Authors: Gabriel Sherman
Tags: #Business & Economics, #Corporate & Business History, #Political Science, #General, #Social Science, #Media Studies
In the weeks leading up to the launch, Ailes was on a war footing, convinced his rivals were out to damage him and the show. He announced the debut, in part, to force the hand of Mitch Stern, the News Corp television executive who had blocked Peyronnin’s previous efforts at news programming.
“Roger is acutely aware how the rest of the company views him. He calls News Corp a pirate ship, where everyone tries to stab everyone else,” a former senior Fox executive said.
As Stern remembered it, the conflict over
Fox News Sunday
had more to do with Ailes’s personal style than underlying business disagreements. “Roger isn’t the easiest guy to get along with. He sees enemies in a lot of places,” Stern reflected. “If he thought he had to win a big battle over
Fox News Sunday
, maybe that got him all nutty.”
Though Tony Snow leaned to the right—in addition to his time in the first Bush White House, he had been an editor at the conservative
Washington Times—Fox News Sunday
resembled on the morning of its debut a conventional network news broadcast. Live from the Decatur House, a neoclassical mansion steps from the White House, Snow tackled a mix of foreign affairs and domestic politics with senators and congressmen.
Worried that other networks would pressure politicians not to appear on
Fox News Sunday
, Ailes did not advertise the guest list in advance.
Only a quarter of Fox’s affiliates agreed to broadcast the program. Very few people watched, but John Carmody,
The Washington Post
’s influential television writer, tuned in.
In a tough write-up, he graded the debut a “C-plus (well, maybe a B-minus).” He called the opening graphic “unexciting” and noted that correspondent Jed Duvall was caught on camera “scratching himself.”
Despite the uneven launch,
Fox News Sunday
fulfilled Murdoch’s stifled ambitions to break into the television news business and secured for Ailes a tangible victory at a crucial moment as he faced off against his chief adversary at NBC.
Two weeks before the cable convention, NBC promoted David Zaslav to president of cable distribution, putting him in charge of the effort to sell MSNBC to cable operators. The feud between Ailes and Zaslav, which had started as an office rivalry, was metastasizing into a corporate clash between News Corp and NBC.
I
n Los Angeles, as 26,000 cable industry executives circulated through the sprawling convention hall, Ailes and Zaslav shadowed each other. The two men shuttled to meetings, making their pitches and talking to reporters. Zaslav was confident a majority of the cable operators that carried America’s Talking would take MSNBC.
He bragged to
The Seattle Times
that he had had a productive meeting that morning with executives from Tele-Communications, Inc., the country’s largest cable operator with its fourteen million subscribers. “We’ve begun a dialogue,” Zaslav said. His comment was a shot across Ailes’s bow. Murdoch was already courting TCI’s conservative co-owner John Malone, the Denver, Colorado–based media investor.
Malone held stakes not only in TCI, but in nearly a hundred companies—from Turner Broadcasting and Court TV to Black Entertainment Television and MacNeil/Lehrer Productions.
As the incumbent, NBC seemed to be taunting Ailes.
“We are the only players doing this that are credible,” Tom Rogers told the press.
Andy Lack announced that
Today
show anchors Bryant Gumbel and Katie Couric would be regular hosts on MSNBC. He also trotted out NBC News stars to woo cable operators. Tom Brokaw anchored the
Nightly News
from NBC’s Burbank studios so he could be on hand at the convention.
“We’re here persuading the cable people that [MSNBC] is the place to be,” Brokaw told a reporter. At the MSNBC booth, computer monitors displayed prototypes of the MSNBC website. Microsoft brought technowizardry to the marketing push.
Unlike MSNBC, Ailes had very little to actually show the industry. He was secretive about Fox News’s plans and combative in his dealings with cable operators.
“I went into their booth, they weren’t communicative about what kind of programming they were going to have,” recalled Richard Aurelio, the former president of Time Warner Cable’s New York City Group. With Fred Dressler, the executive vice president of programming
at Time Warner Cable, Ailes was even more hostile. When Dressler asked Ailes about his plans for Fox News, he replied,
“I’m not going to tell you. It’s a news channel, that’s all you need to know.”
The truth was Ailes was not in Los Angeles to sell programming. By all appearances, he was there to make it clear that Fox News would not play the role of supplicant in the negotiations.
“There’s a ritual dance with cable operators,” Ailes recalled. “They don’t want you, they don’t want your service, they don’t want your phone call.” He would later recall that getting onto the cable dial required a kind of forced entry, like “breaking into Fort Knox.” To pry open the door, cash was a powerful crowbar. Inside the Los Angeles Convention Center, word circulated that News Corp would pay cable companies millions to carry Fox News. In the conventional arrangement, cable operators were the ones who paid channel owners.
