1115.org

Back in February, we took a look Fox News‘ decision to launch a business channel to compete with CNBC for the remaining audience of masochists who enjoy watching their investments circling the bowl. Last week, The Wall Street Journal reported that Rupert Murdoch is “nearing an agreement with Time Warner Inc.’s cable division to carry a Fox News business channel,” and that Fox News boss Roger Ailes “has reluctantly agreed to run the Fox business channel.”

Ailes is right to be cautious. With the end of CNNfn and CNBC’s 60% decline in ratings, viewers will be hard to come by without the risk of cannibalizing Fox News‘ audience. Ailes also faces the daunting task of trying to outflank CNBC on the right while still producing programming that bears some resemblance to reality.

But with Fox News‘ own ratings in free-fall after the election, and an overall decrease in cable news television, Murdoch, like any good capitalist, must find new revenue streams. These days no one says no to Rupert Murdoch, so Time Warner will make room and Ailes will wade into the gutter once again to practice his black arts. But the fact remains: Fox News can make up any damn thing they want because their audience wants red meat and isn’t the smartest bunch. They can afford to be woefully misinformed and misled as this PIPA/Knowledge Networks poll shows because they aren’t making financial decisions based on what they watch. There’s a reason that Media Matters has 12 entries correcting CNBC and 584 entries correcting Fox News.

As mentioned previously, there are scoreboards in financial news. Commentators can make whatever excuses they like about missing a top call or guessing incorrectly about what the Fed will do with interest rates, but miss too many, and even the fiercest partisan will go elsewhere for business news.

Squawk Box is CNBC’s most watched show, and will never be confused with a Democratic club. Squawk’s host Mark Haines and contributors Joe Kernen, David Faber, and Becky Quick often deride anyone below a certain pro-market / anti-regulation level. Steve Liesman is the closest thing they have to a counterbalance, and if anything, he plays it right down the middle. Writing in Slate, Daniel Gross put it this way:

The gang at CNBC bears some resemblance to the House Republican caucus—an all-white, overwhelmingly male group in which centrists are branded as liberals and marginalized.

Never was that brought into sharper focus than the morning of June 23rd where the Squawkers were debating Chinese energy company CNOOC’s bid to buy American oil company UNOCAL. On a program where free trade is an article of faith and non-believers are tagged as protectionist Luddites, the audacity of CNOOC to bid on the open market for UNOCAL produced jingoist howls more fitting Bill O’Reilly than Maria Bartiromo. WHAT ABOUT NATIONAL SECURITY? WE CAN’T ALLOW A CHINESE COMPANY TO BUY AN AMERICAN OIL COMPANY! And of course, the least dramatic, but most hypocritical argument of the lot: WHAT ABOUT FAIR TRADE?

Without access to LexisNexis, it’s hard to say if that was the first time anyone on CNBC used fair trade to defend their own argument rather than as a source for mocking an insufficiently free trade guest. (I’d be more than willing to bet on it in any event.) Liesman, sticking his head into the mouth of the lions as usual, defended the deal on free market grounds; any company should be able to buy any other company. The protests from the other side of the table bordered on hostile, and certainly crossed over into patronizing territory. STEVE, REGULATORS (appealing to regulators, another CNBC first) CAN’T APPROVE THE $18.5 BILLION SALE OF UNOCAL TO THE CHINESE. THAT WOULD ALLOW THEM TOO MUCH INFLUENCE OVER OUR ECONOMY! Liesman, bless him, brought the whole argument to a grinding halt by making a point we’re quite fond of here (albeit in our kindergarten economic analysis style.) The United States government borrows $2 billion per day, with 90% of that coming from foreign nations. In just the last year, China has purchased $200 billion in U.S. Treasury notes, more than 10 times the total proposed value of UNOCAL. Surely that is a bigger threat to our national security than a mid-size oil company. Liesman didn’t make any headway, and magically time was up for that segment.

The discussion continued however on SquawkBlog, with a few posts here, here, and here. Comments seem to be running about 80/20 in favor of protectionism.

Obviously, CNBC (and apparently their viewers) now put patriotism and xenophobia ahead of economics. CNOOC’s bid topped the existing bid for UNOCAL from Chevron by almost 9%. It’s not clear what kind of investor passes up an extra 9% in profits, but if extant, they would make ideal trading partners. Watching this one example of the Fox News influence at CNBC seemed to preempt any hope of Ailes attacking them from the right. After all, there isn’t much room between the S.S. CNBC and the land on the starboard side.

But in what might be a practice cruise on Fox News‘ Saturday morning business block “The Cost of Freedom,” they risk running aground on some pretty sharp rocks. Last week James Wolcott caught this absurdity:

…the first topic was (I kid thee not) “The Prison at Guantanamo Bay: Good for the Stock Market?”

Opening up the mental-midget debate for the panel, host Terry Keenan asked, “If we ‘cut and run’ from there, isn’t it all bets off for the market?”

Fast forward two weeks, and some more negative press for Guantanamo (and negative returns in the market) necessitates a new theme:

(FYI- NOT Photoshopped)

And that’s really the ballgame in one play. Bush’s agenda is quacking like the lame duck he is because he can’t convince Republicans in Congress to back him. House Democrats couldn’t block a bill calling for them to become Republicans, and their Senate counterparts have to fight and claw to enforce party loyalty just to keep the 41 votes needed for a filibuster. Republicans hold all the levers of power: Executive, Legislative, Judicial, and Lobbyists. But if Fox News had done their homework (and felt like being honest,) they would have informed their viewers that the market always does better when Congress and the President are from differing parties. Even Fox favorite James “Dow 36,000″ Glassman knows that:

…over the past 24 years, the average annual rise in the Dow under divided government was 23 percent while the average annual rise under one-party government was just 2 percent.

But who needs facts when there’s a party line to tow. If Ailes is as cunning as his reputation, he’ll realize the best way to take on CNBC and make money is to sell drugs, specifically the hallucinogenics supply-sider Larry Kudlow takes, the stimulants that keep Jim Cramer going, and whatever it is the CNBC programming staff is on that makes them think that giving these guys (and until recently, Dennis Miller) an hour of air time each day is a good idea.

There might actually be a thin opening for a Fox News business channel on CNBC’s right, but it’s an awfully big risk for very little reward. Kind of like watching televised business news in the first place.