As much as anything, the bond between Ailes and Murdoch was sealed by the benefits each brought the other. Murdoch provided Ailes with a chance to rise from the tumult of NBC. Ailes could help Murdoch recover from something of a mid-career malaise. After Murdoch bought the 20th Century Fox film studio in 1985, he purchased a Tuscan-style mansion in Beverly Hills, and his wife, Anna, quickly adapted to the Los Angeles lifestyle. But Murdoch was miserable living on the West Coast. Rupert despised everything about Hollywood, except the profits. When one of his newspaper editors called to tell him about a great story, Murdoch seemed despondent. “They wouldn’t recognize one in L.A. if it came round the corner and hit them,” he said. Ten years later, and four years removed from News Corp’s near bankruptcy, Murdoch was carrying himself like a man at the outset of his career. Teaming up with a fellow warrior like Ailes was thrilling, and provided an excuse to spend more time in New York, “the capital of the world,” he called it.
Together, Murdoch and Ailes were embarking on a holy mission to lay waste to smug journalistic standards. “We will be the insurgents in a business of very strong incumbents,” Murdoch said shortly after hiring Ailes. He spoke of “a growing disconnect between television news and its audience,” and “an increasing gap between the values of those that deliver the news and those that receive it.”
The grand plans of Ailes and Murdoch were not received in the spirit with which they were delivered. Never mind the politics—almost no one besides the two principals thought the channel made sense as a business. Critics savaged its programming (having not seen a minute of it). The most critical review, which noted “widespread doubts” about the channel’s “long-term survival,” appeared on the front page of The New York Times. Veteran television reporter Bill Carter cited anonymous “insiders” who scoffed at the unnamed twenty-four-hour news channel. A former Fox News executive told him, “there is no there there.” Carter’s own words were the harshest: “The idea, some suggested, was to give Mr. Ailes a toy to play with, though, given the current state of Fox News as described by some insiders, it may be less a toy than an imaginary friend.” It was a devastating assessment from an authoritative voice. In the television industry, Carter was more than a news reporter. He was an information broker, whose articles, like Nielsen ratings, could make or break careers.
After reading the Times article, Bob Wright, Ailes’s former boss, expressed relief. The next day he told NBC employees on an internal video-conference that he doubted Ailes’s new job would amount to much, pointing to Murdoch’s track record at Fox. “They have yet to air a program, as far as I know, in ten years,” Wright told his team. “They don’t have affiliates with news. They don’t have any structure at all, nationally or internationally, really.… So it’s a real reach.” And it was true. Murdoch’s talk was sometimes cheap. Where was his Sunday morning public affairs program? Where was the 11:00 p.m. newscast? Both had been announced, but had yet to come into being. A Current Affair, which debuted in 1986, was tabloid, and his attempts at creating a serious newsmagazine had failed.
In March 1995, Murdoch recruited CBS News executive Joe Peyronnin, who had overseen 48 Hours and 60 Minutes, to try building up Fox’s hard news capabilities. Murdoch told Peyronnin he wanted what he called “proper news.” Peyronnin hired a stable of broadcast news producers and correspondents and placed Emily Rooney, daughter of legendary CBS newsman Andy Rooney, in charge of covering national political campaigns for Fox affiliates. In the fall of 1995, Peyronnin hired Today show producer Marty Ryan to executive-produce a weekly public affairs show called Fox News Sunday. Murdoch was personally involved. His ideal host for a morning or prime-time news show was Brit Hume, the conservative ABC News White House correspondent. Murdoch and Hume talked, but Hume didn’t want to leave his comfortable perch at ABC until his contract came up for renewal. When Peyronnin suggested 60 Minutes correspondent Ed Bradley, Murdoch replied, “I hear he’s lazy.” NPR analyst Mara Liasson was rejected as well. (Liasson would join Fox News in 1997.) Eventually, Peyronnin hired a conservative, the affable former George H. W. Bush speechwriter Tony Snow, who was a regular fill-in for Rush Limbaugh’s radio show.
