The rivalry between Murdoch and Turner had become entertainingly vituperative in the year since Murdoch announced his intention to compete in cable news. They were perfectly matched masters of insult. In the press, Turner called Murdoch a “schlockmeister.” Murdoch publicly accused Turner of “brown-nosing foreign dictators” and turning “Fidel Castro” into a CNN bureau chief. When Turner agreed to merge with Time Warner, Murdoch, age sixty-five, sniffed that Turner, age fifty-seven, had “sold out to the Establishment in his declining years.”
To win, News Corp would need a multifaceted campaign. Murdoch listened as Siskind presented possible strategies, which included suing Time Warner for breach of contract on the grounds that they had entered into a verbal agreement. But total war had high costs, Siskind advised. “We don’t want to burn too many bridges here,” he told Murdoch. News Corp had built valuable interlocking relationships with Time Warner through the years, and both companies distributed each other’s content. Fox Broadcasting, for example, purchased popular shows such as The Rosie O’Donnell Show, Living Single, and Party Girl from Warner Bros. Television. Time Warner’s HBO aired films from Murdoch’s 20th Century Fox studio.
There was another option—in effect going over Time Warner’s head, into the world of politics. Murdoch had a decisive political advantage. At the time, his Republican allies were ascendant in New York. Senator Al D’Amato was the state’s most powerful politician. George Pataki, a one-term Republican state senator, defeated three-term Democratic governor Mario Cuomo in 1994, the year in which Murdoch donated $100,000 to the New York State Republican Party. And Mayor Rudy Giuliani was the first Republican in twenty-seven years to take City Hall. Giuliani, in particular, had significant leverage over Time Warner. The city regulated the license by which Time Warner operated its cable system. As it happened, the city’s Franchise and Concession Review Committee was scheduled to hold a public hearing on the Time Warner merger on October 7, the day of Fox News’s launch. If the committee did not approve, the city could choose not to renew Time Warner’s exclusive contract to operate a cable system in the city. The New York cable franchise was the most valuable in the world, with estimated annual revenues of a half billion dollars.
Murdoch’s investment in the New York Post, though it hadn’t made money in years, paid dividends in the battle. The paper had endorsed the candidacies of Giuliani (“MAN OF THE HOUR”) and Pataki (“TIME FOR A CHANGE”) in front-page editorials. From the outset of Giuliani’s first term, the Post cheered the mayor’s aggressive anticrime policies. Murdoch even employed the mayor’s then wife, Donna Hanover, as a feature reporter on the morning show Good Day New York, which aired on his flagship New York broadcast station, WNYW. It was also the same year in which News Corp, as part of a Giuliani program to stanch the emigration of television production across the Hudson River to New Jersey, negotiated more than $20 million of tax breaks with the city to subsidize the construction of Fox News studios in Manhattan. The subsidies signaled Giuliani’s commitment to Fox News’s success.
But in these political battles, Ailes himself was Murdoch’s most potent weapon. Both D’Amato and Giuliani had been Ailes Communications clients. Though he officially renounced politics in 1991, Ailes continued to socialize with both men, especially Giuliani. On the evening of the 1992 presidential election, Giuliani watched the returns at Ailes Communications headquarters at an intimate gathering of seven people, including Ailes and Rush Limbaugh. Listening to Ailes and Giuliani banter, one attendee recalled, was “like watching Sunday morning football with guys on the set on Fox Sports.” A month later, Ailes attended a fundraiser for Giuliani at the New York Sheraton, where he declared to a reporter that if Giuliani lost to incumbent David Dinkins, “this city is going to turn into Detroit.” When Giuliani took office, Ailes continued to give him advice.
And so, two days after Murdoch warned Levin he was about to “let loose the heavy artillery,” Murdoch told Ailes to pull the trigger.
On Friday, September 20, Ailes called Giuliani to ask for help. Giuliani immediately invited Ailes to Gracie Mansion to discuss Time Warner’s decision not to carry Fox News. As the men shared pizza, the mayor pledged his unwavering support. He tasked his forty-two-year-old deputy mayor, Fran Reiter, to head up City Hall’s rapid response. As a former television syndication executive, Reiter was well versed in media issues. She was also plugged into Murdoch’s plans for Fox News. The previous spring, she had negotiated News Corp’s tax relief package with Arthur Siskind.
