Ad revenue pegged at $421 million for 2006 would increase to $502 million in four years, according to Merrill Lynch's influential analyst Jessica Reif Cohen.
The modest growth projections come amid some ratings struggles for FNC, which remains the highest-rated cable-news channel, and its two competitors--second-place CNN and MSNBC. FNC saw prime-time ratings in the key 25-to-54 demo drop 40 percent for the summer to a .3. CNN's ratings fell 33 percent to a .2; MSNBC was flat at a .1.
The Merrill Lynch report also cast some doubt on whether FNC will be able to garner $1 per sub a month in renewal negotiations with cable and satellite operators, although the Wall Street firm said an increase to .$50 would be a success.
Perhaps as a negotiating ploy, top executives at parent News Corp. have said that FNC's leading position merits the major jump from its current per-sub rate in the $.25 range. Last week, Chairman-CEO Rupert Murdoch said $1 "is not a lot--we get more for our sports channels." If negotiations with Cablevision prove contentious, it might even cause a rift between Murdoch and long-time friend, Chuck Dolan, chairman of the cable operator.
Nonetheless, Merrill says it will be "quite pleased" if FNC receives the increase to $.50. In addition to Cablevision, negotiations with DirecTV are imminent. DirecTV is under the News Corp. umbrella for now, but may be shifted to Liberty Media in a stock-based transaction soon, which could alter that dynamic.