Peyronnin fared no better than earlier Fox television news executives. In particular, Peyronnin and his team battled Mitchell Stern, the Fox Television Stations president, who was in charge of the News Corp–owned broadcast stations, to get network evening news coverage on the air. “Mitch Stern was the enemy of our group,” Rooney recalled. “He was negative. He was a big bully.” Stern, whose performance was judged by the local stations’ profitability, was reluctant to make programming changes at a time when they were minting money. In the mid-1990s, Fox had developed a successful strategy of positioning itself as a broadcast network for younger viewers, which was especially appealing to advertisers. Executives worried that news programming would skew the audience older.
In the fall of 1995, Murdoch abandoned his piecemeal approach. Several executives were assigned to work in secret on a business plan for a twenty-four-hour network. In December, they presented Murdoch with a seventeen-page confidential memo. The highly detailed plan, which included line items for prime-time hosts ($500,000 a year) and studio decorations ($75 a week for flowers), contained three options. A basic newsfeed for Fox affiliates was projected to cost $60 million per year. A headline news service that was “wall-to-wall (similar to CNN/Headline News)” would require an annual investment of $147 million. And a full-service cable news network would cost an estimated $182 million total, a significantly higher figure than the one Murdoch would announce at the press conference in January. The Fox News Channel, according to their financial analysis, had to differentiate itself to win. They rightly stated that CNN’s founding maxim, “The news is the star,” and its workaday presentation of headlines had grown stale. CNN, on the one hand, was “breaking news driven, processed event coverage, big story dependent … reactive and slow and predictable.” On the other hand, “FNC” must be about “personality and programming, produced information, appointment TV, news plus human interaction,” that was both “convenient and interesting” with “attitude.” In other words, Fox News should be conceived as “news talk-radio with video.” According to their analysis, the cable news channel would require a long-term financial commitment. They anticipated losses that could reach $785 million within a decade. To reduce risk, they recommended exploring a possible joint venture with CBS News, which was seeking to compete against the cable news efforts of NBC and ABC. The memo acknowledged the obvious business challenges of such a partnership: “long-term day-to-day control of the venture, CBS ability and willingness to fund sustained early-year losses … availability of CBS talent to channel and at what price … and union issues.” After some discussions between News Corp and CBS executives, the partnership never happened, and Murdoch pressed ahead alone.
Having developed a plan, Murdoch looked for someone to put it into motion. “I’ve been trying to get a news channel started,” Murdoch told Ailes. “I’ve had a bunch of guys try.”
One of the thorniest challenges would be securing distribution. In those days, cable was analog and as such, had limited space. Digital signals were on the verge of making a world of five hundred niche channels and on-demand entertainment possible. But until then, the operators had tremendous leverage and tended to favor ABC, NBC and CBS. In the early 1990s, legislation mandated that cable operators had to compensate broadcast networks for “retransmitting” their programming. Some paid cash, others reserved space on their cable systems for the Big Three to create their own cable channels. In this way, NBC struck a deal with cable operators to make room for America’s Talking, and ABC negotiated space for ESPN2. With such competition, Ailes faced a nightmare scenario of musical chair negotiations in which his upstart network, with the weakest track record in news, could be left standing. In the 1970s, TVN was hobbled by broadcast stations’ unwillingness to sign up for the expensive newsfeed. At America’s Talking, limited distributio
n hamstrung Ailes’s ability to attract an audience (the talk channel was only available in about twenty million homes when it was shut down, while CNN was available in 67 million at the time). “Distribution is the name of the game,” Ailes said. Murdoch agreed. “If you look at successive larger battles he’s waged against the unions or the BBC,” a Murdoch family intimate said, “the battles tend to focus on controlling distribution.”
Rumors circulated inside News Corp that Peyronnin’s days were numbered. By hiring Ailes and installing him as Peyronnin’s boss, Murdoch had broken Peyronnin’s contract. But Peyronnin agreed to have lunch with Ailes to see if a working relationship could be forged. Ailes took Peyronnin out to the Manhattan Ocean Club a few blocks north of News Corp headquarters. Peyronnin told him about his struggles to get news on the air and warned him that rival News Corp executives like Mitch Stern were bent on blocking him. Peyronnin explained that Ailes would have to move quickly and be aggressive. Ailes tried to persuade him to stay on. “I need you,” Ailes told him. “I don’t know anything about news.”
