Newsonomics: As Fox’s Dr. Frankenstein Exits Right, the Murdochs Are Left to Reboot Their Wounded Cable News Leader.
If the ascendance of Donald Trump is showbiz, the descent of Roger Ailes can only be described as opera. Trump and Ailes should go down into history together, and July 21, 2016 will mark it.
Just hours before Trump formally accepted the Republican nomination for President, the Dr. Frankenstein who helped create the possibility of that acceptance is locked out of the billion-dollar Fox News empire he cooked up — albeit with a nice $40 million gold watch.
Frankenstein? Indeed. Roger Ailes deserves some kind of award for his genius in inventing Fox News. Certainly, he borrowed from his funder Rupert Murdoch’s combative, biased, and hot tabloids, importing those sensibilities into the U.S. — where cooler if muddled standards of ethics had kept things in (too often boring) check.
“Fair and balanced,” the Orwellian branding that Ailes attached to the Fox News brand brought a gale of laughs in the meeting at which it was introduced, one person in the room tells me. But it has long managed to throw some of its critics off their game. To be clear, Ailes and Fox didn’t pick Trump. But Trump picked up on all the groundwork Ailes laid for two decades, fertile soil for a master manipulator of media and of branding.
First published at Harvard’s Nieman Journalism Lab
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Roger Ailes brilliantly and happily made a deal with the devil to divide the country – pounding talking point after talking point, understanding pre-digital memes – as only a great political operative could. That deal twinned Fox News Channel’s ability to prosecute Rupert Murdoch’s views and churn huge profits, now estimated at about $1.5 billion a year.
Now, though, the sustainability of those profits, Fox’s take-no-prisoners programming, and its very role in Republican pantheon has been thrown into question. It was only two weeks ago that former Fox News anchor Gretchen Carlson went public with her sexual harassment claims against Ailes. As the Republican convention closes and the Democrats’ is set to open, the grand proprietor himself, Rupert Murdoch, has become interim CEO and chairman of Fox News, a job he likely never imagined taking on.
Rupert will soon turn that post over to a likely interim Fox News leader, who will shepherd FNC through the next half year of the election and its immediate aftermath. Then, though, the issues before FNC – ones that Murdoch sons James and Lachlan, in charge of parent 21st Century Fox for the past year, now confront – become more gnarly. The big one: How it will move a 1996 creation profitably into a much more competitive, strongly digital media landscape?
What really ails Fox?
Looking from the outside, Fox News appears to boast an incredible business. Fox rings up about $1.5 billion in profit a year on $2.3 billion in total revenue, running circles around both CNN and MSNBC in both money and audience. Fox News throws off about 20 percent of 21st Century Fox’s profits. That’s no small number, especially as the world’s legacy TV/movie businesses, including both Disney and Time Warner, find themselves buffeted by new, profit-sapping competition on all sides.
But plot out the company’s future, and one number stands out above all. The median age of Fox News primetime watcher is 68, and by some accounts is going up by one year every year. (CNN, at 61, and MSNBC, at 63, face parallel problems.)
Fox News even skews significantly older online, as we see in the June 2016 comScore U.S. multiplatform data below. Thirty-two percent of its digital audience is 55 or older, about 10 percentage points higher than either CNN or MSNBC. Fifty-one percent are 45-plus, 11 points higher than CNN and 6 points higher than MSNBC.
| CNN | |||
| Unique visitors (000) | % total uniques | Index of share | |
| Total audience | 136,147 | 100.0% | 100 |
| 18-24 | 21,094 | 15.5 | 117 |
| 25-34 | 31,703 | 23.3 | 148 |
| 35-44 | 26,631 | 19.6 | 131 |
| 45-54 | 22,432 | 16.5 | 108 |
| 55-64 | 21,794 | 16.0 | 114 |
| 65+ | 10,459 | 7.7 | 69 |
| Fox News | |||
| Unique visitors (000) | % total uniques | Index of share | |
| Total audience | 62,953 | 100.0% | 100 |
| 18-24 | 5,664 | 9.0 | 68 |
| 25-34 | 12,143 | 19.3 | 123 |
| 35-44 | 12,379 | 19.7 | 132 |
| 45-54 | 12,176 | 19.3 | 126 |
| 55-64 | 11,538 | 18.3 | 131 |
| 65+ | 8,562 | 13.6 | 122 |
| MSNBC | |||
| Unique visitors (000) | % total uniques | Index of share | |
| Total audience | 17,621 | 100.0% | 100 |
| 18-24 | 3,308 | 18.8 | 141 |
| 25-34 | 1,763 | 10.0 | 64 |
| 35-44 | 4,506 | 25.6 | 171 |
| 45-54 | 3,154 | 17.9 | 117 |
| 55-64 | 2,699 | 15.3 | 109 |
| 65+ | 2,092 | 11.9 | 106 |
Source: Comscore Multiplatform U.S. Study
That aging out of its core audience is its longer-term problem. It’s been masked for cable news in this Trumpinated election cycle that has sent ratings way up for everyone. CNN showed an audience increase of 38 percent from 2014 to 2015, but Fox has benefited as well. Similarly, comScore reports each of three cable news channels is up more than 20 percent year over year in digital audience.
