The Man Who Changed TV News Is About to Change It Again
The most reviled CEO in America—at least by the establishment media—was Roger Ailes, who disrupted the TV news industry when he created Fox News, now a profitable and powerful voice that has elbowed its way into American media past established rivals. But is technology threatening to destabilize access as young people increasingly opt to watch online video rather than pay for traditional TV content?
September 5 2013 by JP Donlon
A man who grew up digging ditches as a kid in the working-class town of Warren, Ohio, Ailes is a far cry from the bien pensants of Manhattan or Georgetown and is a figure of paradoxes. Douglas Kennedy, the youngest son of Bobby Kennedy and a reporter Ailes once hired, said, “What people don’t understand is that Roger is very comfortable with others who don’t agree with him.” He helped coach Ronald Reagan for his second TV debate with Walter Mondale, but he also produced public affairs interviews with Malcolm X—and counted both as friends.
Ailes capitalized on two simple insights. First, he realized that news is entertainment and that talent and content draw viewers. His influence is such that it often goes unrecognized. Second, Ailes took note of the fact that a sizeable portion of the American TV audience, conservatives and independents, were underserved. Ailes qualifies this: “The first rule of media bias is selection,” he says. “Most of the media bullshits you about who they are. We don’t. We’re not programming to conservatives, we’re just not eliminating their point of view.”
The truth is that he is cannier than most in understanding what attracts attention, which makes him a transformational figure in his industry. Fox is not shy about stockpiling liberals among its pundits. Former Clinton advisor Kirsten Powers and former democratic senator Evan Bayh are among 24 left and center-left commentators who are paid FNC advisors. Former ABC White House correspondent and FNC analyst Brit Hume observed that “there are more liberals on Fox than all the networks combined have conservatives.”
The problem of stagnant cable subscription growth, however, poses a challenge for Ailes, as well as rival cable-content providers. SNL Kagan analyst Ian Olgeirson noted that 85 percent of U.S. households paid for TV service in the third quarter of 2012, down from 87 percent penetration in the same period in 2009. SNL Kagan estimates that 4.3 million people relied on Internet video instead of paying for TV, projecting that number will double by 2016. The current spat between Time Warner Cable, which has blacked-out CBS over a fee dispute, involves, in part, digital rights for carrying CBS programming online to smartphones and other digital devices. Predicting that the transmission of TV will eventually move to the Internet, Cablevision Systems CEO James Dolan told the Wall Street Journal, “there could come a day” when his company stops offering television service, making broadband its primary offering. If cable operators should drop TV service, charging only for broadband, it would force channel owners like Fox to sell directly to the public or through Web outlets.
While mindful of the threat, Ailes offers a surprising statistic from McKinsey & Co., which recently measured news consumption in the U.S. by time spent, rather than raw audience numbers. Digital platforms, it turns out, are getting only 8 percent of the action. Smart phones and tablets each account for 2 percent of time spent and desktop/laptop accounts for 4 percent. McKinsey data show 35 percent of news consumption remains in newspapers and magazines, 16 percent in radio and other audio, and 41 percent with television. In other words, 92 percent of news is consumed on legacy platforms. Although he rarely gives interviews, recently, Ailes spoke with Chief Executive’s J.P. Donlon at his News Corp office in Manhattan: