The real test for Fox Business News

The real test for Fox Business News won't be how it reports earnings, corporate scandals or mergers and acquisitions. It will be whether people tune in when the market is quiet.

The Achilles heal for all-news networks, like Time Warner Inc.'s (NWS:TWX) CNN, is that many people only want to watch them when there's big news such as the death of Anna Nicole Smith, the president's State of the Union speech or Hurricane Katrina. When it's a slow news day, viewers go elsewhere.

Part of the success of News Corp.'s (NYSE:NWS) Fox News is that people tune into "The O'Reilly Factor" and "Hannity and Colmes" when there's nothing going on. Jim Cramer also attracts viewers to his show on General Electric Co.'s (NYSE:GE) CNBC when the market is dull. (I used to work for TheStreet.com, which Cramer co-founded.).

I am not sure whether people are going to be tuning into Neil Cavuto in droves, but the question investors need to ask is whether there is enough business to support a second cable business news network. CNBC's struggles are well-known and other cable news channels have failed, but it still remains a decent money-maker.

CNBC's advertising sales rose 6 percent to $173.3 million in 2006, according to estimates by Kagan Research. That may sound impressive but they are still below the $371 million level in 2000. Cash flow rose 12 percent to $301.5 million, ahead of the $288 million in 2000.

There's plenty of competition for the business news consumer. Dow Jones & Co. (NYSE:DJ) recently redesigned the Wall Street Journal and is showing some healthy gains in advertising at its flagship newspaper and Barron's. Conde Naste's Portfolio, the much-hyped magazine, debuts later this year.

This may be besides the point to Rupert Murdoch. He wants Fox Business News to be to CNBC what the New York Post is to the New York Times. Profitability can wait for now.