• by David Goetzl  @dgoetzl, July 13, 2007

A Wall Street analyst says News Corp.'s announcement that it will launch the Fox Business Network this fall could strengthen its bid for The Wall Street Journal. Further, Pali Research's Richard Greenfield projects that while FBN will lose some $75 million in its first 12 months, it will move "rapidly to profitability" in 2009.

"This move could actually help increase News Corp.'s leverage and limits the risk that they will need to pay any more than $60 per share to actually acquire DJ," wrote Greenfield--who also predicted the deal would go through.

Greenfield said FBN would lose about $75 million in its first year due to start-up costs, but the continued success at its sister Fox News Channel--which will be buoyed by the 2008 presidential race--would likely "more than offset" the red ink.

However, another analyst, Bear Stearns' Spencer Wang, wrote this week that he didn't expect FBN to break even until four years after launch, or 2011. He also wrote that News Corp. has placed a value of $1 billion on the synergies that would come from a Dow Jones acquisition, which he thinks is "unlikely."

As for how lucrative FBN will ultimately be, Greenfield said there are too many variables in play to weigh in. First consideration--what happens in the battle with key competitor CNBC. CNBC brings in some $300 million a year in ad revenues and $386 million in subscriber fees, he estimated.

For example, FBN will be available on Wall Street desks in Manhattan, but how many traders and bankers will shift from the NBC Universal establishment? (Nationwide, the network will launch in at least 30 million homes.)

Other questions include what FBN will do in prime time and how FBN will take advantage of its connection to market leader Fox News Channel. Also, will there be any talent defections from CNBC to FBC? If News Corp. gets the Journal what impact will it have on CNBC's current content deal with the newspaper?

The Journal reported Thursday that CNBC and the Financial Times were in discussions about working together to strengthen each other's Web sites, which "could eventually lead to a closer relationship between the two news organizations" if CNBC and the Journal terminate their deal, which ends 2012.

"We have no value for FBN in our News Corp. model today, but it could be an important driver of value within the next few years as start-up losses are projected to swing to profits in fiscal [June] 2009," Greenfield wrote.