News Corp.'s (NYSE:NWS) Fox News Channel is one of the most valuable elements in Rupert Murdoch's media empire. Now he's trying to enhance that value through a deal with XM Satellite Radio (NASDAQ:XMSR).
Content from Fox News Channel and Fox News Radio, newly packaged under one brand name, will become part of XM's programming come January 2006. The Fox Talk News Channel will feature all the cable channel's noted pundits, including Greta Van Susteren, Tony Snow, Sean Hannity, John Gibson, Alan Colmes, and, of course, Bill O'Reilly, who is arguably the killer app of the whole operation.
According to an article in The Hollywood Reporter, this is neither an exclusive deal nor a new offering for XM. The satellite broadcaster currently features streams of Fox News Channel programs. Competitor Sirius Satellite Radio (NASDAQ:SIRI) also offers some Fox News content.
The new deal is all about consolidation, according to Kevin Magee, senior vice president of Fox News Radio. He believes that collecting Fox News' dispersed satellite offerings under a single brand identity makes sense.
I agree -- this is a great move for News Corp. Whether you like Fox News or not, the channel is a value driver for the media conglomerate. It's also changed the landscape of cable news coverage; Time Warner's (NYSE:TWX) CNN has felt Murdoch's competitive wrath over the past several years. In fact, Fox News Channel helped drive the 44% growth in News Corp.'s cable operating segment in the company's most recent fiscal year.
As for the satellite radio wars, stay tuned -- they're about to heat up. While this News Corp. deal may help to differentiate XM a bit from its competitor, it pales in comparison to Howard Stern's move from terrestrial radio to Sirius. It seems so long ago when Stern was on the David Letterman show hawking the deal, but now we're only about two months away from his Sirius debut. I think XM will have a lot to worry about.
Fox News Channel will continue to make News Corp. shareholders smile with this XM marketing scheme. The channel's radio exposure should lead to higher TV ratings and more lucrative advertising rates over time.
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Fool contributor Steven Mallas owns none of the companies mentioned. Time Warner is a Motley Fool Stock Advisor recommendation. The Fool has a disclosure policy.
