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While CNN and MSNBC both saw their ratings grow in 2011, Fox News saw their ratings drop by 3% for the second straight year.

According to the Pew Research Center’s Project For Excellence in Journalism’s The State of the News Media 2012 report, viewership for all cable news was up 1% in daytime and 1% in primetime. CNN saw their ratings rise by 16%. Despite the loss of Keith Olbermann, MSNBC’s prime time audience grew by 3%. The network’s daytime audience was up 20%. The ratings surge at CNN was a temporary blip caused by the tsunami in Japan and the Arab Spring. Without breaking news, CNN sinks to third place.

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Fox News continues to lose viewers, but remains highly profitable. How can a network lose viewers, but increase profits? The answer is that Fox News demands the highest licensing fee from carriers in all of cable news. All subscribers pay an additional seventy eight cents a month to have Fox News carried on their system. This was an 11% increase in 2011 and one of the main reasons why Fox News can lose viewers, but set a record for profits.

Even if you never watch Fox News, as long as it is carried by your cable or satellite system, you are still adding to Rupert Murdoch’s fortune. If people really want to stop Fox News, they need to be pushing Congress to pass a la cart legislation that will allow viewers to pick and choose the networks that they want to pay for instead of being forced to subsidize channels that they can’t stand.

There are three warning signs on the road ahead for Fox News. It is likely that Fox News will continue to lose viewers in the future because they have the oldest audience on television. The average age of a Fox News viewer is 65 years old. Younger people aren’t replacing the older viewers that the network is losing on a yearly basis, which means that if things stay as they are, the network is fighting a losing battle against Father Time.

The Internet is also posing a big threat to Fox News’s bottom line. A 2011 study by Credit Suisse, found that 25% of cable/satellite customers plan to cancel their service in the next five years. Subscribers are threatening to cancel because they are realizing that they can get much of the programming that they receive on their televisions right now on the Internet for less. If 25% of subscribers canceled, it would be a big blow to all three cable news networks, but it would hurt Fox News the most.

The biggest dilemma facing Fox News is a problem that they created for themselves. After years of moving to the hard right and making inflammatory rhetoric a staple of their programming, Roger Ailes is trying to move the network back to the middle. The problem is that the core part of the network’s audience still resides on the far right. To put this in political terms, Fox News wants to be Mitt Romney, but their audience craves Rick Santorum.

The far right audience may not react well to the new moderate Fox News. In fact, the door may be opening for a bit of competition for the conservative viewership. The same battle that is playing out for control of the Republican Party among the far right and the party establishment could replicate itself on the cable news landscape.

There are only 1.9 million daily Fox News viewers, but Fox News is available in 102 million homes. This means that 100 million American households are subsidizing the right wing hate of Fox News. If the American people ever wake up and realize that they are paying for a network that many of them disagree with, and demand to be given the ability to financially support only the channels that they watch, the future of Fox News will be in doubt.