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Roger Ailes

News that Fox News co-founder and boss, Roger Ailes is negotiating his exit from the company brings with it a flurry of questions – many without good solid answers.

Interested parties regarding a post-Ailes Fox News entity include cable news rivals, major Fox News stars and, of course, investors in parent company, 21st Century Fox (TSX:FOXAC).


The Lawsuit That Started It All

In early July former Fox News anchor Gretchen Carlson filed a sexual harassment lawsuit against Ailes. Ailes denied the charges and several Fox personalities spoke up on his behalf. Nonetheless, the network launched an internal investigation, raising eyebrows in some corners.

Recently reports in New York magazine suggested other women, including current Fox News anchor Megyn Kelly, had said they were the target of harassment by Ailes. The Fox News head denied those charges as well.

About Those Stars

Two of Fox News’ biggest stars, Bill O’Reilly and Meghan Kelly have contracts that are up in 2017. If they were to choose to try to leave for another job, the timing couldn’t be better for them.

Others including Sean Hannity and Greta Van Sustern – as well as O’Reilly have clauses in their contracts that allow them to leave if Ailes departs, according to the Financial Times.

Media analysts who have opined so far are somewhat divided on whether Ailes’ departure could cause enough problems for major stars to want to leave with many suggesting it will be a long time before the loss of Ailes would have an impact.

Things That Could Go Wrong

That said, there is concern that James and Lachlan Murdoch, sons of Fox CEO Rupert Murdoch, might try to change the editorial format or philosophy of Fox News in the absence of Ailes. Media analysts almost unanimously consider that unlikely.

Other aspects of modern life are already working against Fox News, with or without Ailes. For example, 72% of the public gets news on a mobile device, according to Pew. Almost 84% of 18-to-29-year-olds access news through social media. Millennials, who will make up 75% of the workforce by 2025, are more engaged in organizations than media.

All this leaves the network with an audience that has an average age of more than 70, according to one analyst. If that isn’t fixed, Fox’s audience will eventually be much smaller – or possibly dead.

Things That Could Go Right

For those who haven’t noticed, there’s a presidential election going on. Cable news channels get their best ratings and highest advertising dollars in U.S. presidential election years.

According to Barry Lowenthal, president of the Media Kitchen, “Advertisers would have to see a drop in viewers before they would do anything." Lowenthal said he has not heard from a single concerned client since reports surfaced about Ailes leaving. In short, so far, so good.


Profit And The Bottom Line

While these numbers do not reflect the impact of a post-Roger Ailes Fox News on its parent company, the Pew Research Center's latest State of the News Media report issued in June estimated Fox News' 2015 profit at $1.5 billion.

That’s well above Time Warner's (:TWXN/A) CNN, estimated to have earned $381 million, and Comcast's (NASDAQ:CMCSAC) MSNBC, which came in at $227 million.

Estimated earnings were based on projected revenue of $2.3 billion for Fox, $1.2 billion for CNN and $518 million for MSNBC.

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