Roger Ailes Can’t Build a Fox News Rival...Yet
The ex-chairman signed a non-compete clause when he resigned, but insiders say he could easily secure funding should he want to set up a rival network.
With shocking swiftness, Roger Ailes has been forced to resign effective immediately as chairman and CEO of the Fox News and Fox Business cable channels he built from scratch, just 15 days after fired Fox News anchor Gretchen Carlson filed a sexual harassment, discrimination, and retaliation lawsuit against the 76-year-old Ailes.
A Thursday afternoon press release from parent company 21st Century Fox announced Ailes’s abrupt resignation as well as executive chairman Rupert Murdoch’s interim role in Ailes’s former jobs, which also include the chairmanship of the Fox broadcast television stations, as the company searches for a successor.
Ailes deputies Bill Shine, Jay Wallace, and Mark Kranz will run the channels day to day until a successor is named, the press release announced.
The corporate shakeup represents a win for Rupert Murdoch’s sons and fellow top 21st Century Fox executives, Lachlan and James, who have clashed with Ailes in the past and have reportedly used Carlson’s lawsuit, and ordered up an internal review of her allegations and those of other female employees, as a wedge to drive him out of his powerful perch.
But it also represents a victory of sorts for Ailes, who is stepping down under undisclosed but assuredly generous financial terms—a leaked but unsigned term sheet mentioned a figure of $40 million—and with an official company statement that showers him with praise and makes no explicit mention of the controversy that prompted his exit.
There was no mention in the release of whether 21st Century Fox will be underwriting Ailes’s legal bills.
Especially damaging were reports that Fox News prime-time star Megyn Kelly had told lawyers from Paul, Weiss, the law firm conducting the internal investigation, that Ailes had sexually harassed her a decade ago when she was a cub legal reporter.
“Dear Rupert,” Ailes wrote in his resignation letter released by Fox News contributor Susan Estrich, one of his attorneys involved in the exit negotiations. “With your support, I am proud that we have built Fox News and Fox Business Channels into powerful and lucrative news organizations that inform our audience and reward our shareholders.”
Apparently with an eye toward Kelly’s alleged account to the Paul, Weiss attorneys and Carlson’s ongoing lawsuit—which claims Ailes suggested in September 2015 that having sex with him would help her career at Fox News, and then retaliated by firing her when she rebuffed his unwelcome advances—Ailes added: “I take particular pride in the role that I have played advancing the careers of the many women I have promoted to executive and on-air positions. Many of these talented journalists have deservedly become household names known for their intelligence and strength, whether reporting the news, fair and balanced, and offering exciting opinions on our opinion programs.”
Rupert Murdoch, meanwhile, said in part in his effusive farewell statement: “Roger Ailes has made a remarkable contribution to our country and to our company. Roger shared my vision of a great and independent television organization, and executed it brilliantly over 20 great years.”
Contrary to rumors that Ailes would stay on as a corporate consultant through 2018, a role unmentioned in the 21st Century Fox press release, Ailes wrote in his resignation letter: “Having spent 20 years building this historic business, I will not allow my presence to become a distraction from the work that must be done every day to ensure that Fox News and Fox Business continue to lead our industry.” Ailes, however, will advise the elder Murdoch, said a corporate source.
Gretchen Carlson’s legal team, meanwhile, issued this statement reacting to Thursday’s developments:
“Within just two weeks of her filing a lawsuit against Roger Ailes, Gretchen Carlson’s extraordinary courage has caused a seismic shift in the media world. We hope that all businesses now understand that women will no longer tolerate sexual harassment and reputable companies will no longer shield those who abuse women. We thank all the brave women who spoke out about this issue. We will have more to say in coming days as events unfold.”
Team Carlson says the lawsuit will proceed. Lawyers for Ailes are trying to force Carlson into confidential arbitration, while lawyers for Carlson are fighting that maneuver, with the goal of securing a jury trial—a process that could take many months.