“Time Warner informed us they would not be giving us a cable channel, which puts us in jeopardy,” Ailes told Reiter in a phone call later that day. “Is there anything the administration can do to help us turn this around?” Ailes explained that Ted Turner must have scuttled the deal to damage Murdoch and Fox News. Reiter assured him that she would look into it.
Reiter placed a call to Ailes’s colleague Arthur Siskind. He told her that News Corp might not be able to hire more New York–based employees if Time Warner did not relent. As part of its tax relief package, News Corp had pledged to retain some 2,200 jobs and create 1,475 new positions. By invoking the loss of potential jobs, Siskind was making a threat: any obstacle to the growth of News Corp would embarrass the Giuliani administration. The mayor had made job creation, especially in highprofile sectors like media, a plank in his economic program.
Privately, however, Reiter thought that getting involved was a terrible idea. “No one is going to remember this except for the fact that you intervened,” she told Giuliani. Although Time Warner Cable operated with a city contract, the First Amendment gave the company’s executives wide latitude to program the channel lineup as they saw fit. Though Reiter agreed with her boss that the city had an interest in Fox’s success, she believed stepping in was “an effort doomed to failure under the law.” She also saw tight channel capacity as a legitimate issue. A couple dozen cable channels were vying for the same spot on Time Warner’s New York system.
Furthermore, the optics were reason enough to stay on the sidelines. Giuliani was facing reelection in the coming year. In 1993, he had won by fewer than fifty thousand votes. Reiter, who had served as his deputy campaign manager, could easily script the attack lines Giuliani’s opponents would use: Here is a Republican mayor intervening on behalf of a conservative media mogul who invested $100 million to launch a conservative news channel run by the mayor’s former media adviser. And by the way, the mogul, who donated $100,000 to the New York State Republican Party in 1994, also just happens to employ the mayor’s wife as a television personality.
Giuliani ignored her advice. “I got attacked,” Reiter recalled. “He was angry. He felt what Time Warner had done was wrong and was bad for the city.” Her worries were prescient. The situation soon devolved into a baroque tabloid spectacle of swooping egos and petty grievances, in which each side pursued maximum ends by questionable means, one of the defining imbroglios of the Giuliani years. The battle to launch Fox News, aided by Giuliani’s strong-arm tactics, became the quintessential example of Murdoch’s brazen manipulation of political relationships to help expand his media empire. And Ailes was at the center of it, crafting Murdoch’s message and battling his Time Warner opponents as ferociously as any political candidate.
The months-long campaign tarnished the reputation of everyone involved. “Rudy was walking into a snake pit,” Reiter said. “It was the worst episode in my time in government.”
On Thursday, September 26, just a few days after Ailes called Giuliani, News Corp executives Arthur Siskind and Bill Squadron arrived at City Hall in lower Manhattan to make their case before the city’s corporation counsel, Reiter, and her senior aides. They argued that Time Warner was breaking antitrust laws to protect CNN. Would Reiter call Time Warner’s CEO, Gerald Levin? Reiter was amenable, but directed Siskind to first send her a detailed letter laying out his case. Meanwhile, uptown at a Time Warner luncheon to celebrate the merger, Ted Turner was comparing Rupert Murdoch to Adolf Hitler. “T
alking to Murdoch is like confronting the late Führer,” he declared to journalists at the reception.
Given the messy public row, Reiter decided to take action even before receiving Siskind’s letter. She left a message for Time Warner president Dick Parsons, saying she was “very concerned.” Reiter hoped that Parsons, a longtime Giuliani ally, could serve as an influential back channel.
By Friday afternoon, Reiter and her aides devised a novel solution, essentially a one-for-one channel swap, to free up a spot for Fox News. As part of Time Warner’s franchise agreement with the city, the Giuliani administration controlled five public channels. Named “Crosswalks,” the channels had to be programmed, according to law, for noncommercial public, education, or government programming. It was a leap, but perhaps Time Warner could move a cable channel with educational content—the Discovery Channel or History Channel, for example—to one of the Crosswalks channels. Reiter desperately wanted to avoid the protracted lawsuit that Siskind was now threatening.
