forces at play. Works Cited. Grover, R & Duffy, S. (1990, September 17). The Fourth Network – Fox a hit but can it take on the big boys?. Business Weekly, p. 114 – 120 Harvard Business School. (1993). Fox Broadcasting Company. Cambridge, Massachusetts. (1993, December 20) How Fox Stole the Football from CBS. The Wall Street Journal, p. B6 Jessel, H. (1993, April 5) Networks victorious in syn-fin fight. Broadcasting and Cable, p 7 Carter, B. (1994, May) Fox will sign up 12 new stations, takes 8 from CBS. The New York Times, p C5 Read More