Fox News vs. Fox Culture War Grows as Murdoch Empire Shrinks

Fox Studios_Illo - THR - H 2018
Illustration by: Taylor Callery

As Disney buys the studio, the remaining media empire's balance of power shifts to NYC's cable news cash cow as TV creators and broadcast employees in L.A. feel increasingly marginalized.

Fox's The Simpsons had been skewering Fox News for years before show creator Matt Groening claimed that the right-leaning cable network finally had enough and threatened to sue in 2003 over a parody scrawl on the show ("Do Democrats cause cancer?"). Had Fox News sued either the broadcast network that airs the show or the studio that produces it, the corporate parent controlled by Rupert Murdoch essentially would have been suing itself, so it never happened.

The incident, though, underlined an important dynamic: Fox News could not inflict its will on other segments of the Murdoch media conglomerate — a dynamic many insiders fear will be reversed once Disney acquires most of 21st Century Fox, leaving Fox News as the dominant profit driver of so-called "new Fox," run by Lachlan Murdoch. "I kind of wish Disney was buying us, too," laments one broadcast network worker.

In fact, many on the Fox Studios lot in West Los Angeles who once simply rolled their eyes and shrugged at the content from the opinion hosts at the New York-based Fox News now tell The Hollywood Reporter they're not pleased they'll be part of a much smaller company where Fox News by far is the leading force. The assets left behind from the $71.3 billion Disney sale will make up a new entity known simply as "Fox" — a name that often is shorthand for Fox News, which could account for north of 70 percent of the new company's annual earnings.

"When I tell my liberal acquaintances I work for Fox, I have to add the caveat: 'Not Fox News!' " gripes another broadcast employee. "But it's getting harder to justify that I contribute financially to Fox News and that it contributes financially to me."

The hiring of Hope Hicks, President Trump's former communications director, as new Fox's chief communications director, exasperated some employees. To them, it was a signal that the cozy relationship between the president and Fox News is here to stay and that they'll be dragged into his orbit, especially since Hicks is moving to L.A., where the Fox broadcast network is headquartered. Hicks, Fox and Fox News declined comment.

Multiple Wall Street analysts, speaking on the condition of anonymity because they did not want to wade into politics, warn that a culture war could be brewing at the new Fox. It's an "important" topic that's largely being ignored, says one analyst.

Yet the hiring of former AMC Networks executive Charlie Collier, who began his tenure as the leader of entertainment for new Fox on Nov. 12, calmed some anxiety at the broadcast network because it indicated that Lachlan Murdoch is serious about maintaining the Fox Entertainment brand. Sources say development orders have been halved as the network focuses on sports and unscripted fare and jittery executives await word on how new Fox will approach scripted content. "The network has always operated separately from news, as it should," says a person close to Collier and the Murdochs.

"It's not political, it's practical. Journalism and entertainment assets can amicably coexist but rarely commingle." This source says Lachlan and Collier's priority is simply to "build a culture that thrives on creativity and exceptional content for all." There also has been speculation that Collier could go after a studio, perhaps Lionsgate, which would, of course, add a more traditional Hollywood culture to the mix. Says another source, "Hiring Charlie signals that they're trying to build something."

By all accounts, Collier is left-leaning, donating $2,700 to Hillary Clinton's presidential campaign in 2015, and Lachlan Murdoch isn't as hard right as some presume, describing himself at a New York Times DealBook conference as "conservative economically and more liberal on social policy. I don't fit neatly into a left-right, Republican-Democrat bucket."

Yet there are concerns that politically active Hollywood creators won't work with the new Fox in what has become a hyperpartisan environment in the Trump era, something Credit Suisse analyst Douglas Mitchelson predicted would happen in a research note when he wondered "whether owning Fox News will hamper access to Hollywood talent."

Steve Levitan, co-creator of Modern Family, which is produced by the Fox studio but airs on Disney's ABC, and Seth MacFarlane, creator of Fox's Family Guy and The Orville, both have been vocal about their issues with Fox News on Twitter. Lachlan Murdoch acknowledged as much when he was asked about Levitan's comments Nov. 1 at the DealBook conference. "I completely understand this," he said. "He feels the anger and intolerance of opinions that we're seeing across all of our communities in America."

Still, Murdoch continued, "I'm not embarrassed by what [Fox News does] at all. … Fox News is the only mass-media company in America with conservative opinions. It's the only one. Frankly, I feel in this country we all have to become more tolerant of each other's views."

Mitchelson projects Fox News will generate about $3 billion in annual revenue in 2018, and SNL Kagan says about $1.7 billion will come via fees from cable and satellite distributors, which means as much as $1.3 billion should come from ads — sales of which increasingly are difficult with activist groups like Media Matters for America pressuring advertisers to dump Fox News. Media Matters president Angelo Carusone says his group will keep up the pressure on Fox News, but, for the time being, it will leave the broadcast network alone.

"It's true that Fox News will feature more prominently in new Fox, but I'm a practical person," says Carusone. "We can get advertisers to leave Fox News or severely scale down their buys. … For now, I just think it makes the most sense to stay focused on the Fox News brand."

Analyst Mitchelson, for one, isn't worried about the financial prospects of new Fox, noting that the broadcast network, sports channels and Fox News have "clear negotiating leverage over pay TV distributors." The analyst adds, "New Fox will deserve the moniker of free-cashflow machine, something that we have not used for media companies in quite some time."

Some broadcast employees who despise Fox News still hold out some hope they can jump ship to Disney, even though the company run by CEO Bob Iger isn't buying that asset. If not, they pray there won't be cross-pollination between their business and Fox News.

21st Century Fox CFO John Nallen, who will be COO at new Fox, made no bones about the importance of Fox News to the new entity when speaking in September at a conference. "It's the cashflow engine of new Fox; there's no secret about that," he said. "It's a great business, whether you like it or not — the brand itself is in the news many times." It's that last part that has so many soon-to-be-employees of New Fox on edge.

A version of this story appears in the Nov. 14 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.