With the broad contours of a potential accord in place, Reiter needed to get Time Warner on-board. Dick Parsons had not called her back, which worried her. Over the weekend, Reiter and her aides decided to call Parsons and Levin at home, but they could not find their numbers. On Sunday, she managed to get through to Derek Johnson, a Time Warner vice president. Johnson listened as Reiter explained her “deep concern” over Time Warner’s refusal to carry Fox. She said the city wanted Time Warner to agree to carry Fox before October 7, when the city’s franchise review committee had a hearing scheduled on the Time Warner merger. After hinting at her channel swap plan, Reiter insisted that she meet with Levin or Parsons in the next week to discuss it. It was important enough, she said, that if Levin and Parsons were out of town, she would get on a plane to meet them.
On Monday morning, Johnson sent a memo to Parsons and Levin offering his assessment of Reiter’s proposal. “Although attractive … could spark grave reaction from programmers and politicians alike,” he wrote. With the backlog of other cable channels waiting to get into the New York market, it was not fair to jump Fox News to the front of the line just because the mayor’s office endorsed the idea. After reading Johnson’s memo, Levin and Parsons decided to turn down the request for a meeting and Dick Aurelio, a man closer to Reiter’s level, was dispatched to handle the negotiations. He even had political experience, beginning his career as an aide to Republican New York senator Jacob Javits and as a deputy mayor under Mayor John Lindsay.
Aurelio left a message for Reiter, but David Klasfeld, her chief of staff, returned the call, which insulted the Time Warner executive. Aurelio said he wanted to talk to Reiter. As they spoke by phone later that day, Reiter was in the middle of explaining the channel swap when Aurelio cut her off.
“No fucking way,” he snapped. The proposal was illegal.
“There’s no point in us meeting, then,” Reiter said.
“Let’s do the meeting,” he said, advising Reiter to bring city lawyers.
Aurelio was entering the talks with a history of conflict with Giuliani and Murdoch. The locus of their friction was Aurelio’s close friendship with Giuliani’s predecessor, David Dinkins. As a veteran of New York’s bare-knuckle politics, Aurelio was ready to hold Time Warner’s ground. He believed the city’s jobs argument was “a phony issue” used to cover up political favor trading. “The New York Post helped make him mayor,” Aurelio recalled. “In my memory, there was never a newspaper cheerleader in New York City in any mayoral contest more overwhelmingly supportive than the New York Post for Giuliani in 1993.”
On Tuesday, October 1, Aurelio arrived at Reiter’s office at City Hall flanked by a pair of lawyers: Robert Jacobs, the general counsel of Time Warner’s New York City Cable Group, and Allan Arffa, a litigator at Paul, Weiss. Six City Hall representatives lined one side of the table, outnumbering the Time Warner contingent two to one. The meeting was a disaster, lasting less than an hour. At one point, Time Warner’s lawyers accused the Giuliani negotiators of proposing a cover-up to avoid making the channel swap seem like a quid pro quo for the city agreeing to renew Time Warner’s franchise. Before Aurelio and his colleagues stood to walk out, Norman Sinel, the city’s outside attorney, issued a blunt warning. “The mayor’s office is fully aware of the risks involved here,” he said. “We’re willing to take those risks. The question is, is Time Warner willing to take those risks?”
Aurelio returned to the office and briefed Parsons on the fireworks. Aurelio wagered that the saber rattling would soon subside. “I don’t know,” Parsons said, knowing Giuliani and Ailes well. “I’m not sure that’s the end of it.”
Parsons was right. Later that day, he called Fran Reiter. It was the first time the two had spoken since she had left him a message the previous week. Reiter expressed outrage at Aurelio’s abrasiveness. “The bottom line is, Dick, we have a very, very serious concern. Your guys totally rejected our proposal today. They got up on a soapbox about the First Amendment. I don’t want to get into that discussion. I’ve got a new approach that I’d like to lay before you.”
Reiter explained that the city planned to air Fox News on one of its Crosswalks channels. In the morning, Time Warner would receive a letter from the city requesting a “waiver” to proceed. Reiter suggested that Levin call Murdoch and make amends. Time Warner’s city franchises came up for renewal in 1998, and as Reiter put it, Time Warner wouldn’t want the Fox News issue clouding up the franchise issue. The mayor controlled four of six seats on the franchise review committee.
