Authors: Gabriel Sherman
Tags: #Business & Economics, #Corporate & Business History, #Political Science, #General, #Social Science, #Media Studies
The strongest bond between them was politics—the Australian’s abiding passion.
“Murdoch loved to be part of the political game. He couldn’t help himself,” John Menadue, a former general manager of Murdoch’s Sydney papers, wrote in his memoir,
Things You Learn Along the Way
. Murdoch’s ideology was reflexively more anti-establishment than Ailes’s politics when the two met.
Murdoch, for one, loathed Ailes’s hero, George H. W. Bush. In 1988, Murdoch’s preferred Republican was the televangelist Pat Robertson.
“You can say what you like,” Murdoch told Andrew Neil at the time, “he’s right on all the issues.” Four years later, Murdoch voted for billionaire third-party presidential candidate Ross Perot. On a deeper level, however, Murdoch and Ailes shared a more primitive ideology:
winning
. Which is why Murdoch could easily back a liberal like the Australian Gough Whitlam and a union buster like Margaret Thatcher; and Ailes could transform a country-club Republican like George Bush into a heartland populist.
As much as anything, the bond between Ailes and Murdoch was
sealed by the benefits each brought the other. Murdoch provided Ailes with a chance to rise from the tumult of NBC. Ailes could help Murdoch recover from something of a mid-career malaise.
After Murdoch bought the 20th Century Fox film studio in 1985, he purchased a Tuscan-style mansion in Beverly Hills, and his wife, Anna, quickly adapted to the Los Angeles lifestyle. But Murdoch was miserable living on the West Coast. Rupert despised everything about Hollywood, except the profits. When one of his newspaper editors called to tell him about a great story, Murdoch seemed despondent.
“They wouldn’t recognize one in L.A. if it came round the corner and hit them,” he said. Ten years later, and four years removed from News Corp’s near bankruptcy, Murdoch was carrying himself like a man at the outset of his career. Teaming up with a fellow warrior like Ailes was thrilling, and provided an excuse to spend more time in New York, “the capital of the world,” he called it.
Together, Murdoch and Ailes were embarking on a holy mission to lay waste to smug journalistic standards.
“We will be the insurgents in a business of very strong incumbents,” Murdoch said shortly after hiring Ailes. He spoke of “a growing disconnect between television news and its audience,” and “an increasing gap between the values of those that deliver the news and those that receive it.”
T
he grand plans of Ailes and Murdoch were not received in the spirit with which they were delivered. Never mind the politics—almost no one besides the two principals thought the channel made sense as a business. Critics savaged its programming (having not seen a minute of it).
The most critical review, which noted “widespread doubts” about the channel’s “long-term survival,” appeared on the front page of
The New York Times
. Veteran television reporter Bill Carter cited anonymous “insiders” who scoffed at the unnamed twenty-four-hour news channel. A former Fox News executive told him, “there is no
there
there.” Carter’s own words were the harshest: “The idea, some suggested, was to give Mr. Ailes a toy to play with, though, given the current state of Fox News as described by some insiders, it may be less a toy than an imaginary friend.” It was a devastating assessment from an authoritative voice. In the television industry, Carter was more than a news reporter. He was an information broker, whose articles, like Nielsen ratings, could make or break careers.
After reading the
Times
article, Bob Wright, Ailes’s former boss, expressed relief. The next day he told NBC employees on an internal video-conference that he doubted Ailes’s new job would amount to much, pointing to Murdoch’s track record at Fox. “They have yet to air a program, as far as I know, in ten years,” Wright told his team. “They don’t have affiliates with news. They don’t have any structure at all, nationally or internationally, really.… So it’s a real reach.” And it was true. Murdoch’s talk was sometimes cheap. Where was his Sunday morning public affairs program? Where was the 11:00 p.m. newscast? Both had been announced, but had yet to come into being.
A Current Affair
, which debuted in 1986, was tabloid, and his attempts at creating a serious newsmagazine had failed.
In March 1995, Murdoch recruited CBS News executive Joe Peyronnin, who had overseen
48 Hours
and
60 Minutes
, to try building up Fox’s hard news capabilities. Murdoch told Peyronnin he wanted what he called “proper news.”
Peyronnin hired a stable of broadcast news producers and correspondents and placed Emily Rooney, daughter of legendary CBS newsman Andy Rooney, in charge of covering national political campaigns for Fox affiliates.
