Fox Scandals Weaken Murdochs' TV Future

By Jennifer Saba | NEW YORK

(Reuters Breakingviews) - Fox News has entered the spin zone. Automakers Mercedes-Benz, Hyundai and BMW are among the companies pulling ads from "The O'Reilly Factor" amid a scandal involving popular host Bill O'Reilly. The cost to parent Twenty-First Century Fox is low for now. A toxic culture, however, can damage long-run efforts to broaden consumer appeal.

The lucrative cable news network with conservative tendencies is once again the story. The primary architect of Fox News, Roger Ailes, left as chairman last year after a two-decade run following allegations by Fox News host Gretchen Carlson that Ailes sexually harassed her. Six months after the company apologized and settled with Carlson, the New York Times reported over the weekend that O'Reilly and Fox made payments totaling $13 million to five women to settle claims regarding unwanted advances and other inappropriate behavior.

The list of O'Reilly refuseniks may grow. The controversy arises just as advertisers are raising concerns about their brands appearing with inappropriate material on Google and its video site YouTube – and pulling their ad dollars. It would take a major boycott to eat into Fox's top line, though. Fox News typically dominates evening programming. In February, for example, nearly 3 million people tuned in, compared with 1.2 million at CNN and 1.5 million for MSNBC.

It could become a bigger problem, though. Cable news has been enjoying a renaissance since Donald Trump entered the political realm a couple years ago. To keep the momentum going, however, the networks will have to find younger viewers. The median age of a primetime Fox News viewer in 2015 was 68, according to Nielsen, older than at both its main rivals.

James and Lachlan Murdoch, the mid-40s children of Fox Chairman Rupert Murdoch, have been given the job of making the company live up to the 21st century moniker. They were involved with the departure of Ailes, their father's longtime lieutenant. Fox News also has urged employees to come forward with concerns about unseemly behavior and retained law firm Paul Weiss to conduct a review.

The situations involving O'Reilly and Ailes make the job harder for the younger Murdochs. Like Travis Kalanick's Uber, which is confronting a backlash because of its frat-house culture, similar threats may endanger Fox. Audiences and advertisers may be changing faster than Fox can keep up.