The two sons of media tycoon Rupert Murdoch have long harbored deep cultural and personal differences with Roger Ailes, the man who has shaped the right-wing Fox News that has cranked out profits for the Murdoch empire since the network’s inception two decades ago.
Now, less than two years after Rupert ceded more authority to sons Lachlan and James, those differences loom large as the pair is poised to oust the longtime Fox News president amid allegations of sexual harassment.
Whereas Ailes, the son of a factory foreman in Warren, Ohio, cut his teeth at a Cleveland NBC affiliate and later as a political consultant for President Richard Nixon, the Murdoch brothers came up as wealthy heirs to a global media empire that not only appeals to conservative Americans but produces blockbuster movies, makes television series and broadcasts in eight Indian languages.
“Roger (Ailes) has always known and expressed to me that there would come a day when Rupert Murdoch was no longer in charge and the company was run by Murdoch children, and at that point, Roger understood that he would be toast. And that day appears to have come.
Michael Wolff, Rupert Murdoch’s biographer
At a time when most TV networks hewed close to the center of public opinion, Ailes made right-wing populist views a profitable and influential franchise, transforming the tone of American political culture and tapping into a demographic much like his own. “I think that my primary qualification for running a news channel is that I don’t have a degree in journalism,” he told C-Span in a 2004 interview.
By contrast, London-born James Murdoch dropped out of Harvard, started an independent hip-hop label, Rawkus Records, and has guided Twenty-First Century Fox investments in everything from the international satellite network Sky News to National Geographic’s magazines and books.
For years, the differences didn’t matter. Ailes was making money and had the ear of family patriarch Rupert, who protected him. And when Lachlan, who was being groomed to be Rupert’s successor, abruptly left his News Corp. executive posts and went to Australia for 10 years, Ailes cheerfully moved into Lachlan’s office next to Rupert.
Now their differences have acquired new significance not only for the family but for Twenty-First Century Fox investors and the future of American political discourse.
“The Murdoch sons, Lachlan and James, it’s been a long-held goal of theirs to remove Ailes from Fox News,” said Gabe Sherman, an editor at New York magazine and the author of a biography of Roger Ailes. “But they’ve been unable to do it because their father has consistently sided with him over their wishes. But they now have the corporate power to force his removal, which has been a goal of theirs stretching back more than decade.”
It is not clear whether the Murdoch brothers will put a new imprint on Fox News. But some of their views appear to contrast sharply with common themes hit by the network’s personalities.
Ailes has relished in attacking the establishment – “the East Coast and West Coast people who frequent the same parties” he told C-Span in an interview in 2004 – but James does not share his attitudes and interests.
James has long had an interest in global warming and measures needed to stop it. He sought to make BskyB, one part of Murdoch’s European operations, carbon neutral. And his wife, Kathryn, sits on the board of the Environmental Defense Fund; she is also president of the Quadrivium Foundation, which focuses on natural resources, “civic life, childhood health and equal opportunity.”
And while many longtime readers of National Geographic feared that Rupert Murdoch, who has dismissed climate change concerns, would water down the magazine’s coverage of global warming, James Murdoch has been supportive of the coverage and of the magazine’s independence.
The danger for the brothers is figuring out a post-Ailes formula for continued success.
“The business (Roger Ailes has) built, and the channels he’s built, are terrific. We have a huge regard for him, and he’s done a great job.
Lachlan Murdoch, son of Rupert Murdoch, to the Hollywood Reporter
“Fox News is one of the most important media properties in the industry,” said Brian Wieser, an analyst of 21st Century Fox at Pivotal Research Group. “More than a source of influence for some (and agitation for others), it is a highly profitable entity that accounts for a large share of its parent company’s value.”
He said that SNL Kagan data indicates that Fox News and its sibling Fox Business generated $900 million in ad revenue and $2.5 billion in total revenue last year.
“Fox News is a ratings juggernaut, dwarfing CNN in time consumption by 2.2 times last year,” Wieser said. Fox News channel ratings topped all cable networks for the first time in the first quarter of this year, according to Fox, claiming 2.4 million viewers in prime time.
“The business (Ailes has) built, and the channels he’s built, are terrific,” Lachlan told the Hollywood Reporter. “We have a huge regard for him, and he’s done a great job.”
But will that formula continue to work? The demographics of Fox News skews toward older viewers. Moreover, the network faces a potential exodus of talent because some of the key anchors have contracts that let them leave if Ailes does.
“It’s possible that just being bombastic is where the successful formula is,” said Wieser. “There could be changes to broaden their focus that could play out, but it’s really hard to say what is the revenue maximizing choice both short and long term.”
He said that as media becomes more global, “it’s possible that something bombastic could also work globally too, but on the other hand, it might be somewhat alienating.”
While many longtime readers of National Geographic feared that Rupert Murdoch, who has dismissed climate change concerns, would water down the magazine’s coverage of global warming, James Murdoch has been supportive of the coverage and of the magazine’s independence.
The brothers have been cautious in public. “The health of the Fox network depends on the quality of the programming, and we’re really doing stuff creatively that works,” James chimed in during the same Hollywood Reporter interview. “The model around it will evolve, and we have to have an appetite for that change. Too often in the industry, we focus on the existing or past business rules and not on the product itself and new business rules and opportunities that are going to emerge from that.”
A person familiar with the sons, frequently clad in blue jeans, said they are more international in their views, placing emphasis on the rapid growth of digital and mobile businesses in places such as India. They are also focused on the need to develop core brands, such as National Geographic or sports stations, that can be packaged in online video bundles that people will pay to access. James and Lachlan are also influenced by how their children consume content, the person said, who spoke on the condition of anonymity to talk freely about the Murdochs.
“You have to be able to actually have a real appetite for change, not just react to it,” James said at the Bernstein Strategic Decisions Conference for investors. “Our single biggest risk, our single biggest competitive threat is our own incumbency, and we have to not be afraid to get out there and innovate new products into the marketplace.”
What that will look like is unclear. Laura Martin, an analyst of 21st Century Fox at Needham, said that Fox News may be able to bring in bigger profits by introducing some shows that are less politically polarized to broaden its appeal. The company could offset its aging viewership by drawing in a more mainstream audience – a change that would have been impossible under such a devout right-wing believer as Ailes.
But new corporate leaders may also hesitate to alienate its core audience and tamper with Fox’s proven profitability, especially when the politically focused network could face a weak 2017. The political election has brought plenty of viewers to Fox News, but that effect will evaporate next year - setting the company up for a challenge just as new leadership takes over.
Michael Wolff, Rupert Murdoch’s biographer, said that ultimately, Ailes had a poor relationship with the sons.
“They have a terrible relationship. This is goes back many, many years,” Wolff said. “And Roger has always known and expressed to me that there would come a day when Rupert Murdoch was no longer in charge and the company was run by Murdoch children, and at that point, Roger understood that he would be toast. And that day appears to have come.”