The new generation of Murdochs is betting that Fox News Channel will continue to be a big moneymaker without former chairman Roger Ailes in the engine room and now without Bill O’Reilly as captain of The O’Reilly Factor, the No. 1 news network’s highest-rated and most-lucrative show.
By cutting loose O’Reilly, the face of Fox News since it was founded in 1996, James Murdoch, the still-new 21st Century Fox CEO, is trying to demonstrate that the media giant will no longer tolerate the workplace behavior that led to payments reportedly totaling $13 million to settle a series of sexual harassment charges against the host. Similar harassment charges led to the removal of Ailes a year ago.
Murdoch didn’t want to talk about the big news, dodging reporters when he appeared at an upfront event for National Geographic Channel, a network dedicated to science and conserving the environment, shortly after O’Reilly’s termination was announced.
“We did a thorough investigation, a thorough review and we reached a conclusion,” he finally said, referring reporters to the company’s statement, which said “after a thorough and careful review of the allegations, the company and Bill O’Reilly have agreed that Bill O’Reilly will not be returning to the Fox News Channel.”
In a statement, O’Reilly said it was “tremendously disheartening that we part ways due to completely unfounded claims.”
Declan Moore, CEO of National Geographic Partners, declined to comment on future O’Reilly projects based on his Killing book series, saying only there were none on the 2018 slate.
The decision will be costly at first. After that it remains to be seen if Fox News, now headed by Rupert Murdoch, will be the same without O’Reilly, in many ways the combative, conservative, bombastic face of the network.
Under the terms of a recently signed contract, the company is reportedly paying O’Reilly as much as $25 million — one year’s salary — to go away.
That $25 million is a drop in the bucket considering Fox News made $1.6 billion in gross profit in 2016, according to SNL Kagan, generating $1.5 billion in affiliate fees and $894 million in ad revenues.
With as many as 4 million nightly viewers, O’Reilly’s show alone generated more than $400 million in ad revenues over the past two years. But when the host’s alleged sexual harassment activity came to light, advertisers moved their spots. When O’Reilly went on vacation this month, the audience stayed but his show was airing just 10 commercials a night, down from 35 spots, adding economic pressure to Fox News’ ethical and legal issues.
On the ethical side, critics including Sen. Elizabeth Warren (D-Mass.) are not satisfied. Anti-sexism group UltraViolet noted that Ailes and O’Reilly were walking away with more money than their victims. “This is disgusting,” the group said.
UltraViolet is calling for former Ailes deputy Bill Shine, the new Fox News president, to be fired for “covering up and paying off serial sexual predators.”
Tucker Carlson is set to take over O’Reilly’s 8 p.m. time slot. According to research company SQAD, advertisers paid $16,000 per spot in last year’s upfront to be in O’Reilly’s show and $14,120 to be in Carlson’s.
“It is still too early to know how much, if any, Fox will lose or gain in ad revenue with O’Reilly‘s departure,” said Dan Klar, a VP at SQAD. “Other programs, such as Fox and Friends and Hannity are taking the ad load that shifted when advertisers abandoned O’Reilly earlier in the month. If the advertisers are happy with the program and viewership Carlson brings to the timeslot, they will stay, albeit at a lower rate initially, which will negatively impact revenue.”
Pivotal Research analyst Brian Wieser said he did not think the end of The O’Reilly Factor would have a meaningful impact on 21st Century Fox’s finances. “Because viewing of news-related programming is growing fast enough to more-than-compensate of O’Reilly’s departure, we think domestic ad revenues at Fox are likely to fare better than we previously forecast,” Wieser said.