Although the call ended without any firm commitments, Reiter was encouraged by Parsons’s collegial tone. The thaw in relations, however, was fleeting. At News Corp, Murdoch and Ailes were plotting a new phase in the campaign. “When you’re screwed over, you fight,” Ailes would tell a reporter. “We’re not going to quit until we’re all dead. This’ll be a blood war until we get clearance in New York City.”
That evening, Reiter was one of the hundreds of guests toasting the launch of Fox News under a giant white tent outside News Corp headquarters. The mayor himself was on hand at the gala and posed for photos with Ailes and Murdoch, which the New York Post published. Murdoch gave a brief speech introducing the “fair and balanced” creed. Giuliani told guests that Fox News was of “incalculable value to the people of the city.” Governor Pataki added that Ailes “used to teach me how to campaign, and now he’ll teach me how to watch the news.” An assistant guided Reiter to speak with Murdoch. A few moments later, she bumped into Ailes, who thanked her for the city’s assistance. Reiter was not the only politico getting the full-court press. The party was a public stage on which to flex political muscle.
Within twenty-four hours after the party, Ailes’s Republican Triumvirate confronted Time Warner’s leadership. Giuliani called his onetime ally Parsons, while Pataki and Al D’Amato made calls to Levin and Aurelio. “Why aren’t you carrying it?” D’Amato pointedly asked Aurelio. “It was unusual to get the mayor, senator, and governor all putting pressure on us the next day on behalf of Rupert,” Aurelio recalled. “I found it a display of raw political power that was extremely inappropriate.” On Thursday, October 3, Giuliani’s office received a disappointing answer from Time Warner. “Your request that we waive our rights in order to carry [Fox News] on a dedicated municipal access channel, however innocent your intent, is in the circumstances a violation of Time Warner Cable’s franchise rights with the City, the Federal Cable Act and other law, including our First Amendment rights,” Time Warner’s general counsel wrote. “It is therefore a request we cannot and will not consider.”
Time Warner’s defiance did not deter Giuliani. Norman Sinel, the city’s outside counsel, immediately called Allan Arffa, Time Warner’s lawyer at Paul, Weiss, and threatened to raise antitrust issues at the franchise review. Reiter’s chief of staff, David Klasfeld, sent one final letter to Parsons. “The City makes its request to Time Warner as an appeal to its good corporate citizenship,” Klasfeld wrote, further reveali
ng the city’s desperation. “New York City’s successful economic revitalization depends on businesses cooperating with these efforts so the City can create new jobs at all income and skill levels.”
Friday, October 4, ended without a response from Parsons. Time Warner’s silence, which ensured that New Yorkers would not be able to view Fox News when it went live at 6:00 on Monday morning, moved the crisis toward a showdown in court.
As Time Warner dug in, Ailes found himself scrambling. The distribution battle had escalated at the moment when the demands on his time were reaching an apex. After the launch party, Ailes returned to work a few hours later for the 4:00 a.m. meeting with his senior staff. But presidential politics had accustomed him to little sleep. It also reinforced a truism about the press: journalists love to report conflict. If Ailes could gin up controversy, what political consultants called “free media,” articles would follow.
On the eve of the launch, Ailes opened the press front. “People who are out there saying we’ll be a bunch of sleazy bastards are the same ones who said we wouldn’t be able to get on the air,” he told the Los Angeles Times. His competitors at CNN and MSNBC took his bait. CNN president Tom Johnson rebuked Ailes for his nasty barbs. “I see no value whatsoever in one news organization firing shots at another,” he said. Andy Lack told The Dallas Morning News that competition “doesn’t mean we have to try to destroy each other in the process or trample all over each other. So good luck, and let’s go at it.”
It was a good thing Ailes made news. He needed all the PR he could get. The only way to see Fox News in Manhattan on the morning of its debut was, in essence, to walk by its street-facing studio on 48th Street.
Shortly before 6:00 on the morning of October 7, Ailes barreled into the newsroom, giving locker room pep talks. “You set?” he barked to a group of employees. “Too much laughter over there!” he hollered at another bunch. “Act nervous!” The staffers ignored his request. They could likely sense he was hamming it up for an Associated Press reporter scribbling notes nearby.
The Loudest Voice in the Room: How the Brilliant, Bombastic Roger Ailes Built Fox News--and Divided a Country Page 28