Depending on the terms of his departure from Fox, Ailes might have agreed to a non-compete clause that would sideline him for a period of time from the television business or from joining or launching a rival outlet to Fox News and Fox Business.
If, however, Ailes managed to avoid those golden handcuffs, industry observers said he could very well do just that (although Bloomberg’s Lucas Shaw reports that Ailes did sign a non-compete provision, an assertion confirmed by The Daily Beast, though details were unclear).
“I think he could do whatever he feels like doing,” said a media industry executive who spoke to The Daily Beast on condition of anonymity, so as not to get involved in the ongoing controversy. “He’s got a ton of money and a reputation as a gold mine, a builder of empires, and if he decided that he wanted to go off and launch a conservative cable channel to rival Fox News, and he went off to a private equity firm, he could raise as much cash as he needed.”
That sanguine view of Ailes’s future, never mind his current spot of bother, was echoed by an internet and technology maven who suggested that the legendary Republican media strategist-turned-television mogul would have no trouble attracting tens of millions of dollars from any number of Silicon Valley venture capitalists.
This tech expert mentioned Gawker arch enemy Peter Thiel, a self-described libertarian and Donald Trump delegate from California at this week’s Republican convention in Cleveland, as a promising source of cash for Ailes through his wildly successful Founders Fund.
Thiel—who secretly financed the Hulk Hogan lawsuit and reportedly other lawsuits that have driven Gawker Media and its founder Nick Denton into bankruptcy—not only shares Ailes’s conservative politics but also his fondness for wreaking revenge and intimidating adversaries.
“He’s vindictive, and he would take revenge if he could,” the media industry executive said. “If there’s any way that he could make James and Lachlan look bad, that would be his first choice.”
The Murdoch sons, perhaps ironically, issued their own statement heaping praise on Ailes: “We join our father in recognizing Roger’s remarkable contributions to our company,” it began. But they pointedly added: “[W]e continue our commitment to maintaining a work environment based on trust and respect. We take seriously our responsibility to uphold these traditional, long-standing values of our company.”
The media exec, meanwhile, said Ailes could also team up with an existing conservative outlet like Newsmax—with or without such on-air talent as Bill O’Reilly, Sean Hannity, and Greta Van Susteren, who reportedly are contractually permitted to follow Ailes out the door—in order to try to create a television powerhouse to rival Fox News.
“If he went to Newsmax, he’d have no troubling attracting the money he would need to hire people,” said the exec. “Don’t forget: He built that channel [Fox News] on no names. He believes in his playbook. He doesn’t believe he needs stars. He believes he makes stars. He wouldn’t require O’Reilly and Hannity. He’s going to have a philosophy and he’s going to know how to execute.”
It would be problematic, however, if Ailes were to join a large publicly traded company—say, if Verizon, succeeded in its quest to acquire Yahoo and needed someone to beef up television and video operations—because of Ailes’s baggage as an accused sexual harasser who is facing damaging litigation.
Beyond the public relations challenges to such a move, “employees of the company might rise up against it,” said the media industry exec.
Another possibility for Ailes’s future would be a return to his roots as a Republican political strategist, although he has worked hard since he founded Fox News 20 years ago to shed that identity—occasionally threatening reporters who continued to describe him that way with legal action (as when he was caught sending a memo to then-presidential aide Karl Rove, now a Fox News contributor, advising George W. Bush on how he should respond politically to the terrorist attacks of Sept. 11, 2001).
At the Republican convention in Cleveland, unsubtantiated rumors in media circles name Ailes, one of the most successful campaign admakers in history, as a possible leader of or consultant to his longtime friend Donald Trump’s presidential effort, driving a disciplined message for a frequently anarchic-seeming campaign organization.
“Or he could also say, ‘Screw it. I’m 76 years old. I don’t feel that great,’” said the media exec. “And go home to Garrison, New York, and say ‘I’m gonna kick back, take it easy, and write a book.’ I’m sure he’s going to want his legacy to be couched in the correct way.”