But as the conversation progressed, Peyronnin became convinced that Ailes was not someone he could work for. “Why are you a liberal?” Ailes snapped at one point. At another moment, he attacked CBS, Peyronnin’s previous employer, as the “Communist Broadcasting System.” Ailes told Peyronnin that he was going to create “an alternative news channel.”
Peyronnin went home that night and told his wife he was going to resign. “This guy thinks I’m a liberal. He’s a godawful person and I get paid no matter what, so I’d like to leave,” he told her. Peyronnin asked his agent, Washington lawyer Bob Barnett, to negotiate an exit deal with News Corp. Ailes soon moved into Peyronnin’s corner office on the second floor, where he would remain.
The logistical and technical issues involved in building the channel were far more complex and difficult than those Ailes had had at America’s Talking. In his previous endeavor, he benefited from the talent pool and existing studio infrastructure of NBC. This time around, he was on his own. “We had no news gathering operation,” Ailes recalled in 2004. “We had no studios, no equipment, no employees, no stars, no talent and no confidence from anybody.” They also had no time. MSNBC was set to debut in July 1996, less than six months from the time he joined News Corp. ABC’s cable news channel was also moving forward. Ailes told Murdoch that they had to launch alongside their rivals or risk getting left behind. Though MSNBC would be first, News Corp would not be last—Ailes still had a chance to beat ABC.
But before launching an entire channel, Ailes needed to prove he could launch a single show. Given Murdoch’s checkered history in TV news, Ailes had to demonstrate he could succeed where his predecessors failed. He immediately put in motion Peyronnin’s plan to launch Fox News Sunday, the weekly public affairs show for Fox affiliate stations, which had stalled in development. It was not merely a matter of public relations—a move to prove the critics, especially Bill Carter, wrong—but one of business survival. The annual convention of the National Cable Television Association, NCTA ’96, was less than three months away. It was a place where channel executives pitched cable operators on new programming. NBC and ABC had gilded news brands and famous anchors to make their case. Ailes would need something to show for himself.
In starting with Fox News Sunday, Ailes chose the worlds he understood best: politics and daytime television. Sketching out the show, he experimented with formats and personalities that would fuse news and politics into an entertaining mix. He considered as potential hosts former Democratic New York governor Mario Cuomo, former Republican congressman Jack Kemp, and Weekly Standard founder William Kristol. In the end, Ailes settled on Peyronnin’s choice of Tony Snow, with whom Ailes had crossed paths in 1992, when Ailes and Peggy Noonan were brought into the White House to rewrite Snow’s first draft of the State of the Union address. On April 3, Ailes announced that Fox News Sunday would debut on Fox affiliate stations on the morning of April 28. Notably, it was the same day that the cable convention began. “We hope to attract the traditional Sunday morning news viewer,” Ailes said, “but at the same time, we want to appeal to a more diverse and younger audience who are not currently regular viewers.”
The announcement did not lead to a smooth corporate rollout. On April 4, Daily Variety reported that Fox affiliates were “caught off-guard” by the “sudden” announcement. “The last-minute nature of the show was not taken well by many affiliates,” one source told the trade magazine. Until the Telecommunications Act of 1996 went into effect in February of that year, media companies could not own more than a dozen stations. Daily Variety reported that the Fox-owned stations—twelve out of the network’s nearly two hundred affiliates—were going to carry the news show, and thus it would reach roughly a quarter of the country. In effect, getting Fox News Sunday on the air would be the first test of Ailes’s corporate power.
In the weeks leading up to the launch, Ailes was on a war footing, convinced his rivals were out to damage him and the show. He announced the debut, in part, to force the hand of Mitch Stern, the News Corp television executive who had blocked Peyronnin’s previous efforts at news programming. “Roger is acutely aware how the rest of the company views him. He calls News Corp a pirate ship, where everyone tries to stab everyone else,” a former senior Fox executive said.
As Stern remembered it, the conflict over Fox News Sunday had more to do with Ailes’s personal style than underlying business disagreements. “Roger isn’t the easiest guy to get along with. He sees enemies in a lot of places,” Stern reflected. “If he thought he had to win a big battle over Fox News Sunday, maybe that got him all nutty.”