In the fall of 1995, Peyronnin hired
Today
show producer Marty Ryan to executive-produce a weekly public affairs show called
Fox News Sunday
. Murdoch was personally involved. His ideal host for a morning or prime-time news show was Brit Hume, the conservative ABC News White House correspondent. Murdoch and Hume talked, but Hume didn’t want to leave his comfortable perch at ABC until his contract came up for renewal. When Peyronnin suggested
60 Minutes
correspondent Ed Bradley, Murdoch replied, “I hear he’s lazy.” NPR analyst Mara Liasson was rejected as well. (Liasson would join Fox News in 1997.)
Eventually, Peyronnin hired a conservative, the affable former George H. W. Bush speechwriter Tony Snow, who was a regular fill-in for Rush Limbaugh’s radio show.
Peyronnin fared no better than earlier Fox television news executives. In particular, Peyronnin and his team battled Mitchell Stern, the Fox Television Stations president, who was in charge of the News Corp–owned broadcast stations, to get network evening news coverage on the air.
“Mitch Stern was the enemy of our group,” Rooney recalled. “He was negative. He was a big bully.”
Stern, whose performance was judged by the local stations’ profitability, was reluctant to make programming changes at a time when they were minting money. In the mid-1990s, Fox had developed
a successful strategy of positioning itself as a broadcast network for younger viewers, which was especially appealing to advertisers. Executives worried that news programming would skew the audience older.
In the fall of 1995, Murdoch abandoned his piecemeal approach. Several executives were assigned to work in secret on a business plan for a twenty-four-hour network.
In December, they presented Murdoch with a seventeen-page confidential memo. The highly detailed plan, which included line items for prime-time hosts ($500,000 a year) and studio decorations ($75 a week for flowers), contained three options. A basic newsfeed for Fox affiliates was projected to cost $60 million per year. A headline news service that was “wall-to-wall (similar to CNN/Headline News)” would require an annual investment of $147 million. And a full-service cable news network would cost an estimated $182 million total, a significantly higher figure than the one Murdoch would announce at the press conference in January. The Fox News Channel, according to their financial analysis, had to differentiate itself to win. They rightly stated that CNN’s founding maxim, “The news is the star,” and its workaday presentation of headlines had grown stale. CNN, on the one hand, was “breaking news driven, processed event coverage, big story dependent … reactive and slow and predictable.” On the other hand, “FNC” must be about “personality and programming, produced information, appointment TV, news plus human interaction,” that was both “convenient and interesting” with “attitude.” In other words, Fox News should be conceived as “news talk-radio with video.” According to their analysis, the cable news channel would require a long-term financial commitment. They anticipated losses that could reach $785 million within a decade. To reduce risk, they recommended exploring a possible joint venture with CBS News, which was seeking to compete against the cable news efforts of NBC and ABC. The memo acknowledged the obvious business challenges of such a partnership: “long-term day-to-day control of the venture, CBS ability and willingness to fund sustained early-year losses … availability of CBS talent to channel and at what price … and union issues.” After some discussions between News Corp and CBS executives, the partnership never happened, and Murdoch pressed ahead alone.
Having developed a plan, Murdoch looked for someone to put it into motion.
“I’ve been trying to get a news channel started,” Murdoch told Ailes. “I’ve had a bunch of guys try.”
One of the thorniest challenges would be securing distribution. In those days, cable was analog and as such, had limited space. Digital signals
were on the verge of making a world of five hundred niche channels and on-demand entertainment possible. But until then, the operators had tremendous leverage and tended to favor ABC, NBC and CBS. In the early 1990s, legislation mandated that cable operators had to compensate broadcast networks for “retransmitting” their programming.
Some paid cash, others reserved space on their cable systems for the Big Three to create their own cable channels. In this way, NBC struck a deal with cable operators to make room for America’s Talking, and ABC negotiated space for ESPN2. With such competition, Ailes faced a nightmare scenario of musical chair negotiations in which his upstart network, with the weakest track record in news, could be left standing. In the 1970s, TVN was hobbled by broadcast stations’ unwillingness to sign up for the expensive newsfeed.
At America’s Talking, limited distribution hamstrung Ailes’s ability to attract an audience (the talk channel was only available in about twenty million homes when it was shut down, while CNN was available in 67 million at the time). “Distribution is the name of the game,” Ailes said. Murdoch agreed. “If you look at successive larger battles he’s waged against the unions or the BBC,” a Murdoch family intimate said, “the battles tend to focus on controlling distribution.”
