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O'Reilly allegations rock Fox

October 2004

O'Reilly allegations rock Fox

By Jon Friedman,
Last Update: 2:05 PM ET Oct. 15, 2004

NEW YORK (CBS.MW) -- Fox News Channel, America's most-watched 24-hour cable news operation, has a lot at stake as its star news personality, Bill O'Reilly, battles sexual harassment charges.

In allegations that became public this week, a Fox producer has accused O'Reilly of harassing her with sexually explicit telephone messages.

O'Reilly, whose show, "The O'Reilly Factor," is the highest-rated cable news program, has said he will fight to protect his reputation. He then filed a suit against his accuser, Andrea Mackris, saying that she and her attorney tried to extort $60 million from him in exchange for her not filing a claim against him.

Regardless of what comes to pass in a courtroom, though, Fox News and its parent, Fox Entertainment Group, have a lot riding on the situation. The network's popularity has reached new heights: During the recent Republican convention, Fox had the highest TV ratings of any network, a remarkable achievement, since cable audiences are by definition smaller than those of CBS, NBC or ABC.

"Fox is between a rock and a hard place," said Ken Marlin, of Marlin & Associates, an investment banking house that specializes in the media industry. "Fox is in a position of having to defend itself."

The news value of the charges is higher than it otherwise might be because of the O'Reilly factor. A nationally known tough-talking commentator and best-selling author, O'Reilly is the news personality who has been Fox's public face for several years.

"O'Reilly is in some ways the brand for Fox News, as Dan Rather is for CBS and Tom Brokaw is for NBC," Marlin said. "This, without question, tarnishes the brand."

Irina Briganti, a Fox spokeswoman, didn't return a call seeking a comment. Andrew Butcher, a spokesman for News Corp. , the corporate parent of Fox, referred questions to Fox.

Fox's stock rose 9 cents to $29.18 on Friday.

Loyal viewers, nervous shareholders

Another factor is how the charges will affect the loyalty of Fox's audience, which has proven to be extremely supportive of the network and the Bush administration.

"Fox constitutes a fairly conservative audience," Marlin said. "The question for analysts to ponder is whether this will cause people to reduce advertising associated with O'Reilly, in a narrow sense, and Fox, in a general sense. My best guess is that he can ride it out -- if nothing else happens."

Wall Street observers are monitoring the situation, but it's too early to say whether the issue will hurt Fox's shareholders.

For now, said Denver mutual fund manager Patrick Adams, "it's an issue for the stock."

When the New York Times Co. was rocked by a scandal involving Jayson Blair, a reporter who fabricated news stories, its reputation was sullied, but its stock held strong because there was no evidence of a companywide conspiracy that might tarnish the corporation's brand.

Viacom Inc., parent of CBS and a significant investor in MarketWatch, the publisher of this report, was hit by a scandal of its own this year. A few weeks ago, in the thick of the presidential race, CBS News and its anchor Dan Rather issued apologies for a flawed report about President Bush's service record in the National Guard.

"The CBS situation was worse only because it was an allegation of a failure by the news organization to vet a news story," Marlin said. "This allegation is personal to Bill O'Reilly. However, if Fox winds up having to part ways with O'Reilly, the impact will be worse for Fox than it has been for CBS."

Damage control

O'Reilly may even face more pressure to clear his name than an ordinary citizen would.

Richard Torrenzano, a crisis-management expert in New York, said: "Everyone is innocent till proven guilty, but just because he's on television, he doesn't have any special privileges. He becomes a public lightning rod for a lot of issues."

The pressure is squarely on Fox to make a decision about how to protect its image.

"Fox has to take some action, saying it's either a civil issue or one involving the corporation," Torrenzano said. "It will depend on what a fact-finding analysis turns up. There are always three sides to every story when a public figure is involved."

Because Fox has been so closely aligned with a specific, conservative-leaning TV audience, the stakes are heightened further.

"It becomes a much bigger debate because he has such a large TV following and it becomes even more of a focus with the liberal-conservative feelings," Torrenzano said.

It would take a great deal of public pressure for a company to force out its biggest star. Whether a public figure is a famous athlete, investment banker or TV personality, corporations don't want to lose a rainmaker.

"I can't speak on the merits of this particular case, but in the brokerage business, it had to be so embarrassing before a guy got kicked out," said Susan Antilla, the author of "Tales from the Boom-Boom Room: The Landmark Legal Battles that Exposed Wall Street's Shocking Culture of Sexual Harassment."

"If he is making money for Fox, he'll stay at Fox," Antilla said. "The company is going to back him. Period."

Jon Friedman is media editor for in New York.

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