Mackris’s camp worked the Post’s archrival, the Daily News. On October 17, the paper reported Mackris had the upper hand. “FOR EXTORTION, O’REILLY’S SUIT MIGHT NOT FIT: Accuser May Have Outfoxed Network Star, Legal Experts Say,” a headline declared. On October 20, Mackris and Morelli sat down with the Daily News for her first extended print interview.
In response, Fox News worked to inject its point of view into the Daily News’s coverage. Green went after Mackris viciously. He told the paper Mackris was “insolvent” and that when she was a White House intern in 1991, she gave herself the nickname “Andrea Mattress.” “It speaks volumes to what was going on then,” he said.
Brian Lewis told people he was thrilled with how the campaign was going, but O’Reilly was getting weak-kneed. Several days after filing the lawsuit, Morelli consented to allow O’Reilly’s lawyers to listen to excerpts of Mackris’s audio recording. By Friday, October 22—ten days into the scandal—settlement talks resumed. “Word came down Bill wanted to settle,” one person who heard the tapes said. The following Thursday, it was over. The Daily News played it big. “CALL HIM OWE-REILLY!” the headline blared. O’Reilly, the tabloid reported, paid Mackris as much as $10 million to make the whole thing go away. “This brutal ordeal is now officially over, and I will never speak of it again,” O’Reilly told Factor viewers that night. Lewis was disappointed. He told executives that Fox could have prevailed if he had been allowed to continue the PR campaign.
The success of Fox’s PR offensive was validated by the most important measure: ratings. Like Bill Clinton, O’Reilly survived a sex scandal by retaining the support of his fans. Ratings for the Factor jumped 30 percent during the heat of the scandal. On Monday, October 25, the show pulled in 3.7 million viewers. After it was all over, Ailes recalled that he had been confident that O’Reilly would weather the worst of it. “About a week after we were in the middle of it, and I sent word down to the executive producer, ‘How’s Bill doing?’ And he said the staff just says, ‘It must be going well, because he’s back to being a prick.’ ”
In the winter of 2005, a quieter but more consequential struggle was about to unfold within News Corp. For all his conservatism, Rupert Murdoch did not have an ideological litmus test, and a younger generation of executives, many of them Democrats, had moved into positions of influence at the highest reaches of the company, leaving Ailes encircled by executives who welcomed Fox’s profits but chafed at the network’s conservative message. The trigger for this shift was the departure of Chase Carey, Murdoch’s co–chief operating officer, who left to become CEO of DirecTV, the satellite TV service News Corp controlled. Carey was a powerful Ailes ally and boardroom protector. He had backed Ailes during Fox’s launch and gave Ailes wide latitude to run his affairs—as long as Ailes met his numbers. Carey’s exit was accompanied by the rise of a competing power center inside the company: Peter Chernin.
Chernin, who held the president and COO title following Carey’s departure, was already a Hollywood eminence, with all the cultural and political baggage—and ego—that implies. Chernin based himself on Fox’s studio lot in Century City and devoted a considerable amount of his time to News Corp’s entertainment assets. Chernin also fashioned himself as an operator—in the movie business, the players were in the political game—but his politics were considerably to the left of the News Corp norm.
Wall Street valued Chernin’s polished mien, especially after Murdoch’s brush with prostate cancer in 2000, but the management ranks at News Corp did not readily bow to his commands. Chernin promoted loyalists into key positions. The most visible casualty of Chernin’s drive to consolidate power was the heir apparent. Lachlan Murdoch was thirty-two when Chernin took over, and held the title of deputy chief operating officer. Rupert had hoped that Lachlan would train under the experienced entertainment executive. Lachlan even bought a house in Los Angeles and took an office on the Fox studio lot. But Lachlan felt frozen out in California. Chernin did not see himself as a regent to chaperone the king’s successor and left him out of management decisions. The mounting tension between Chernin and Lachlan created a polarizing dynamic. Ailes started out a bit player in this boardroom drama but ended up delivering a performance that many would remember long afterward.
Lachlan decided to give up on California to focus on his portfolio of businesses in New York. As deputy COO, he was responsible for the New York Post, HarperCollins, and the Fox Television Stations Group. But he could not fully escape Chernin’s reach. Their relationship finally ruptured over internal arguments over retransmission rights to cable operators. Lachlan wanted cable systems to pay News Corp cash; Chernin wanted to negotiate channel slots to launch the Fox Reality channel. The debate came to a head during a tense conference call with senior executives. Rupert sided with Chernin. Feeling betrayed and lost, Lachlan began spending more time at the Post, a Murdoch pet that Chernin had no interest in caring for.
But in seeking to avoid Chernin, Lachlan confronted another formidable power: Ailes. Ailes wanted Lachlan to take his programming ideas for the Fox broadcast stations. He pitched Lachlan on giving Geraldo Rivera a syndicated broadcast show. He also pressed Lachlan to develop a procedural drama called Crime Line. Lachlan resisted. He told Ailes he would look at some pilots but did not make any promises. The truth was, he did not need Geraldo. In early 2005, he recruited Australian tabloid television pioneer Peter Brennan to relaunch A Current Affair. And Crime Line, Lachlan told his staff, would likely cost millions. Rejecting the show was the “100 percent right decision,” he told News Corp executives.
So Ailes undercut Lachlan. He opened a back channel to Lachlan’s deputy, Jack Abernethy, the CEO of the Stations Group and an Ailes loyalist going back to their CNBC days. Before being promoted by Lachlan in 2004, he worked alongside Ailes as Fox News’s CFO. Ailes also went over Lachlan’s head. Having been blocked by Lachlan on Crime Line, Ailes pitched the show directly to Rupert over the summer of 2005. “Do the show,” Rupert told him. “Don’t listen to Lachlan.”
In late July, while in Sydney on a business trip, Lachlan received the news that Ailes had outmaneuvered him. The flap over Crime Line was, on the surface, a minor issue. But as Lachlan flew home to New York, Ailes’s meddling came to symbolize much more. Lachlan’s resentments festered. The pressure of satisfying his father’s dynastic ambitions had taken its toll. He had sided with his mother, Anna, during her divorce from Rupert. And Lachlan resented that Rupert pushed to relocate the company from Australia to New York, a city he never felt at home in. He loved the laid-back Australian culture and rugged countryside. His Australian wife, Sarah, a swimsuit model, also yearned to return home, where they were celebrities, almost royalty. Rupert could not understand these feelings. “Rupert used to say to me, ‘What kind of stupid person would give this up to go live there?’ ” former News Corp executive Mitch Stern recalled.