Though Tony Snow leaned to the right—in addition to his time in the first Bush White House, he had been an editor at the conservative Washington Times—Fox News Sunday resembled on the morning of its debut a conventional network news broadcast. Live from the Decatur House, a neoclassical mansion steps from the White House, Snow tackled a mix of foreign affairs and domestic politics with senators and congressmen. Worried that other networks would pressure politicians not to appear on Fox News Sunday, Ailes did not advertise the guest list in advance. Only a quarter of Fox’s affiliates agreed to broadcast the program. Very few people watched, but John Carmody, The Washington Post’s influential television writer, tuned in. In a tough write-up, he graded the debut a “C-plus (well, maybe a B-minus).” He called the opening graphic “unexciting” and noted that correspondent Jed Duvall was caught on camera “scratching himself.”
Despite the uneven launch, Fox News Sunday fulfilled Murdoch’s stifled ambitions to break into the television news business and secured for Ailes a tangible victory at a crucial moment as he faced off against his chief adversary at NBC. Two weeks before the cable convention, NBC promoted David Zaslav to president of cable distribution, putting him in charge of the effort to sell MSNBC to cable operators. The feud between Ailes and Zaslav, which had started as an office rivalry, was metastasizing into a corporate clash between News Corp and NBC.
In Los Angeles, as 26,000 cable industry executives circulated through the sprawling convention hall, Ailes and Zaslav shadowed each other. The two men shuttled to meetings, making their pitches and talking to reporters. Zaslav was confident a majority of the cable operators that carried America’s Talking would take MSNBC. He bragged to The Seattle Times that he had had a productive meeting that morning with executives from Tele-Communications, Inc., the country’s largest cable operator with its fourteen million subscribers. “We’ve begun a dialogue,” Zaslav said. His comment was a shot across Ailes’s bow. Murdoch was already courting TCI’s conservative co-owner John Malone, the Denver, Colorado–based media investor. Malone held stakes not only in TCI, but in nearly a hundred companies—from Turner Broadcasting and Court TV to Black Entertainment Television and MacNeil/Lehrer Productions.
As the incumbent, NBC seemed to be taunting Ailes. “We are the only players doing this that are credible,” Tom Rogers told the press.
Andy Lack announced that Today show anchors Bryant Gumbel and Katie Couric would be regular hosts on MSNBC. He also trotted out NBC News stars to woo cable operators. Tom Brokaw anchored the Nightly News from NBC’s Burbank studios so he could be on hand at the convention. “We’re here persuading the cable people that [MSNBC] is the place to be,” Brokaw told a reporter. At the MSNBC booth, computer monitors displayed prototypes of the MSNBC website. Microsoft brought technowizardry to the marketing push.
Unlike MSNBC, Ailes had very little to actually show the industry. He was secretive about Fox News’s plans and combative in his dealings with cable operators. “I went into their booth, they weren’t communicative about what kind of programming they were going to have,” recalled Richard Aurelio, the former president of Time Warner Cable’s New York City Group. With Fred Dressler, the executive vice president of programming at Time Warner Cable, Ailes was even more hostile. When Dressler asked Ailes about his plans for Fox News, he replied, “I’m not going to tell you. It’s a news channel, that’s all you need to know.”
The truth was Ailes was not in Los Angeles to sell programming. By all appearances, he was there to make it clear that Fox News would not play the role of supplicant in the negotiations. “There’s a ritual dance with cable operators,” Ailes recalled. “They don’t want you, they don’t want your service, they don’t want your phone call.” He would later recall that getting onto the cable dial required a kind of forced entry, like “breaking into Fort Knox.” To pry open the door, cash was a powerful crowbar. Inside the Los Angeles Convention Center, word circulated that News Corp would pay cable companies millions to carry Fox News. In the conventional arrangement, cable operators were the ones who paid channel owners. In 1996, for instance, cable operators paid CNN roughly 25 cents per subscriber. Murdoch flipped the equation: he was prepared to pay cable operators a stunning $10 per subscriber. For a large cable system, agreeing to carry Fox News would be worth upward of $100 million. Chase Carey, a Harvard MBA who was chairman of Fox Television, had devised the risky plan to reverse cable television economics. “We had to put something on the table to grab the attention of the cable operators,” Carey said. As one former Ailes colleague put it, “we had Rupert’s checkbook and balls.”
The Loudest Voice in the Room: How the Brilliant, Bombastic Roger Ailes Built Fox News--and Divided a Country Page 24