Roger Ailes Resigns as Fox News Chief After Sexual Harassment Accusations

Roger Ailes Horizontal - H 2015
Wesley Mann

Roger Ailes Horizontal - H 2015

After a 20-year career building Fox News into a ratings titan and financial powerhouse for boss Rupert Murdoch, Ailes' downfall began after former anchor Gretchen Carlson filed a lawsuit against him and other women spoke out about inappropriate behavior.

Roger Ailes, the television impresario who built Fox News into a financial and ratings juggernaut, will leave the network he spent 20 years building under a cloud of sexual harassment accusations, effective immediately. Rupert Murdoch, the 85-year-old executive co-chairman of 21st Century Fox and Ailes' close ally for decades, will assume the position of chairman and acting CEO of Fox News Channel and Fox Business Network. He will work closely with current Fox News executives Bill Shine, Jay Wallace and Mark Kranz until a permanent CEO is named.

In a statement Thursday announcing Ailes' departure, Murdoch noted Ailes' "remarkable contribution to our company and our country. Roger shared my vision of a great and independent television organization and executed it brilliantly over 20 great years. Fox News has given voice to those who were ignored by the traditional networks and has been one of the great commercial success stories of modern media."

Rupert's sons, Lachlan and James Murdoch added: "We join our father in recognizing Roger’s remarkable contributions to our company. Our talented Fox News and Fox Business colleagues, up and down the organization and on both sides of the camera, have built something that continues to redefine the cable news experience for millions of viewers. We are enormously proud of their accomplishments. For them, as well as for our colleagues across our entire organization, we continue our commitment to maintaining a work environment based on trust and respect. We take seriously our responsibility to uphold these traditional, long-standing values of our company.”

Terms of the exit agreement have not been released, but sources say Ailes will walk away with $40 million, which is the remainder left on his contract, which originally extended into 2018. There also is no formal advisory role in the exit agreement, but Ailes will be available to Rupert Murdoch during the transition period. And sources say there is a non-compete clause in the exit agreement, which is standard.

Ailes' exit marks the end of an era at Fox News Channel, the cable news landscape overall and at 21st Century Fox, where the news chief has enjoyed a long and close relationship with Murdoch. It was Murdoch's idea to start a conservative cable news network more than 20 years ago, tapping Ailes, who shared Murdoch's conservative ideology, to execute it. But since the 85-year-old Murdoch last summer ceded day-to-day control of 21st Century Fox to his sons James and Lachlan, many observers have predicted that Ailes' days were probably numbered. 

The powerful Fox News chief never had a warm relationship with the Murdoch sons and it was often combative, according to insider accounts. He immediately chafed at reporting to them, and after a public power struggle in the days after James was elevated to CEO and Lachlan to executive chairman, the company announced that Ailes would in fact report to all three Murdochs. Rupert Murdoch retains the title of executive co-chairman. 

And certainly the priority at 21st Century Fox is to keep the network running smoothly through the transition. Ailes has created a business that contributes almost 25 percent to the bottom line of 21st Century Fox, the single most profitable asset in the company’s portfolio. Fox News and Fox Business generated $900 million in ad revenue, $1.5 billion in affiliate revenue and $2.5 billion in total revenue last year, according to data from SNL Kagan. Their operating income before depreciation and amortization (OIBDA) totaled $1.6 billion. (In comparison, Time Warner's CNN and HLN generated $600 million in ad revenue, $700 million in affiliate fee revenue and $1.4 billion overall, with around $500 million in OIBDA.)

The succession process is expected to take a few months, Multiple internal candidates have emerged, top among them New York Post publisher Jesse Angelo, who enjoys a close relationship with the Murdochs (he was the best man at James Murdoch's wedding), as well as Shine, a longtime Fox News executive who runs primetime programming and also oversees Fox Business Network, and Wallace, who in April was promoted to executive vp news and editorial. David Rhodes, a former Fox News staffer who is now president of CBS News, is the lone external name floated, but he is under contract at CBS for the foreseeable future. And sources have dismissed reports that the Murdochs would bring in someone from their British broadcaster Sky. 

Having Rupert Murdoch guide the network in the interim will likely quell a potential talent exodus. Megyn Kelly is currently in contract talks and the rest of the Fox News primetime hosts — Bill O'Reilly, Sean Hannity and Greta van Susteren — all have clauses in their contracts that allow them to exit if Ailes does. It is an unusual wrinkle that has not gone unnoticed by Wall Street. 

Pivotal Research Group analyst Brian Wieser wrote in a report Wednesday that the strong political cycle gives Fox News a fortuitous "headwind" during the transition. But he also acknowledged that a "disruption of this nature may introduce some challenges. Reports that the unit’s CEO is set to depart in the wake of sexual harassment allegations introduce concerns for investors beyond the allegations themselves. Fox News is more heavily dependent on its CEO for its personality and operations than are most other networks. Because of this, the network has historically operated as an independent fief, and many of the network’s highest profile on-air commentators evidently prioritize loyalty to its current leader rather than to the parent company. These elements lead investors to question whether recent developments create new risks."

News of Ailes' ouster comes toward the end of the Republican National Convention, just hours before GOP presidential candidate Donald Trump is set to make a primetime address, with many Fox News journalists on the ground in Cleveland. The announcement was also made after the stock market closed on Thursday.

Here is Rupert Murdoch's full statement: 

Roger Ailes has made a remarkable contribution to our company and our country. Roger shared my vision of a great and independent television organization and executed it brilliantly over 20 great years.

Fox News has given voice to those who were ignored by the traditional networks and has been one of the great commercial success stories of modern media.

It is always difficult to create a channel or a publication from the ground up and against seemingly entrenched monopolies. To lead a flourishing news channel, and to build Fox Business, Roger has defied the odds.

His grasp of policy and his ability to make profoundly important issues accessible to a broader audience stand in stark contrast to the self-serving elitism that characterizes far too much of the media.

I am personally committed to ensuring that Fox News remains a distinctive, powerful voice. Our nation needs a robust Fox News to resonate from every corner of the country.

To ensure continuity of all that is best about Fox News and what it stands for, I will take over as Chairman and acting CEO, with the support of our existing management team under Bill Shine, Jay Wallace and Mark Kranz.