In 1996, for instance, cable operators paid CNN roughly 25 cents per subscriber.
Murdoch flipped the equation: he was prepared to pay cable operators a stunning $10 per subscriber. For a large cable system, agreeing to carry Fox News would be worth upward of $100 million. Chase Carey, a Harvard MBA who was chairman of Fox Television, had devised the risky plan to reverse cable television economics.
“We had to put something on the table to grab the attention of the cable operators,” Carey said.
As one former Ailes colleague put it, “we had Rupert’s checkbook and balls.”
It worked. Murdoch’s preemptive strike spooked the industry.
Less than a month after the convention, ABC’s parent company, the Walt Disney Company, pulled the plug on the ABC cable news channel. “It became more and more apparent as we looked at the numbers that there was no light at the end of the tunnel,” Roone Arledge, the president of ABC News, told Bill Carter. He did not hesitate to blame Murdoch in the pages of the
Times
. “We couldn’t believe that offer of $10 a subscriber,” he said. “It’s the same thing he did in escalating the costs of football rights and station values.”
Ailes gloated. “Now we’ll be getting résumés from ABC as well as NBC,” he boasted to
USA Today
.
Dozens of CNBC and A-T executives, producers, and anchors had already joined Ailes at Fox News. Judy Laterza, his seasoned assistant, was there. So was his
Mike Douglas
mentor, Chet Collier. Ailes Communications staffers, including Kathy Ardleigh and Scott Ehrlich, who had followed him to CNBC, followed him to News Corp. CNBC pressman Brian Lewis became his spokesperson. In December, he’d completed a master’s thesis in communications at Fairleigh
Dickinson University that had been inspired by Ailes. (“The News Media: The Modern Day Electoral College,” he titled it.) CNBC CFO Jack Abernethy left to do the same job for the new cable channel. CNBC ad man Paul Rittenberg became head of Fox’s advertising sales. And, after peppering Ailes with requests to join the new network, Steve Doocy got a job as a weatherman and “man on the street.”
In all, eighty-two former A-T and CNBC staffers would decamp to News Corp.
That spring, NBC CEO Bob Wright called Ailes to complain about the staff defections. The conversation was brief.
“You’ve been poaching my people,” Wright said.
“It isn’t poaching;
it’s a jailbreak
!” Ailes roared.
In the press, Zaslav continued to provoke Ailes.
“Our view is we wish Rupert luck,” he told
The Hollywood Reporter
in a story published on May 7. “We don’t see his service as a competitor.… We’re launching with a real news and information service. We already have deals for distribution with the top 100 multiple system operators.” A few weeks later, Ailes struck back.
On Friday, May 31, Justin Manus, an attorney representing Ailes, sent a letter to Ed Scanlon threatening legal action. In it, Ailes accused Zaslav of dirty tricks that were designed to damage Ailes’s ability to sell Fox News to the cable industry. “It has come to our attention that David Zaslav of NBC has been showing Cable Operators a carefully edited video of the start-up problems of the A-T Network, and telling them that these problems were created by Roger Ailes.”
Several days later, NBC’s general counsel, Rick Cotton, fired back in a letter, denying any wrongdoing.
While Ailes and NBC traded legal letters, the war was shifting to a strategic piece of terrain, as News Corp and NBC sought to win over Time Warner Cable, the most important cable distributor in the country.
The system reached 11.5 million domestic cable viewers, but, more important, it was the gateway to Manhattan, the media capital of the world, inhabited by the Madison Avenue advertisers who controlled the flow of billions of marketing dollars. Time Warner Cable had a monopoly on New York City’s one million cable subscribers. Adding complexity to the negotiations, because Time Warner had merged with CNN’s parent company, Turner Broadcasting, in 1995, it was against the company’s interest to introduce into their market a competitor to CNN.
In early June, Murdoch and Chase Carey lunched with Time Warner CEO Jerry Levin and Time Warner president Richard Parsons in Murdoch’s private dining room. Murdoch and Carey explained that because
Manhattan was so important for Fox News’s launch, News Corp would pay handsomely for access. Murdoch was offering Time Warner $125 million—more than $10 per subscriber—to carry Fox News. Levin and Parsons were noncommittal.
