As Rupert Murdoch's sons, James and Lachlan, prepare to assume
top leadership roles at 21st Century Fox next month, they already
have one big assignment cut out for them: building a rapport with
Roger Ailes, the chairman and chief executive of Fox News.
A TV news impresario with deep roots in Republican politics, Mr.
Ailes has built the channel into a cable-news juggernaut and a
major profit center for Fox. The 75-year-old executive's contract
is up next summer, just months before the presidential election,
people familiar with the matter say.
Mr. Ailes has enjoyed considerable autonomy while reporting to
the elder Mr. Murdoch. Under the leadership structure that goes
into effect July 1, Mr. Ailes will report to his sons. James, 42,
will become chief executive while Lachlan, 43, will join his father
as executive co-chairman.
The relationship got off to an awkward start last week after
word of the succession broke on CNBC. Mr. Ailes said publicly he
would continue to report directly to Rupert Murdoch. Then on
Tuesday, a company spokesman said that in fact Mr. Ailes would
report to the Murdoch brothers, although he would continue his
"unique and long-standing relationship with Rupert."
The decision to have Mr. Ailes report to the younger Murdochs
was seen by some familiar with the inner workings of 21st Century
Fox as a potential issue over time. Mr. Ailes protects his corner
of the Fox empire with zeal.
Mr. Ailes and the Murdochs all declined to be interviewed for
this article. A Fox News spokeswoman declined to comment on how Mr.
Ailes viewed the Murdoch succession. A call to Mr. Ailes's lawyer,
Peter Johnson, wasn't returned.
21st Century Fox and News Corp, owner of The Wall Street
Journal, were part of the same company until 2013, when the elder
Mr. Murdoch split up his media holdings.
Mr. Ailes built a name for himself as a cable news executive
while running CNBC in the early 1990s. He also had produced Rush
Limbaugh's TV talk show. Mr. Murdoch tapped Mr. Ailes to launch Fox
News and the two developed a close relationship and a shared
interest in politics.
A former senior Fox executive said it would be highly unlikely
that Mr. Ailes would leave Fox News. "It's his baby and his
persona," the former executive said.
Replacing Mr. Ailes at the helm would be difficult. Under his
leadership, Fox News grew to dominate cable news and rack up
profits. It accounted for approximately 20% of 21st Century Fox's
profits of $4.5 billion in 2014.
Not only does the channel routinely beat rivals CNN and MSNBC in
the ratings by a wide margin, it also typically beats most
entertainment and sports channels on the dial, especially in prime
time. The channel has struck a chord with conservative viewers who
feel other outlets pander to the left, though its critics charge
that its opinion shows have contributed to a polarization of the
political process.
"He's cornered the market on conservatism," said Temple
University School of Media professor Chris Harper.
Fox News will have revenues of $2.2 billion this year and cash
flow of $1.4 billion, according to industry consulting firm SNL
Kagan.
Its sister financial channel Fox Business Network is less
successful and has struggled to make headway against Comcast
Corp.'s CNBC.
Of the two brothers, it is Lachlan Murdoch that has a deeper
history with Mr. Ailes as the two bumped up against each other
during Mr. Murdoch's first stint as the company's deputy chief
operating officer over a decade ago, according to people familiar
with the matter.
Despite disagreements over programming of the Fox-owned TV
stations, Mr. Ailes has respect for the elder son, who is seen as
sharing some of his father's approach to business and deals, people
familiar with Mr. Ailes's thinking said.
Mr. Ailes has weathered storms before. When Mr. Murdoch's former
son-in-law Matthew Freud was publicly critical of Mr. Ailes in
2010, Chief Operating Officer Chase Carey offered strong words of
support, saying the company was "100% behind Roger Ailes."
Keach Hagey
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