FORK IN THE ROAD
After Ailes and O’Reilly, Fox News’ Risky Evolution
Salivating new rivals on the right, soaring critics to the left. After a stinging year of scandals and exits, can the champ of cable news stay on its perilous conservative course?
For the No. 1 cable news and opinion outlet, still immensely profitable at the start of its third decade for parent company 21st Century Fox (an estimated $1.65 billion in operating income for 2016), the media landscape has become a tricky territory laced with minefields and other perils.
The three moguls at the top of the empire, 86-year-old Rupert Murdoch and his fortysomething sons Lachlan and James, must figure out how to navigate this new world and ensure the survival of their golden-egg-laying goose.
It’s a world that doesn’t include Fox News’ creator, Roger Ailes—who died in May at age 77, a mere 10 months after scandal forced him from the throne—or its tent-pole prime-time personality, Bill O’Reilly—another scandal casualty—while the channel’s evening programming schedule has necessarily undergone a hasty makeover.
And it’s a world in which conservative media rivals, such as Newsmax and One America, along with Sinclair Broadcasting, are increasingly in the mix—and conspiracy-mongering outlets like Alex Jones’s Infowars and Trump-loving trolls like Mike Cernovich are gaining traction while mocking Fox News as a wholly owned subsidiary of the supposedly dying Republican establishment.
“Fox News is on the way down, and I’m on the way up,” claimed Cernovich, an ardent Trumpkin who boasts nearly 300,000 followers on Twitter (including frequent retweeter Donald Trump Jr., who once suggested Cernovich be nominated for a Pulitzer Prize) and recently joined forces with Jones and Infowars to do regular “reports” such as his June 18 report that “NBC is now trying to get the Murdoch brothers to do a contract buyout” to bring Megyn Kelly back to Fox News—an assertion that has no factual basis, according to an authoritative NBC News source. (The channel placed Cernovich, a favorite of the Trump White House and presidential counselor Kellyanne Conway, on its do-not-book list last year because he’s an alleged date-rape apologist).
“I don’t watch Fox News,” he told The Daily Beast. “They don’t move the needle for me.”
While the right-leaning network has continued to post solid wins in the Nielsens, including in the recent May sweeps (on which advertising is sold), the latest numbers are also exposing once-unthinkable chinks in the armor.
Deprived of Ailes’ guidance and O’Reilly’s services, along with the defection in January of Megyn Kelly to NBC, Fox News is suddenly losing to liberal-leaning MSNBC’s Rachel Maddow at 9 p.m., not just in the 25-to-54 advertising-friendly age demographic, but sometimes in total viewers.
What’s more—in what has to be another troubling development—MSNBC’s other prime-time anchors, Chris Hayes at 8 p.m. and Lawrence O’Donnell at 10 p.m., along with Brian Williams at 11 p.m., have occasionally beat their formerly unassailable competitors in that all-important demo.
“They [Fox News] seem to be doing pretty well lately just in terms of the numbers,” former CNN President Jonathan Klein told The Daily Beast. “They’re always going to be challenged in the demo, because they’ve got a much older audience… But any impact of losing Roger and Bill is going to be seen more in the long term than the short term.”
So will the Murdochs stay the course? Or somehow try to alter it?
“That’s the dilemma,” said a former top Fox News executive who asked not to be further identified. “We stick with the status quo, because we’ve got to maintain this enormous revenue source and keep what we have, but we’re losing valuable assets along the way and there are strong indications that the brand is no longer as relevant as it once was. We probably need to look at retooling, but can we do that when the guy standing at the gate, Rupert, is saying, ‘Not under my watch’?”
The ex-Fox News exec added: “I’ve seen a lot of companies maintain the posture of hoarding success until they don’t have it anymore. And when they don’t have it anymore, they’re in a position where they’re at the bottom of the ocean looking up, and then they almost always say, ‘How did that happen?’”
Fox News exec Jay Wallace, whom Rupert Murdoch appointed president of news after longtime Ailes confidant and successor Bill Shine was forced out in early May (while Murdoch named Ailes loyalist Suzanne Scott president of opinion programming), is facing the challenge with a display of sangfroid.
