Posted 9:45 AM by Robert

News. Supply. Demand.

The New York Times ponders the growth and profitability of Fox News in a curious article that spends much space on the consequences of Fox becoming the largest cable news network:

Fox News clobbered the other cable news networks, its 8.1 million viewers more than tripling its own election night prime-time performance in 2000. NBC, ABC and CBS, on the other hand, lost millions of viewers this year, according to Nielsen Media Research. And Fox News actually came closer to CBS in the ratings than CNN did to Fox News. .... [T]he network's success could undercut the very raison d'être of Fox News: that it exists as an alternative to what its executives and some of its on-air talent call, disdainfully and often, the media establishment. Fox News has now become popular enough - with an audience whose conservative political leanings track those of the voters who re-elected President Bush - to lay claim to its own place in the establishment.

Someone might want to point out to the Times that when the reference is disdainful, the term of choice is the liberal media establishment. But who's picking?

Perhaps the most bizarre omission in the Times article is its complete failure to consider the consequences of supply and demand in its analysis of why Fox News keeps getting bigger and more profitable and the outlets comprising the liberal media establishment - including the New York Times - have become "mature" cyclical businesses whose profits tick up when advertising spending goes up generally, but mostly have profits that are at best stagnant or decline steadily in the long run.

Here's something to ponder: NBC, ABC, CBS, MSNBC, PBS and CNN all serve their news with pretty much the same political mix (calling that mix a "slant" or a "bias" or the consequence of "unbiased policies" does not change the economic fact that the mix, whatever it is called, is pretty much the same). That's a lot of suppliers to align themselves with the views of the roughly 50% of the nation who voted for for Kerry-Edwards. On the other hand, the Times completely misses the economic consequences of one of its own observations regarding Fox:

What seems less open to debate is that the audience for Fox News mirrors the majority that re-elected the president. In June, the Pew Research Center for the People and the Press reported that the percentage of Fox News viewers who identify themselves as Republican was 41 percent, compared to 29 percent who identified themselves as Democrats, and that 52 percent of Fox viewers identified themselves as conservative. (CNN, by contrast, was found to be more popular with Democratic viewers.) Mr. Ailes said he regarded the study as "a totally fraudulent survey done by a bunch of liberals."

Andrew Kohut, president of the Pew Research Center, said, "It's a classic case of shoot the messenger." Mr. Kohut said his organization's financing came from a nonpartisan source, the Pew Charitable Trusts, and the survey results had been replicated in other studies. He added that Fox News's commentators had had no problem quoting approvingly from an earlier study by his organization - one that suggested that the news media was increasingly liberal.

The Times reporter seems completely distracted by the "Is-Fox-conservative?" side show. The main economic point here - entirely missed by the Times - is that Fox is the only major television supplier to align itself with the views of the roughly 50% of the nation who voted for Mr. Bush.

Political slant is obviously not the only factor used by news consumers to choose their media. Now that the election is over, Fox's advantage and distinctiveness may fade somewhat. Or Fox's advantage and distinctiveness may not fade, since the liberal media establishment insists on flavoring all sorts of stories with what the "Bush base" would view as political bias.

Media audiences are not wholly distinct even during politically charged events like elections. Many people flip at least briefly among news channel to follow special events - and thereby create their own "balanced" portfolio of news. (One might compare this behavior to that of investors who create their own portfolios of stocks rather than purchase stock in a single "balanced" conglomerate.) But even those "media flippers" have lots of choices for their "left-of-center" litings - but Fox is the only choice on television for the "right" view. The Man Without Qualities, for example, found Wolf Blitzer's energetic and increasingly delusional attempts to present the election results as "up for grabs" and "too close to call" long after Mr. Bush had clearly carried Ohio to be hilariously entertaining compared to the obviously correct "it's over - Bush won Ohio and reelection" message Fox was putting out. Similarly, science fiction movies that defy the laws of physics can sometimes be much more entertaining and hilarious than a science documentary explaining those same laws. Part of the entertaining hilarity is that after a few martinis the science fiction movies can for moments on end actually seem to make more sense than the documentaries - until you actually think about it - just like Wolf!

The bottom line is that to the extent political slant is a factor in viewers' choice of media outlet, Fox has a huge advantage simply because it is the only television news outlet serving its 50% of the nation while the outlets comprising the television liberal media establishment are many and for the most part virtually interchangeable. Unless the television liberal media establishment actually remakes itself into the television media establishment (say, for example, CBS fires Rather, hires Hannity), that advantage will continue and Fox will likely continue to grow and make ever more money while its competitors continue to shrivel. If that transformation continues to be delayed or denied, one can look forward to lots of consolidation in the television liberal media establishment. The attempted merger of ABC News and CNN was one early attempt, an attempt that essentially recognized how fungible these two outlets really are. That merger crashed on big corporate ego rocks at Disney and Time Warner - but the economics justifying the merger have only gotten more imperative.

All of which begins to sound a lot like the current discussions about how the Democratic Party will have to remake itself into something broader if it wants to survive.

MORE: Reports concerning the workings of CBS News bear an increasing resemblance to the disconnected associations one might read in, say, Zippy the Pinhead comics:

Pre-election, the feeling in some quarters at CBS was that if Kerry triumphed, fallout from the investigation [of the Rathergate fake-document ANG story] would be relatively minimal. The controversial piece’s producer, Mary Mapes, would likely be suspended or fired, but a long list of others up the chain of command—from 60 Minutes II executive producer Josh Howard, to Rather and all the way up to news division President Andrew Heyward—would escape more or less unscathed. But now, faced with four more years of President Bush, executives at CBS parent Viacom could take a harder line on the executives involved.

So CBS News is now to be seen discharging senior people who would have been retained but for President Bush's re-election? The liberal media establishment will react with fury to that report. It's pretty clear that this story was probably leaked by the very people at CBS News who are threatened - exactly to stir up that fury and resistance to their discharge. Whether those people stay or go at this point, it's another disaster for CBS News.

And a few more bucks for Fox.