After the lunch, Murdoch followed up with a confidential two-page letter to Levin. Murdoch portrayed Ailes’s channel in lofty terms. It was a sales pitch that clearly oversold the middlebrow product Ailes was actually planning to roll out. Fox, Murdoch promised Levin, would be a “high quality” news channel “designed to provide more information to viewers than any current news on the air.” Remarkably, Murdoch even promised Levin that Fox News would carry “more news than talk programming,” a direct contradiction to the vision Ailes and Chet Collier had for the channel.
At the time Murdoch was pitching Levin on carrying Fox News, he was gaining an unlikely ally. Regulators at the Federal Trade Commission, reviewing the Time Warner–Turner deal, were coming to Murdoch’s aid.
FTC chairman Robert Pitofsky, an antitrust scholar at Georgetown University and a vocal opponent of media concentration, was planning to ask Time Warner to carry a competing cable news network, in exchange for agency approval of the deal. The move essentially guaranteed that either Fox News or MSNBC would find long-term space alongside CNN in the crucial New York market. Given the clash of conflicting agendas between NBC, News Corp, and Time Warner, the three-way negotiations were always going to be fraught. But no one could have predicted that the competition would become as nasty as any of Ailes’s most contentious political campaigns.
M
eanwhile, Murdoch notched a major victory that sparked fear in the executive suites at NBC.
On the morning of June 24, News Corp sent out a press release announcing a distribution deal with John Malone. The two men were both allies and adversaries. Malone was the one media mogul Murdoch was said to fear. Politically, however, they were in sync.
“There’s a huge diversity of values in this country between what people in central Manhattan think of the values of our society and what people in Peoria think the values of our society are,” Malone, a self-described libertarian, told
The New Yorker
. In agreeing to distribute Fox News, Malone extracted a steep price from Murdoch: News Corp agreed to pay a rumored $200 million in return for Malone’s commitment to put Ailes’s network in ten million homes by the time of its October launch. (
Ailes
denied that TCI was being paid $200 million, and a TCI spokesperson claimed that the so-called incentive payment was “nothing close” to that amount.) As part of the deal, Malone was given the option to buy a 20 percent stake in Fox News.
The concessions were simply the price of admission: no matter what happened with the Time Warner Cable talks, the Malone deal delivered enough subscribers to ensure that Ailes’s network would achieve a viable audience when it debuted in the fall.
As important, Malone guaranteed that he would offer Fox News to all of TCI’s subscribers, but made no such commitment to MSNBC.
Murdoch’s distribution coup put wind at Ailes’s back and gave Murdoch confidence to double down on television.
A few weeks after Murdoch inked the pact with Malone, he negotiated an even bigger transaction with Ronald Perelman to acquire the remaining 80 percent of his media company, New World Communications, for $2.5 billion. The deal increased News Corp’s stable of corporate-owned stations from twelve to twenty-two, and ensured that Ailes would have access to the biggest chain of broadcast stations, in terms of ownership. But as Murdoch was finalizing the deal with Perelman, NBC tacked ahead on July 15, when MSNBC debuted to mixed but extensive reviews. The News Corp channel was still a chaotic mess. But Ailes always viewed long-shot odds and operational challenges as opportunities. At America’s Talking, he used them as raw material to spin an inspiring David-and-Goliath narrative about his start-up. The contest retained, for Ailes, a deeply personal dimension. From his spacious second-floor corner office at News Corp, Ailes had a clear view of Sixth Avenue toward NBC’s offices at Rockefeller Center, where David Zaslav, Tom Rogers, and Andy Lack were working against him on a channel that should have been his. It was a visual reminder that his war with NBC was far from over.
I
N WAYS THAT ONLY BECAME APPARENT YEARS LATER
, MSNBC’s debut on July 15, 1996, signified the moment when news on cable television forever changed. News was no longer just to be found in the day’s headlines. It became ever more deeply embedded in the context of shared cultural and political ideas that made viewers feel welcome and safe, while widening the chasms that separated them from people who were not like them. From the very beginning, MSNBC spoke, very deliberately, to the coasts. MSNBC’s specific concept was to re-create on camera the vibe of an espresso bar in downtown Seattle, the home of NBC’s new corporate partner.
“People are going to be on television, having coffee,” Andy Lack told NBC anchor Brian Williams, courting him to the channel over dinner. Exposed faux redbrick walls and industrial lighting transformed the America’s Talking studio in Fort Lee, New Jersey, into a loftlike space where urbane twenty- and thirty-somethings chattered about the news of the day, like characters from
Friends
or
Seinfeld
. With so much casual banter, the message to the audience was that big-city life in MSNBC’s America was easy and fun, where successful people had plenty of free time to chat, and the conversation flowed from one venti latte to the next. But MSNBC’s urbane and cheerful family inevitably left a lot of America on the outside.