Fox takes the offensive

Ratings decrease, but news channel plots future growth

At Fox News Channel’s 10th anniversary bash last week, topper Roger Ailes joked to the crowd, “This tent is the Green Zone; you’re safe in here.”

Safe, perhaps, from the institutions of the media elite that Fox loves to position itself against. But the siege metaphor could just as easily apply to the fights Fox News Channel yet faces.

In the decade since its launch, Fox News roared to the top on attitude and a guiding premise: The major, coastal news outlets, Ailes believed, were misinforming and patronizing Middle America.

Ailes now faces his toughest challenges since startup. Cable news is in the midst of a ratings slump, and since FNC has the most viewers to lose, it is bearing the brunt of it. Carriage agreements with cable and satellite operators are expiring, and Fox’s steep rate demands could lead to the channel going dark in some regions.

At the same time, Fox topper Ailes has his hands full getting a long-gestating business network off the groundwhile building an audience for nascent MyNetworkTV.

When Ailes launched the Fox News Channel in 1996, cable news was ripe for an attitude adjustment. With viewers concentrated in the growing exurbs of the Southeast and in the Midwest, FNC took on all comers and won, defeating CNN and MSNBC and pushing its way onto the list of top-10 cable networks.

During the 2004 Republican Convention, the net at times outrated CBS, ABC and NBC, although the broadcasters had only limited coverage of the event.

Along the way, its formula – opinionated talk in primetime and news ginned up with Fox attitude during the day – has been much-imitated as the competition adapts to a world that is, increasingly, of Fox’s creation.

“Fox did it by not coming across as superior to the heartland, and that has been tremendously appealing,” says former Reagan aide and media consultant Eric Dezenhall.

Its cultural weight could be measured by the cottage industries it has spawned. Comedy Central’s “The Colbert Report” could scarcely exist without Bill O’Reilly; indeed MSNBC’s first breakthrough personality, Keith Olbermann, fashions himself as the anti-O’Reilly.

Now the Democrats act as if they’re running against Fox, which from a buzz standpoint, might as well be an early anniversary present.

Bill Clinton accused Chris Wallace of carrying out a “nice little conservative hit job on me” on “Fox News Sunday”; a week later, Sen. Barbara Boxer (D-Calif.) bickered with daytime anchor Jane Skinner, saying sarcastically, “Oh, I know, you’re fair and balanced.”

Ailes says he has a hard time believing those reactions were spontaneous. But it’s a political strategy he’s seen fail twice, both as a young aide to President Nixon, and again in the ’80s when Republicans made running against the media a standard page in their playbook.

“They are trying to isolate Fox, but I can tell you historically the prime reason for attacking the media is that you’re having trouble getting elected and your ideas aren’t resonating,” Ailes says.

Ultimately, he says, attacks only add weight to Fox’s “fair and balanced” mantra, a slogan that couldn’t be more aggravating to the liberals who love to hate Fox.

But with Fox’s 10th anni comes more uncertainty for the network, and for Ailes personally, as he triesto re-infuse a start-up mentality to re-ignite ratings growth.

“Since our ratings are so much higher than everybody else’s, we probably settled a little harder than a few,” he says, describing the recent slump. “I see it as a temporary thing; the distance between us and our competitors is strong.”

Ailes’ authority has expanded from his fast-growing startup network to overseeing some mature businesses, such as the Fox Television Stations Group, and MyNet, which is based on telenovelas — a costly gamble that may not pan out.

Fox News Channel is already posturing for what most expect to be brinkmanship negotiating for new carriage agreements for operators. When FNC started out, it paid cable ops to take the channel; now, it’s one of cable’s most popular offerings and the channel is seeking fees of $1 per subscriber, 40% more than CNN gets.

If the two sides don’t reach an agreement, there are threats FNC may be yanked from some cable operating systems, including Cablevision.