But everybody expects the audiences to decline — maybe nosedive — in 2017, after this hyperkinetic election year. That election year/non-election cycle is a fixture of the environment.
More deeply, Ailes’ successor must face two fundamental features of cable news’ competition.
The Big Three — Fox News, CNN, and MSNBC — are in some ways artifacts of the end of the 20th century. Dating back to Ted Turner’s original 1980 vision for CNN, cable TV has changed our behavior. From the Challenger disaster through to this sad summer from St. Paul to Istanbul to Dallas, cable TV — today — still acts as a gathering point for times of big news. To see the latest horror, many of us still turn to the TV set. As Jeff Zucker reminded his staff when the took over CNN in 2013, it’s breaking news that makes or breaks cable news.
While that’s still true today, it won’t be in 2020, or probably not even 2018. This was the first convention to be livestreamed on Twitter. We’re just a bit ahead of the technology that will allow media — from Vox Media to the Times, The Atlantic to Breitbart — to do their own livestreaming of the big events, licensed from others but adding their own commentary. Why limit NPR to audio interpretation? Why resort to live blogs from The Guardian to put the words with the pictures? If news consumers can combine their watching of news — on their phones and via over-the-top devices — with the authority of the news brands they trust, why won’t they? Brian Williams, Don Lemon, and Shepard Smith won’t have the monopolies they now enjoy.
That will be real, new competition for what is been the protected island of cable TV news.
Further, there’s the business model. Sixty percent of Fox’s fat revenue pie comes from fees paid it — approaching $1 per customer — by the cable or satellite companies, the rest coming from ad sales. But this model is threatened in the era of unbundling. In the Netflix age, the 250-channel bundles that built cable and satellite are quickly slimming down. The rage of today (more so tomorrow) is the skinny bundle. We’ll see lots of experimentation with these and their pricing.
What’s the likelihood of a highly successful company like Fox News making a smooth, retain-the-revenue transition to this new era? We’d have to say, based on the travails of legacy media overall: Fat chance.
Put together the aging of the audience, the arrival of skinny bundles, and the advance of disintermediating technology, and we can see the new headache James and Lachlan Murdoch now have before them.
Tweak or transform?
Today, the day after Ailes’ leave-taking and Trump’s official ascent, it is curiously Rupert Murdoch’s name at the top of the Fox News org chart. It won’t be there long, but even its placement tells us both how fast Gretchen Carlson’s charges of a hostile workplace spread (as cataloged by the company’s own internal investigation) and that the Murdochs are still looking for the right replacement.
Draw up the job description and it would focus on three major qualities:
- A leader able to calm the roiled emotions rubbed raw over the past two weeks, and to address the frat-boy atmosphere Ailes built, with Rupert’s tacit agreement
- A proven TV operator, deeply grounded in the business
- A strategic thinker, able to navigate Fox News through the election and then to tackle those bigger questions of age, technology, and business model
Is there such a person? If there were a list, it would be a short one. Figure that the Murdochs — presented both with crisis but also a longer-term opportunity — may have to settle for two out of three, and then try to fill out a new top team from there. Long on loyalty, a hallmark of Rupert Murdoch’s career, but short on a bench of executive talent, both 21st Century Fox and Murdoch newspaper company News Corp have struggled to find new top-notch talent. At Dow Jones, Rupert Murdoch finally turned to Will Lewis to soothe the many organizations bruises left by the two-year-tumultuous reign of strongman (Rupert does like alpha males) Lex Fenwick, and that organization is still in rehab, though pointed in a much better direction. Is there a single Fox exec who can now fill Ailes’ shoes?
I’d expect the Murdochs to settle on an interim leader, and then to aim for a big strategic re-evaluation — and new hire — come early 2017.
The big questions before them, ones they thought were unapproachable given Ailes’ near-total power: Does Fox News need a tweak or a transformation? As NPR’s David Folkenflik, a longtime Murdoch watcher, has resurfaced: “James Murdoch, in particular, is known to favor a model more like the Murdochs’ Sky News in Britain, which is lively but less openly political. And the Murdoch sons would like the company to reflect what they believe are more 21st century values.”
What might that mean? It’s easy to imagine a new Fox personified by Megyn Kelly. Twenty-one years Bill O’Reilly’s junior, the right-leaning, feminist-seeming, feisty Kelly could become — lots of contract negotiations ahead! — the face of a new Fox News.
Of course, the big question is how far James and Lachlan want to go, in what could be a reboot. Would it be change in presentation, in tone, or in the actual product? Given Fox News’ outsized impact on U.S. politics, those are questions that go well beyond one cable news company’s fate.