“Of course we knew there would be some softening with the loss of Bill O’Reilly,” Wallace told Variety this month. “The man was the tent-pole of our prime-time lineup. We knew there would be a little bit of a difference there. But overall, Fox News fans are committed to us. They watch us longer than any other network [per session]. They like our brand of storytelling and the way we report news.” (The widely liked and respected Wallace was not made available for this article, and the elder Murdoch is reportedly in charge, often running the morning news meetings.)
Yet another looming threat is Sinclair Broadcast Group’s pending $3.9 billion acquisition of Tribune Media and its WGN America cable station, which will likely position the merged media juggernaut to become a credible challenge to Fox News’ dominance among conservative and Donald Trump-loving viewers.
In the nightmare scenario for Fox News, O’Reilly, who was basic cable’s most popular personality until his abrupt April 19 departure, would host a show for the freshly reconfigured Sinclair powerhouse, maybe on WGN America opposite his 8 p.m. successor, Tucker Carlson Tonight.
“WGN America is the crown jewel of the Tribune Media empire,” the ex-Fox News exec said, noting that the cable station reaches some 73 million households, not that far off from Fox News’ 87 million as of February 2015, and could take advantage of cross-promotion and content-sharing with the post-merger Sinclair’s more than 200 local TV stations.
“That is a massive platform, and Fox has to be very concerned about it,” said the exec. “Sinclair should absolutely be looking at O’Reilly. The median age of his audience is 71, but they loyally watched Bill five nights a week, and he’s still the biggest name in conservative media.”
If Sinclair also managed to recruit Sean Hannity, the top-rated 10 p.m. anchor who publicly expressed displeasure and made veiled threats of resignation with the ousting of Bill Shine, “I could see a real sort of devastating competition boil up,” the exec said. “It could be a major hit to this billion-dollar revenue machine that Fox News is.”
Meanwhile, mushrooming scandals, sexual-harassment lawsuits, and negative publicity about Fox News’ allegedly misogynist and racially charged corporate culture could influence this Thursday’s expected decision by Britain’s shaky Tory government on whether to permit 21st Century Fox to fulfill its long-held ambition to acquire the whole of Europe’s profitable Sky satellite television and online property.
James and Lachlan met recently in London with British regulators to make their case for their good intentions and sincere efforts at corporate house-cleaning. It’s unclear what the effect on Fox News will be if the $14 billion acquisition is once again denied, much as it was seven years ago in the midst of a Murdoch newspaper’s phone-hacking scandal that outraged the British public, resulted in the shutdown of the popular News of the World tabloid, inspired hearings in Parliament, and rendered the transaction politically indefensible.
“I wonder if, in a way, it would take the pressure off Fox News, and people can relax and stop proposing these little change elements and ‘we can just be who we are, because there’s nothing at stake anymore,’” said the former exec.
Like CNN and MSNBC, “Fox News has benefited from the heightened news cycle and the sense of going to the mattresses,” said Klein, co-founder and chief executive of TAPP Media, a personality-focused network of online video channels. “Trump wants to portray criticism of him as a cultural war against conservatives, and Fox continues to treat the investigations as a war of ideas rather than an investigation of Trump himself—and to the degree that Fox viewers have bought that argument, Fox will continue to have a lot of viewers.”
Klein added: “Looking at the meteoric rise of MSNBC over the past year, which is mirroring Fox’s approach on the left, it’s clear that unfortunately embitterment works these days, regardless of one’s philosophical orientation.”
As for Fox News, “they may not do as well as they did when they had the biggest star in all of cable [O’Reilly] kicking off prime-time,” Klein said, “but Fox News is going to be fine—for now.”
Tim Graham, director of media analysis for the conservative Republican Media Research Center, told The Daily Beast: “I wouldn’t say to you, as a Fox watcher, that wow, they seem like they’ve lost their vision. But there is an overwhelming concern among the right that the Murdoch boys are going to water this down to the point where it’s going to be Gergenized”—a reference to CNN political analyst David Gergen, a former White House aide to three GOP presidents (Richard Nixon, Gerald Ford, and Ronald Reagan) and one Democrat (Bill Clinton), who proudly calls himself “a raging moderate.”
“It’s going to be moderate to the point where it’s no longer addressing the things that people are worried about,” Graham said, elaborating his fellow conservatives’ fears. “The business mistake would be, ‘Now here’s a two-hour Fox News special on the climate threat.’”
