Fox to Increase Programs, Add a News Service : Broadcasting: The network is willing to sacrifice short-term profit to put it in position to compete better, Chairman Barry Diller says.

The Fox network, trying to buck the long-term downward spiral afflicting the major broadcast networks, will sacrifice short-term profit to expand its program schedule and launch a national news service, its chairman said.

“We are being more aggressive this year in our expenses because we believe we will be a significant profit generator for the Fox company,” said Barry Diller, chairman of the film and TV studio and the prime mover behind its 5 1/2 year-old fourth network.

“Short-term results frankly have little to do with the upside potential,” he added.

In the face of cutbacks and layoffs at ABC, CBS and NBC, Fox is expanding its program schedule and purposely breaking some time-honored rules of network broadcasting.

Beginning this summer, it plans to premiere one new prime-time series a month over the next year rather than launching its new series all at once during the fall season. The network also is ordering more than the standard 22 new episodes for hit shows such as “In Living Color,” “Beverly Hills 90210” and “The Simpsons.”

Such a strategy is the result of a growing sense among Fox executives that the network had lost momentum and fallen into the trap of aping the programming ploys of the major networks.

The extra episodes alone will cost tens of millions of dollars, Fox executives say, but are designed to attract larger audiences to the network and, along with it, increased advertising revenue.

But probably not this year: The networks are still in the grip of the worst advertising slump in memory, and Fox has booked $100 million less in advance advertising sales than a year ago.

Fox, which Diller contends has been profitable since its 15th month of operation, earned $60 million for the fiscal year ended June 30 on revenue of about $500 million.

“Last year, we got this windfall we probably did not deserve to get,” conceded Jamie Kellner, president of Fox Broadcasting Co.

Fox was the only network to guarantee advertisers that its shows would attract a specific audience level, which inspired advertising agencies to steer more money to the fourth network. But this year, the other major networks are again guaranteeing audience levels to coax more spending from recession-wary advertisers.

Fox also is reviving plans to launch a national news service, which had been postponed because of the recession. It has hired Paul Amos, a former senior executive at CNN, to oversee the project.

“We will not do an evening newscast,” Diller said. Instead, Fox wants its affiliates--independent stations that traditionally have not produced local news--to begin locally anchored news programs for which Fox will feed packaged national stories.

Two years from now, Diller warned, “we won’t tolerate any affiliate that is not in the news business.”

In order to defray the costs of its program expansion plans, Fox has asked its 133 affiliates to help foot the bill. The affiliates would pay for the new programming by agreeing to take a cut in their share of the $25-million compensation pool Fox pays them.

The fourth network is also moving ahead with plans to produce a two-hour block of weekday animated shows and is entering its second year of Saturday morning children’s programming. Warner Bros. has agreed to supply Fox with cartoons for its afternoon programs.