Merrill Lynch: Fox, Cablevision Deal Means 25% Rev Jump For Net

Influential Wall Street analyst Jessica Reif Cohen issued a report Tuesday suggesting Fox News Channel's deal with Cablevision could give the channel a revenue jump 23 percent higher than projections.

On Monday, Cablevision and FNC parent News Corp. reached a deal in which the cable operator will pay an average of 75 cents per subscriber over the next six or so years to carry the most-watched cable news outlet. That's up from an estimated 25 cents per subscriber under the previous deal.

A month ago, Reif Cohen said investors should be content if FNC were to garner an increase to 50 cents. Given the new, more lucrative deal, she now estimates that FNC will pull in $2.4 billion in affiliate revenue between 2007 and 2010--$450 million, or 23 percent more than current projections.

The 75-cents-per-subscriber baseline positions FNC to extract similar pricing in future negotiations with cable and satellite operators, including imminent haggling with DirecTV, Reif Cohen wrote.



But it's not all smooth sailing for FNC. In her report last month, Reif Cohen said FNC's ad revenue would grow only 4 percent a year through 2010--from $421 million in 2006 to $502 million in four years.

Although FNC leads competitors CNN and MSNBC in the ratings battle, it has experienced some ebbing lately. This summer, prime-time ratings in the key 25-to-54 demo dropped 40 percent to a .3. CNN's ratings fell 33 percent to a .2; MSNBC was flat at a .1.

Despite a slight drop Tuesday, News Corp. stock has been climbing to close to $22 a share.

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