In I984 Murdoch purchased half ownership of the Twentieth Century Fox film corporation. The following year he acquired the remaining half of the corporation. These two purchases, totaling $575 million gave him control over an extensive film library and rights to numerous television series (e.g., L.A. Law and M*A*S*H).

     With this enormous programming potential in hand, he was in a good position to form a television network, the FOX Broadcasting Company. In October 1985 Murdoch bought six independent, major market stations (WNEWTV, New York; KTTV-TV, Los Angeles; WFLD-TV, Chicago; WTTG-TV, Washington, DC; KNBN-TV, Dallas; KRIV-TV, Houston). Later he acquired WFXT-TV in Boston. These stations enabled him to reach about 20 percent of all television households in the United States. For the first time since the 1960s the major networks were to experience a kind of aggressive competition that would threaten their very existence.

     The founding of the FOX Broadcasting Company must be placed within a context of the general economic uncertainty and decline of network television. According to Sydney Head and Christopher Sterling, I 985 was the first year that network revenues fell slightly. By 1987 total revenues of ABC, CBS, and NBC had dropped to $6.8 billion. For the first time ever, CBS recorded a net loss for the first quarter. As a result, all three networks adopted austerity measures, cutting budgets, laying off personnel, and dumping affiliates.

     To the big three networks, the competition of the FOX network could hardly have occurred at a worse time. FOX itself was not spared financial hardship. In 1988 the company lost $90 million and in 1989, $20 million. To hedge against increased profit erosion the three networks began to diversify their interests in cable television and shore up their owned and operated stations.

     Economic uncertainty also affected network affiliate relationships. ABC, NBC, and CBS tended to dominate the powerful and lucrative VHF stations throughout the United States, with the less profitable UHF stations being in the hands of independents. With the advent of the FOX network, a number of the VHF stations, previously affiliated with the major networks, jumped ship, providing a lucrative advantage to Murdoch. Some claim that Murdoch's exclusive National Football League contract was an added incentive to switch their allegiance. In one agreement with station group owner New World, the FOX network gained 12 new stations, which ended their affiliation with "Big Three" networks. Such "fickle behavior" on the part of affiliates sent shock waves through the established networks, which had complacently relied upon their loyalty.

     Opposition to Murdoch's aggressiveness did not go unchallenged. The FCC licensing regulations specified that only American citizens could own broadcasting stations. The FCC also regulated cross-ownership of media companies to avoid antitrust abuses. In an attempted to thwart Rupert Murdoch's growing influence, the FCC, spurred on by NBC and the NAACP, investigated his citizenship and the ownership structure of the FOX network. Murdoch became an American citizen in 1985, just prior to the founding of the FOX network. He also disclosed that FOX would assume virtually all economic risk for and reward of acquired stations. His disclosures were backed by sworn declarations of key FCC staffers and the independent legal counsel of Marvin Chirelstein of Columbia Law School. Nevertheless, some reports claimed the disclosures were deceptive. Murdoch's Australia-based News Corporation owned 24 percent of the FOX voting stock (just below the legal limit of 25 percent); the remaining 76 percent belonged to Barry Diller (Twentieth Century Fox) who was an American citizen. In fact, News Corporation in­ directly owned 99 percent, a reality that the FCC either ignored or failed to see. Still, in keeping with deregulation trends, and despite temporary congressional freezes, the FCC found in favor of Murdoch. This decision was a great victory for Murdoch and a major disappointment to the networks.

     The new FOX network strengthened its position with several strategies. By reducing the number of prime-time hours offered each week and by providing no morning shows or soap operas, FOX has given its affiliates much more freedom to schedule their own shows and commercial announcements. Rather than compete with the major networks using counterpro­ gram strategies, FOX has tried to offer entertaining, low-cost shows to its affiliates. Some late-night program (such as the talk shows hosted by Joan Rivers and Chevy Chase) have fared poorly, but others such as Married ... with Children, 21 Jump Street, The Tracey Ullman Show, Beverly Hills 90210, and The Simpsons have been successful. The probable reason for these successes is that they target younger viewers devoted to light entertainment. In addition to this trendsetting, somewhat controversial program strategy, Murdoch has spent lavishly to obtain the rights to National Football League football, a major coup.

     FOX's vertically integrated structure (a combination of Twentieth Century Fox, FOX network, and FOX stations) is also well suited to produce and distribute a large number of quality shows. The substantial collection of films in the vaults of Twentieth Century Fox remains a rich resource, still to be developed.

     Early in the new millennium, the FOX network appeared to be taking advantage of the vertical integration of its corporate structure and the convergence of its constituent media partners and affiliates through the Internet. News Corporation, the parent company of the FOX network, declared a profit of $370 million as of June 30, 2003. This is a great improvement over the previous year's loss of $1.74 for the same period (the loss was attributed to the write-off of an investment in Gemstar-TV Guide International Inc., whose founder was accused of securities fraud).

     In comparison with the mainline networks, FOX remains a loosely connected and frugal network that is controversial and cutting-edge. At times it appears to revel in its challenging, unorthodox, and politically incorrect stance, which may be the reason for its continued popularity. In addition to the abrasive lineup of animated cartoon shows such as The Simpsons, King of the Hill, and Futurama, FOX was the home of the paranoid drama The X-Files. It currently hosts offbeat sitcoms such as Malcolm in the Middle and Arrested Development.