Rumors circulated inside News Corp that Peyronnin’s days were numbered. By hiring Ailes and installing him as Peyronnin’s boss, Murdoch had broken Peyronnin’s contract. But Peyronnin agreed to have lunch with Ailes to see if a working relationship could be forged.
Ailes took Peyronnin out to the Manhattan Ocean Club a few blocks north of News Corp headquarters. Peyronnin told him about his struggles to get news on the air and warned him that rival News Corp executives like Mitch Stern were bent on blocking him. Peyronnin explained that Ailes would have to move quickly and be aggressive. Ailes tried to persuade him to stay on. “I need you,” Ailes told him. “I don’t know anything about news.”
But as the conversation progressed, Peyronnin became convinced that Ailes was not someone he could work for. “Why are you a liberal?” Ailes snapped at one point. At another moment, he attacked CBS, Peyronnin’s previous employer, as the “Communist Broadcasting System.” Ailes told Peyronnin that he was going to create “an alternative news channel.”
Peyronnin went home that night and told his wife he was going to resign. “This guy thinks I’m a liberal. He’s a godawful person and I get paid no matter what, so I’d like to leave,” he told her. Peyronnin asked his agent, Washington lawyer Bob Barnett, to negotiate an exit deal with
News Corp. Ailes soon moved into Peyronnin’s corner office on the second floor, where he would remain.
The logistical and technical issues involved in building the channel were far more complex and difficult than those Ailes had had at America’s Talking. In his previous endeavor, he benefited from the talent pool and existing studio infrastructure of NBC. This time around, he was on his own.
“We had no news gathering operation,” Ailes recalled in 2004. “We had no studios, no equipment, no employees, no stars, no talent and no confidence from anybody.” They also had no time. MSNBC was set to debut in July 1996, less than six months from the time he joined News Corp. ABC’s cable news channel was also moving forward.
Ailes told Murdoch that they had to launch alongside their rivals or risk getting left behind. Though MSNBC would be first, News Corp would not be last—Ailes still had a chance to beat ABC.
But before launching an entire channel, Ailes needed to prove he could launch a single show. Given Murdoch’s checkered history in TV news, Ailes had to demonstrate he could succeed where his predecessors failed. He immediately put in motion Peyronnin’s plan to launch
Fox News Sunday
, the weekly public affairs show for Fox affiliate stations, which had stalled in development. It was not merely a matter of public relations—a move to prove the critics, especially Bill Carter, wrong—but one of business survival. The annual convention of the National Cable Television Association, NCTA ’96, was less than three months away. It was a place where channel executives pitched cable operators on new programming. NBC and ABC had gilded news brands and famous anchors to make their case. Ailes would need something to show for himself.
In starting with
Fox News Sunday
, Ailes chose the worlds he understood best: politics and daytime television. Sketching out the show, he experimented with formats and personalities that would fuse news and politics into an entertaining mix. He considered as potential hosts former Democratic New York governor Mario Cuomo, former Republican congressman Jack Kemp, and
Weekly Standard
founder William Kristol.
In the end, Ailes settled on Peyronnin’s choice of Tony Snow, with whom Ailes had crossed paths in 1992, when Ailes and Peggy Noonan were brought into the White House to rewrite Snow’s first draft of the State of the Union address.
On April 3, Ailes announced that
Fox News Sunday
would debut on Fox affiliate stations on the morning of April 28. Notably, it was the same day that the cable convention began. “We hope to attract the traditional Sunday morning news viewer,” Ailes said, “but at the same
time, we want to appeal to a more diverse and younger audience who are not currently regular viewers.”
The announcement did not lead to a smooth corporate rollout.
On April 4,
Daily Variety
reported that Fox affiliates were “caught off-guard” by the “sudden” announcement. “The last-minute nature of the show was not taken well by many affiliates,” one source told the trade magazine. Until the Telecommunications Act of 1996 went into effect in February of that year, media companies could not own more than a dozen stations.
Daily Variety
reported that the Fox-owned stations—twelve out of the network’s nearly two hundred affiliates—were going to carry the news show, and thus it would reach roughly a quarter of the country. In effect, getting
Fox News Sunday
on the air would be the first test of Ailes’s corporate power.