Ailes, who was conspicuous in his distaste for the elite Manhattan social scene and proud of his working-class Ohio roots, liked to stoke internal suspicion of Lachlan, now 21st Century Fox’s co-chairman, and James, the freshly minted CEO, when he was Fox News’s all-powerful emperor. Indeed, Ailes famously bested Lachlan in one of their behind-the-scenes turf battles, obtaining Rupert’s assent to let him run Fox’s broadcast television stations over Lachlan’s objections, and prompting the latter’s 2005 decade-long departure from the company then known as News Corporation.
It was not entirely unwelcome in January 2011, when Murdoch brother-in-law Matthew Freud, then married to Rupert’s daughter Elisabeth, told The New York Times: “I am by no means alone within the family or the company in being ashamed and sickened by Roger Ailes’s horrendous and sustained disregard of the journalistic standards that News Corporation, its founder, and every other global media business aspires to.”
Said the former Fox News exec: “There was a general feeling that the family held their noses and cashed the checks, but really had no love for Roger or Fox News. To a degree, Roger cultivated that. He sort of identified an enemy that it was good to battle against, and good for the morale of his inner circle—fighting against the liberal rich kids.”
Media Matters President Angelo Carusone, whose liberal watchdog organization has been a relentless critic of Fox News, said that with the exits of Ailes and his proxy, Shine, the channel has betrayed a notable lack of message consistency that would probably not have been tolerated under the previous regime.
While Fox & Friends in the morning and Hannity at night are reliable purveyors of pro-Trump propaganda—and the president remains their most faithful and grateful audience member, frequently parroting their content on his Twitter feed—“they are islands unto themselves,” Carusone said.
On June 6, for instance, afternoon host Neil Cavuto let fly with an impassioned denunciation of Trump’s attacks on the “fake news” media.
“Mr. President, it’s not the ‘fake-news media’ that’s your problem— it’s you,” Cavuto raged. “It’s not just your tweeting—it’s your scapegoating. It’s your refusal to see that sometimes you’re the one who’s feeding your own beast—and acting beastly with your own guys.”
Cavuto continued: “Mr. President, they didn’t tweet disparaging comments about a London mayor in the middle of a murder spree—you did. They didn’t turn on a travel ban that you signed—you did. You’re right to say a lot of people are out to get you... but... the buck stops with you, Mr. President.”
“That was revolutionary,” University of Virginia political science Professor Larry Sabato said about Cavuto’s anti-Trump apostasy.
Carusone, meanwhile, predicted Ailes’s invention will incrementally shed its ideological identity for something resembling a straight news operation, much as the channel recently stopped using “Fair and Balanced,” the dog whistle of a marketing slogan that let Fox News’ aging largely white-male viewers know that the channel was actually a retort to the liberal mainstream media. (“I created a TV network for people 55 to dead,” Ailes once boasted to The Nation’s Joan Walsh. “Nobody believed it could be done, but I did it. It’s for guys who sit on their couch with the remote all day and night.”)
“The way I would characterize it is, Fox News now is a laggard, and when Ailes was running the show they were vanguards. They imbued right-wing misinformation with a veneer of credibility,” said Carusone, whose David Brock-founded group has been an irksome thorn in Fox News’ side—characterized by O’Reilly, for one, as “the most vile, despicable human beings in the country.”
“My prediction is that Fox News will be unrecognizable in five years,” Carusone said. “From a business perspective, what they now have is an unsustainable, untenable position. There is no growth for them. They will lose out every day to the new emerging right-wing voices that are primarily distributed on digital platforms, and they will never be able to catch up. They will never be as creative. They will never have the same reach and relevance among the conservative audience. They lost their most valuable asset the moment they fired Bill O’Reilly. They pissed off their core audience.”
A Fox News spokesperson said eye-rolling is the most appropriate response, given that the latest June and second-quarter ratings, released Tuesday, show the channel winning across the board for 186 consecutive months.
The ex-Fox News exec said: “They’ve certainly lost an incredible tonnage with the loss of O’Reilly and, to an extent, Megyn. I think it would be foolhardy to think that it didn’t have a pretty significant massive impact…
“And I don’t think you can discount the family dynamic there. James and Lachlan would love to use the opportunity and use the crisis to shape and redefine. But Rupert is still very much in control of Fox News. He’s still running the show, day to day.”