Responsible for more than a third of News Corp.’s annual operating income, Ailes’ world is a whole lot bigger than Fox News Channel, but he still spends at least an hour a week watching tape of unknown TV journalists hoping to discover the next Shepard Smith, who was unemployed when Ailes discovered him as a freelancer on the Unabomber story.

Members of the so-called media elite still delight in tweaking Fox whenever possible. Recently, NBC’s Tom Brokaw made Colin Powell giggle on a panel with Murdoch when he said, “There are a lot of people who think the people working (at Fox News) are already working for the administration.”

Susan Estrich, who ran Democrat Michael Dukakis’ campaign for president and who is one of Fox News’ longest-serving house liberals, says she’s used to the abuse. Estrich, who got to know Ailes during the campaign (he was working for George H.W. Bush), says she’s constantly defending her role on the network in Democratic circles.

“No one is stopping anyone else from providing other voices in the same way Rupert and Roger provide the voice of Fox News,” Estrich says. “Within Fox, the voices they provide are free — free as in, ‘I say what I want to say.’ ”

Fox’s 10-city “Thank You America” tour, to honor its anniversary, is as noteworthy for where it goes — Las Vegas, Dallas, Atlanta, Tampa, Phoenix, San Diego, Boston, St. Louis, Detroit and Chicago — as where it doesn’t. Apparently the nation’s two biggest media markets, Los Angeles and New York (in blue states), didn’t need to be thanked.

Fox’s audience is distinct from the other cable news networks in that it is more likely to be white, identify as either Republican or independent, and is more likely to reside in the southeast and middle Atlantic states.

Among the three cable news networks, Fox’s aud is least likely to have attended college and more likely to live in the suburbs, but its median income of $72,300 is just as high as CNN’s and MSNBC’s auds.

“You give me a mill worker in any small town in Ohio, where I came from, or any of those Midwest towns,” Ailes says. “You’ll find they’re not stupid. They know what’s going on. They know if someone’s trying to rip them off or the government is trying to rip them off. They can feel it and I respect that.”

Perhaps it is thinking about that viewer — the factory worker on the barstool — that makes the world look different once you’re on the inside.

Chris Wallace, who had a long career at both ABC and NBC before coming to Fox three years ago, says he noticed a change in his outlook.

“Once I came over to Fox, I began to see the knee-jerk way in which the mainstream media covers stories; I began to see you could find examples of bias in a lot of places depending on how hard you look,” he says.

Indeed, Fox sees the world differently. A “suicide bomber” becomes a “homicide bomber” while “insurgents” or “militants” become “terrorists” on Fox.

The net may offer a tough inquisition of a Bush Cabinet member, but it could also pose the question: “Best President Ever?”

By giving the president the benefit of the doubt, Fox makes an even bigger impact when it departs from the administration line. Shepard Smith recently had a fiery exchange with National Review editor William Kristol over the Iraq war; his passionate coverage of the failures in New Orleans was a breakthrough for both the anchor and the network.

But bias comes from the stories a media outlet chooses to emphasize. Ailes points to what he believes was over-coverage of Abu Ghraib and undercoverage of the U.N.’s oil-for-food program scandal, a story championed by Fox and corporate sibling the New York Post.

“The thing that has surprised me most is the media hasn’t become more fair and balanced itself,” he says. “It’s been dragged kicking and screaming to a point of view that maybe there is more than one point of view in the world.”

Back in his office, Ailes perks up when he sees on one of the giant screens in his office that Neil Cavuto has booked George Soros on his show. This is sure to be a classic Fox News matchup: Cavuto against the reclusive Soros, billionaire benefactor of liberal causes and leading bogeyman of the right.

“Our whole channel is premised on differing with both sides,” he says. “We’ve covered every mistake Bush has made — from friendly fire to Haditha — but we also ask tough questions of the left. The secret the other guys who don’t like Fox News can’t admit is we’re covering the news — the other guys might be pulling punches, but we’re not.”

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