Roger Ailes out as CEO of Fox News Network
Fox News CEO Roger Ailes, who transformed the American news business with his creation of the Fox News Network and its star lineup of conservative opinion shapers, resigned from his influential post Thursday, according to parent company 21st Century Fox.
Ailes's resignation -- effective immediately -- comes less than a month after he was sued for sexual harassment by former Fox anchor Gretchen Carlson, marking a stunning end to a career of one of the most powerful people in the news media.
"Having spent 20 years building this historic business, I will not allow my presence to become a distraction," Ailes said in a statement released Thursday. "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. 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."
Under Ailes's leadership, Fox News has dominated its TV network and cable rivals in the ratings for more than a decade, and was a financial juggernaut as well. It accounts for roughly 20 percent of the profits at 21st Century Fox (FOXA), whose other properties include the 20th Century Fox film studios.
Shares of 21st Century Fox traded up 2 cents to $27.20 in after-hours trading. They had slipped Wednesday, off 2.7 percent, or 75 cents, to $27. as investors fretted over reports that Fox News' biggest stars, such as Bill O'Reilly, Sean Hannity and Greta Van Susteren, might follow Ailes out the door, causing viewership to tumble.
The Financial Times has reported that these top personalities have "escape clauses" in their contracts that would allow them to leave the network if Ailes departs. It was not clear Thursday what their next steps, if any, might be.
Ailes's duties, which also include overseeing Fox Business Channel, will be assumed on an acting by his longtime boss, Rupert Murdoch, the Australian-born media tycoon who made Fox News an integral part of his media empire, the channel's corporate parent 21st Century Fox said in a statement.
"I am personally committed to ensuring that Fox News remains a distinctive, powerful voice," Murdoch said. "Our nation needs a robust Fox News to resonate from every corner of the country."
Cutting short a vacation, the 85-year-old Murdoch addressed Fox News employees in New York on Thursday. Details were not given on the settlement agreement for a contract that was supposed to run through 2018, but Ailes is expected to get a payment of at least $40 million.
Ailes will have no formal role in the company, but is expected to serve as an informal adviser to Murdoch, a person familiar with the agreement told the Associated Press, speaking on condition of anonymity because it is a personnel matter.
Fox is heading into a general election campaign in its customary spot at the top of the ratings, but without the man who sets its editorial tone every day. The announcement came on the day Donald Trump is to accept the GOP nomination for president, a speech likely to be watched by more people on Fox than any other network.
The blustery, 76-year-old media executive built a network that both transformed the news business and changed the political conversation. Fox News Channel provided a television home to conservatives who had felt left out of the media, and played a part in advancing a rough-and-tumble style of politics that left many concerned that it was impossible to get things done in government.
"Roger shared my vision of a great and independent television organization and executed it brilliantly over 20 great years," Murdoch said in the statement. "Fox News has given voice to those who were ignored by the traditional networks and has been one of the great commercial success stories of modern media."
The Pew Research Center's latest State of the News Media report issued in June estimated Fox News' 2015 profit at $1.5 billion, well ahead its closest rival Time Warner's (TWX) CNN, which Pew estimated to earn $381 million, and Comcast's (CMCSA) MSNBC, which Pew projected to earn $227 million. Profit margins for cable channels are around 50 percent, far better than what traditional publishers earn.
Revenue among these rivals wasn't close, either, with Fox projected to bring in $2.3 billion compared with CNN's $1.2 billion and MSNBC's $518 million. Cable news viewership spikes during presidential elections as does advertising revenue, though local stations -- particularly those in battleground states -- make the biggest election-year money.
Some Fox observers wonder if James and Lachlan Murdoch, the sons of 85-year-old Rupert Murdoch, might change the editorial direction of the conservative-leaning channel. But Brett Harriss, an analyst with Gabelli & Co. who follows media companies, told CBSNews.com these concerns are overblown.
"We think that the Murdoch sons are practical and astute enough to realize the special nature of Fox and its market position," said Harriss, whose firm owns shares of 21st Century Fox among its $37.5 billion in assets under management. "They're not going to break the [business] model. We think there's probably enough executives there that could run the thing without Ailes."
Among the potential replacements for Ailes are executive editor John Moody; Bill Shine, who overseas Fox News' prime-time and opinion shows; special projects head Michael Clemente; and Jay Wallace, who overseas news and daytime programming, according to Politico. Another option is for the Murdochs to search outside the company for new leadership.
In her lawsuit, Carlson claims that Ailes retaliated against her because of complaints she had made about discrimination and harassment. The 11-year Fox employee was anchoring a 2 p.m. show when she said she was fired on June 23 at the end of her contract.
Carlson, 50, said her firing came nine months after Ailes told her during a meeting that "you and I should have had a sexual relationship a long time ago."
She alleged in the suit that Ailes, who is 76, ogled her, urged her to wear clothes that enhanced her figure and told her she was sexy but "too much hard work." Carlson also says in the complaint that Ailes punished her by cutting back on political interviews that she conducted and ending a regular appearance she made on Bill O'Reilly's prime-time program, generally Fox's highest-rated show.
Carlson said she was fired as a host of the morning show "Fox & Friends" in 2013 and her pay reduced because she had complained about sexual harassment.
The downfall of Ailes, while seemingly swift, may have actually been years in the making.
Although he enjoyed a close relationship with Rupert Murdoch, his relationship with sons James and Lachlan was reportedly strained for years. Lachlan Murdoch left his father's media empire in 2010 after a row with Ailes. But the brothers assumed new managerial roles last year at the behest of the 85-year-old father, who appears to be in the process of preparing for them to take over his empire.
At the time, Fox News initially claimed Ailes would continue to report directly to Rupert Murdoch only to clarify that the younger Murdochs would be his boss, although he would continue to have a "unique and long-standing relationship" with their father.
The détente between Ailes and the younger Murdochs came to end when Carlson filed the sexual harassment lawsuit against Ailes earlier this month. The TV executive vehemently denies the claims, and several Fox stars spoke up on his behalf. Still, 21st Century Fox hired the law firm Paul Weiss Rifkind Wharton & Garrison to conduct an investigation.
Soon, reports emerged in New York magazine that other women, including Fox News anchor Megyn Kelly, had leveled similar complaints against Ailes. New York reported on Wednesday that Ailes and Fox were working out the terms of his payout, which will be determined by the company's results for the fiscal year ended July 1. A spokeswoman for Fox couldn't be reached for comment.
Whether the likes of O'Reilly, Hannity, and Van Susteren would avail themselves of the opportunity to depart isn't clear, though the conservative websiteBreitbartNews reported that several Fox broadcasters are considering leaving to form a rival network. New York magazine's Gabriel Sherman, who has written a critical biography of Ailes, has raised doubts about that story on Twitter. Al Tompkins of the media think tank Poynter Institute is skeptical as well.
"I can't think of a circumstance," Tompkins said, "where people of real significance have followed someone out the door like that to an opportunity that doesn't currently exist." But even if all those big names stick around, chances are good that Fox News will still be a different organization post-Ailes.
The Associated Press contributed to this report.
