You wouldn’t know it by looking at cable TV ratings, but Fox News has a problem on its hands.
While the conservative news giant enjoyed record Nielsen ratings in November thanks to the presidential election, its dominance is now being tested by Newsmax, a scrappier competitor that’s had fewer reservations about questioning Joe Biden’s victory. That stance has earned the channel praise from Donald Trump, rumors of an acquisition or investment by Trump allies, and a flurry of stories examining Newsmax’s ascent in the TV news pecking order.
Most of those stories point out that Newsmax isn’t profitable like Fox News, and that Newsmax is still well behind Fox News’s Nielsen ratings—which have the network on track for its 19th year as the most popular cable news channel on television. What they miss, however, is that Newsmax doesn’t need more cable viewership to become a serious competitor. While Fox News’s ratings surge occurred entirely within the confines of pay TV bundles, Newsmax has millions of people tuning into its free online live streams, which don’t require a cable package. While questions remain over Newsmax’s ability to make money and to retain viewers without pumping out baseless election fraud claims, its continued existence could threaten Fox News’s dominance in the age of cord cutting.
Newsmax CEO Chris Ruddy says that’s the story everyone’s sleeping on. When you factor in Newsmax’s streaming audience, the race between the two right-wing news networks is closer than you might think.
“Why would you subscribe to Fox when you can get Newsmax for free?” Ruddy says in an interview. “We now have a Fox lookalike—maybe we’re arguably better than Fox in some ways—and [viewers] don’t have to pay $1,500 a year for the damned cable box.”
A free Fox News alternative
Although Fox News doesn’t require a traditional cable or satellite TV subscription anymore, it does require at least some kind of pay TV bundle, even if it’s streamed over the internet. The cheapest way to get the channel is through Sling TV, which has a $30-per-month “Blue” package that includes Fox News and dozens of other cable channels. Some streaming bundles that include Fox News, such as YouTube TV and Hulu Plus Live TV, cost $65 per month or more.
By comparison, Newsmax’s free live stream is almost impossible not to get. It’s available directly through the Newsmax app on most platforms and is part of the lineup in various free live stream aggregators, including The Roku Channel, Pluto TV, and Xumo. It also has live streams on YouTube, Twitter, and Facebook, along with its own websites. Of course, Fox News has its own social media presence with a larger overall audience—it has 6.63 million YouTube subscribers, for instance, versus 1.66 million for Newsmax—but it only distributes short clips through those channels, not a full cable live stream.
“Newsmax is in the cable universe, but we’re also streaming free on all the OTT devices and platforms, and we’re seeing huge numbers,” Ruddy says. (OTT refers to “over-the-top” streaming, outside of pay TV bundles.)
Data Newsmax provided to Fast Company shows that the channel’s YouTube stream alone had 6.3 million unique viewers last month, and its live stream on NewsmaxTV.com had 6.67 million total viewers. Newsmax’s Pluto TV channel also saw 3.83 million total unique viewers.
Most of those viewers won’t be reflected in the Nielsen TV reach numbers that Newsmax provided, which show that Fox News reached 84.1 million viewers on weekdays in November, versus 24.3 million for Newsmax. That’s not to say you can just add the streaming viewers to Newsmax’s cable numbers—there’s likely some crossover between audiences on cable and streaming platforms—but Ruddy believes that his channels’ live streams add about 10 million unique viewers to its total audience.
Granted, even that revised total would put Newsmax about 50 million viewers behind Fox News, but it also has more room to grow. In addition to competing for cable subscribers, Newsmax can also reach an estimated 40 million homes that don’t have a pay TV subscription at all.
Streaming on the rise
Although I can barely stand to watch Fox News or Newsmax myself, the battle between the two companies fascinates me as someone who’s spent years covering the rise of cord cutting.
Within the overall move away from cable, one of the most interesting trends has been the emergence of a parallel à la carte TV system, consisting of services that exist outside the pay TV bundle. Netflix, of course, is the most notable example, but free services like Newsmax are part of this system as well. In all cases, the purpose is not to duplicate what was available on cable, but to come up with good-enough alternatives at a fraction of the cost.
For anyone who can’t imagine life without cable channels, it might be hard to see why people would opt for such a system, but the trend is clear: Five years ago, roughly 100 million households had pay TV subscriptions, but that number has since fallen to around 82.6 million, according to Leichtman Research Group, and the TV industry is bracing itself for a fall to 50 million subscribers within the next five years.
That’s why so many media giants have started making alternative arrangements with services like Disney Plus, HBO Max, and Peacock. None of these companies wants to stake their futures on a collapsing business model.
No such strategy has emerged yet from Fox News. While the company does have a stand-alone streaming service in Fox Nation, the $6-per-month service doesn’t carry a live stream of the cable channel’s popular shows, and only offers audio versions on demand. As reported by Bloomberg in January, Parks Associates estimated that the service has just 200,000 to 300,000 subscribers, though those numbers are nearly a year old. Fox Corporation CEO Lachlan Murdoch has said that the service has grown during the coronavirus pandemic and is seeing an 80% conversion rate on free trials, but the company hasn’t revealed subscriber numbers.
That creates an opening for Newsmax, whose contracts with TV distributors allow it to offer a free live stream even for non-subscribers. How this arrangement works exactly is unclear, as Ruddy won’t get the details of its carriage negotiations with distributors, but he says it’s not uncommon for cable news channels to simultaneously stream their content “in the initial startup period.” (Ben Smith at The New York Times also reported that new channels often pay distributors for carriage, but it’s unclear if that’s happening with Newsmax.)
Ruddy says Newsmax’s streaming plan may change in the future—he floats the idea of having one channel for cable customers and another for free streaming viewers—but added that the company hasn’t settled on a path. For now, he likes the idea of using cable to achieve a critical mass of viewers while also building a streaming audience.
“You get the whole ecosystem of pay cable, and you’re getting the whole universe of the OTT,” he says. “Why turn that down if you have the ability?”
When extremism wins
If Newsmax grows enough, it might also fulfill the other big trend in cord cutting: Increasingly, cable is losing out to streaming services on getting the best content. These days, if you want to watch the most popular or critically acclaimed shows on TV, you’ll likely find them on Netflix, Disney Plus, or HBO Max, not on basic cable. Although Business Insider has reported that Fox News has locked up its talent in multi-year deals, it’s not hard to imagine a future where Newsmax eventually starts siphoning away Fox News’s talent, triggering a vicious cycle.
“It’s going to be a major challenge for them to maintain their profitability and the viewership that they have,” Ruddy says.
All of this does bank on the idea that Newsmax’s appeal isn’t just a flash in the pan tied to right-wing election fraud hysteria. Still, Ruddy notes that his channel’s audience had been growing every month for the last year and a half, and he rejects the idea that Newsmax must become more extreme to retain viewers. He also insists that Newsmax is a “center-right” news channel, albeit one that perhaps has been more consistent in its support of Trump.
“We will fully embrace Joe Biden and respect him as president once the electoral college takes his vote, and he officially becomes president-elect,” he says.
I have my doubts, though. One of the other big trends in streaming video—and online content in general—is that it’s hard to stand out when there’s so much to consume. The extreme voices are the ones that tend to get noticed, which helps explain why Newsmax host Greg Kelly’s amplification of stolen election claims has turned him into a rising conservative star.
In other words, seeing Fox News sweat over Newsmax’s rise gives me great satisfaction as someone who’s always rooted for the cable bundle’s collapse. But I also worry about what will rise from the wreckage.
This story has been updated with more context about Fox’s audience.