A major news network dismissing its chairman and founding CEO after almost two decades due to allegations of rampant sexual harassment is bound to have some wide-ranging ripple effects on both the company and the industry, and the Roger Ailes case is in the process of doing exactly that.
The first after-shock hit on Monday, when the Financial Times reported that Ailes—who left his post in July with a reported $40 million settlement, after a lawsuit launched by former Fox News anchor Gretchen Carlson—has hired the same lawyer that wrestler Hulk Hogan and billionaire Peter Thiel used to bankrupt Gawker Media.
Ailes is said to be considering a lawsuit against New York magazine for a recent feature on his behavior at the network, which included numerous allegations of harassment and questionable conduct, including wire-tapping his own staff and accessing the phone records of journalists.
The second after-shock struck Tuesday morning, when Fox News parent 21st Century Fox (FOX) reportedly reached a settlement with Carlson that includes a $20 million payment and an unprecedented public apology to the former anchor.
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The company said in a statement that “we sincerely regret and apologize for the fact that Gretchen was not treated with the respect and dignity that she and all of our colleagues deserve,” and added that Carlson “exhibited the highest standards of journalism and professionalism.”
Interestingly, Carlson didn’t sue Fox News, she only sued Ailes personally. But since the former Fox News chairman was likely indemnified against lawsuits related to his professional conduct, Fox clearly chose to settle on his behalf, rather than risk a protracted lawsuit filled with seedy details.
There were initial reports that Ailes was paying part of the Carlson settlement himself, but the former Fox chairman’s lawyer Susan Estrich said that this is not the case, and that 21st Century Fox is paying the full amount.
Sources close to the negotiations say Ailes is personally paying for a portion of Carlson's $20 million settlement
— Gabriel Sherman (@gabrielsherman) September 6, 2016
According to Sherman’s feature, controlling shareholder Rupert Murdoch initially tried to stand by Ailes after the allegations were made, but his sons James and Lachlan (who are CEO and chairman of 21st Century Fox respectively), pushed their father and the board of the company to oust Ailes and settle the case.
Meanwhile, a third potentially significant tremor followed quickly on the heels of the settlement news: Greta Van Susteren, a key host with Fox News for more than a decade, is leaving the network immediately. She said in a Facebook post that it was her decision.
A Fox News report said that Van Susteren asked to renegotiate her contract after Ailes left, although it’s not clear what she asked for. She and several other anchors were said to have “key man” clauses that allowed them to renegotiate or leave if Ailes was removed as CEO.
At the point where Ailes’ departure had become a fait accompli, a number of sources reported that many of the network’s stars were also thinking about leaving, including Van Susteren and Bill O’Reilly.
Some of this was seen as a strategy aimed at forcing Fox to keep Ailes, but Van Susteren’s departure raises the question of whether the network could lose some of its big names in the wake of Ailes’ ouster, and whether this would be a good thing or a bad thing.
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On the one hand, those names bring in consistently large audiences of conservative-leaning Americans, and that kind of viewership has produced an estimated $1 billion a year in profit for 21st Century Fox, about 20% of the total that the parent company brings in.
At the same time, the Murdochs may also be looking to reinvent the network to some extent in the absence of Ailes, to try and reach a younger demographic. Changing hosts would be one way to do that.
The current management of Fox News consists of Rupert Murdoch and two co-presidents, Bill Shine and Jack Abernethy—both of whom are long-time executives closely associated with Ailes.
The younger Murdochs are said to be considering more extensive changes to the network, however, including a new CEO executive, but reportedly put Shine and Abernethy in place while the dust settled from the Ailes case. And as we have seen, there is quite a lot of dust to settle.
