Hated by Democrats, demonised by leftwing blogs and worshipped by the right, Fox News is 10 years old this week, but the channel has no plans to grow old gracefully

It was the best birthday present Fox News could have asked for: a juicy on-air punch-up with Bill Clinton. The former president agreed to appear on America's brashest 24-hour news channel a few days ago. Within minutes, the interview had become a slanging match, with Clinton telling interviewer Chris Wallace: "You did Fox's bidding on this show. You did your nice little conservative hit job on me." Clearly agitated, Clinton added: "You've got that little smirk on your face and you think you're so clever."

Result! More controversy for the channel; another liberal seemingly floundering after a pounding from one of Rupert Murdoch's anchors.

Fox News Channel (FNC) is 10 years old this week and, though ratings are not as high as they were, there is little doubt that the channel - hated by the Democrats, demonised by leftwing bloggers and worshipped by the right - is a success story. With its in-your-face attitude, melodramatic "breaking news" whooshes and sexy urgency, Fox is America's number one cable news channel, a title it claimed from CNN four years ago. As a result, it is highly profitable: according to the most recent accounts of parent company News Corporation, its operating income is up 25% on last year. So the company is celebrating by taking its "Thank you, America" tour around the country (including a yah-boo stop right outside CNN's headquarters in Atlanta).

Back in 1996, the flag-flying station received mixed reviews. It also found itself without many viewers - following an effort by Ted Turner, the creator of CNN, to keep the new channel off the cable systems. Such opposition from the established players in the TV market helped to play into Fox's hands. Even today, while it leads the rolling news market, it still likes to portray itself as the "underdog", at war with America's "elite media". And this from a company that is owned by the world's most powerful media entrepreneur.

What infuriates Fox's critics is the fact that the network - run by Roger Ailes, a one-time strategist to Presidents Nixon, Reagan and the elder George Bush - continually repeats its slogan "fair and balanced" while broadcasting output its critics claim is blatantly pro-Republican.

Such critics do appear to have ammunition. For example, what fair-and-balanced on-screen caption did Fox News use a few years back to describe the fact that more than a million people had taken to the streets of London to protest against the Iraq war? "March Madness."

Meanwhile, the network's Washington bureau is so closely aligned with the Bush administration that, according to someone who has worked there, it is known as "White House West".

So is the station as biased as its critics claim? MediaGuardian set out to conduct a "fair and balanced" investigation. Alas, we were not helped by the fact that one side of the argument - Fox itself - refused to take part in the debate once it was explained that we would also be seeking opinions from outside the organisation. "So you're using someone else's opinions of Fox News also?" asked an aghast media relations executive, Diana Rocco. "What sort of critics are you looking to?"

The case for the defence thus falls to radio presenter Nick Ferrari, a Brit who ran a local Fox-affiliate station in New York in the early 90s and now is a presenter on LBC 97.3 in London.

"Do they show bias? Yes of course they do - and it's fantastic," says Ferrari. "They show bias in a patriotic way to counter a never-ending sea of dissent, lies and anti-government crap that swims around much of liberal America." Britain should follow America's example and allow TV, like newspapers, to deliver the news with a point of view. "What's the danger?" he asks. "Are you saying that people are so damn thick that they watch Fox News and they are automatically going to be brainwashed?"

Such sentiments are not going to quieten Fox's critics. Two years ago, documentary maker Robert Greenwald released a polemical film, Outfoxed, which revealed the existence of a daily memo - since discontinued - sent to staff by John Moody, a senior Fox executive, setting the tone for the day's reporting. Thus came an instruction in the midst of the 2004 presidential election to focus on the "flip-flopping" of the Democrat candidate John Kerry, and the order to reporters covering the 9/11 commission: "Do not turn this into another Watergate." And the directive in the early days of the Iraq war: "Let's refer to the US Marines we see in the foreground as 'sharp-shooters' not 'snipers', which carries a negative connotation."

Roy Gutman, foreign editor at the liberal New York newspaper Newsday, praises Fox News for being swift on its feet - "I watch it more than I expected to because they are faster off the mark than CNN," - but appears to hate himself for doing so. Ailes has "introduced opinion and he's calling it fairness". By abolishing the division between fact and comment, Fox, he says, has "established a kind of paradigm that is antithetical to news coverage".

Fox is sister network to Sky News, Murdoch's British rolling news channel. Staff at the politically-neutral UK channel have mixed feelings about the US network.

A well-informed Sky source says: "I like Fox - I just think it's totally biased." The source adds, "I said to a Fox executive once: 'You're so bloody one-sided, it's unbelievable.' And he said: 'No we're not. We've got a stable of Republican pundits and Democrat pundits." Aha! Fair and balanced! "But," added the Fox executive to the Sky source, "we have all the bright Republicans and we set them against stupid Democrats."

'It's entertaining but it's not news'

Robert Greenwald, director of Outfoxed

"My argument is not with what Fox News does, my beef is that they call themselves a news channel. The station exists for one reason: to propagate the Republican party approach to politics. And they do a good job of that. But instead of regularly boasting on air that they are "fair and balanced" and that "we report - you decide", they should say what they are: a Republican party news station. The pretence means they're either ashamed of what they do or they're trying to manipulate the public.

In 2004, I made a documentary called Outfoxed. In the film, we revealed the existence of daily memos sent by John Moody, Fox's senior vice president for news, to his staff. These editorial instructions revealed how Fox has a very specific agenda. For example, Moody wrote: "Do not fall into the easy trap of mourning the loss of US lives and asking out loud why are we there? The US is in Iraq to help a country brutalised for 30 years, protect the gains made by Operation Iraqi Freedom and set it on the path to democracy. Some people in Iraq don't want that to happen. That is why American GIs are dying. And that's what we should remind our viewers."

The point is that the station stands for whatever the Bush administration's policy is at any particular moment. So it spent months trying to show us that everything's going swimmingly in Iraq. All because this is Bush's policy.

Fox News is very entertaining - but so is wrestling. It's fun to watch - you've got the good guys, the bad guys, the boos, the yells and the cheers - but one thing it's not is news." Robert Greenwald was talking to Vincent Graff. His latest film is Iraq for Sale - see www.iraqforsale.org