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Fox News Firestorm: The Lesson All of Corporate America Can Learn

Variety logo Variety 4/23/2017 Andrew Wallenstein
© Provided by Variety

In the wake of Bill O’Reilly’s departure from Fox News, a narrative is taking shape to explain the tumult the 21st Century Fox-owned cable channel is undergoing. But the problem is that it’s an oversimplification of what went on there, one that obscures a larger lesson all of corporate America would be wise to heed.

It’s impossible to look at the sex-harassment scandals that ended the long, wildly successful tenures of Bill O’Reilly and Roger Ailes without viewing them through the filter of the Murdochs who control 21st Century Fox. But it’s at the board-room level where their fascinating family dynamics begin to warp the optics for those of us looking from the outside in, wondering how Fox culture could go so wrong.

The conventional wisdom that explains Fox News’ dysfunction is rooted in the slow-motion baton pass playing out atop the parent company: Rupert Murdoch is gradually ceding ground to his successors, James and Lachlan Murdoch. But Fox News has been a primary focus for Rupert since Ailes’ departure while his sons assume broader oversight of a conglomerate with tentacles in many more parts of the media business.

This is where the narrative kicks in: The rotten mess that is Fox News’ culture is a function of the man who allowed it to to fester the more obscenely profitable it became. But have no fear for the future of the company because in time James and Lachlan will leave their mark on every division unless their aged father suddenly figures out how to live forever. Rupert is a holdover from another era where this kind of “Mad Men”-style tyranny could flourish, but the new guys will clean that up in due time.

There is more than a grain of truth to that narrative. But there’s more to this.

As it becomes abundantly clear that it was long an open secret throughout the conglomerate regarding the shenanigans that made Fox News an inexcusable place for many women to work, Rupert’s sons likely knew full well the problems at this division. They could have conceivably moved quicker to redress Fox News’ culture problems before the situation got as bad it eventually did.

But they didn’t, and if you were in their shoes, you probably wouldn’t have either. Why? Because Fox News generated a quarter of the parent company’s operating income in 2016, which made it a gravy train few would dare derail.

The horribly cynical truth of the matter is that for all the problems Fox News has brought the Murdochs in recent years, they are vastly outweighed by the profits the division delivered. Rupert may have even foreseen the troubles to come but was content to enjoy the ride as long as he could.

Whether his sons felt the same way is something they may be wrestling with themselves right now. There’s no un-ringing that bell, but they’ve probably learned a valuable lesson relevant to CEOs in any industry: don’t reward a successful division by letting it operate as a world unto itself within the universe of the larger company. Too much autonomy is an invitation to anarchy.

Murdoch may have thought earned Fox News earned itself carte blanche to behave recklessly by virtue of the billions of dollars the channel delivered. And his decision to grant Ailes a long leash is an understandable impulse because more intense oversight would be like messing with success. If it ain’t broke, don’t fix it.

But there’s plenty of middle ground between meddlesome smothering and free rein. Turning a blind eye to Fox News allowed the mushrooming of a toxic environment inconsistent with the way the conglomerate generally conducted itself.

Many media companies have crown jewels of their own, from HBO at Time Warner to ESPN at Disney. After watching what transpired at Fox, perhaps the chieftains at those conglomerates are re-evaluating their own relationships. What they’ll understand in time is that no asset is invincible enough to keep karma away forever. Having Fox News biggest stars fly Rupe’s coop proves that sooner or later, the chickens come home to roost.

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