Why Bill O'Reilly and Fox News might be able to weather advertiser storm
The rush of advertisers fleeing Fox News’ “The O’Reilly Factor” and its host Bill O’Reilly surely isn’t welcome news for the network. Setting the public-relations concerns and optics aside, though, if history is any guide Fox and O’Reilly are positioned to weather such defections if they so choose.
Nobody likes taking the financial haircut that prolonged and committed advertiser boycotts can inflict. But while some personalities have lost shows or changed networks amid such pressure, O’Reilly resides on an elevated tier with the likes of Rush Limbaugh, who, like the Fox host, has endured multiple controversies over the years and ultimately prevailed not too much worse for the wear.
The withdrawal of ads from O’Reilly’s program follows a New York Times report detailing a total of $13 million paid out in settlements to five women related to accusations of sexual harassment or verbal abuse against the Fox host. It also follows the ouster of Fox News CEO Roger Ailes — who had been O’Reilly’s staunchest defender over the years — after a series of sexual harassment allegations against him. (Both O’Reilly and Ailes have denied the allegations against them.)
Historically, advertisers are quick to pull ads or reallocate money when programs are faced with the taint of scandal. But it’s not uncommon for them to quietly return to those same programs once the public pressure subsides.
Besides, for Fox News, the benefits that flow from “The O’Reilly Factor” — its highest-rated program, and the linchpin of its primetime lineup — go beyond advertising. The show’s vast audience feeds directly into the program that follow hosted by Tucker Carlson and Sean Hannity, helping buoy their numbers.
And as a basic cable network, Fox also receives a dual revenue stream. Well over half of its annual income stems from fees that cable and satellite operators pay to carry the channel.
Writing in the Hollywood Reporter, news analyst Andrew Tyndall cited O’Reilly’s sizable audience as the true source of his value — making carriage of Fox News “indispensable, thereby allowing the channel to charge cable operators top dollar, which is the true source of its fabulous profitability.”
Earnings from advertising are also significant, but in the short term Fox’s sales operation can rely on companies that are less sensitive to public pressure than big national brands — what are sometimes known derisively as “bottom-feeder” advertisers, from gold companies to direct-response marketers, urging viewers to call toll-free numbers. A preponderance of such sponsors ran spots during the show on Tuesday night.
Those advertisers generally pay less than blue-chip sponsors. Still, they will offset some of the losses, while securing O’Reilly’s show, which has become perhaps even more fundamental to Fox News’ short-term foundation with the departure of another primetime star, Megyn Kelly,
Finally, the cable-news audience in general — and Fox in particular — skews much older than the young-adult demographics sought by media buyers. While advertisers generally negotiate TV news deals based on the adults 25-54 age bracket, Fox’s median viewer age is 68 (the oldest among the cable-news networks), which blunts ad revenues relative to its total audience.
Advertiser boycotts have produced some notable victories, in some instances resulting in unrenewed contracts or talent opting to migrate to premium platforms, where advertising isn’t an issue.
Bill Maher, for example, lost his ABC show “Politically Incorrect” in 2002 after remarks related to the Sept. 11 attacks. He subsequently landed at HBO, where he remains.
Similarly, Dr. Laura Schlessinger — criticized for her positions regarding gays and lesbians, as well as for using the “N” word on air multiple times during a conversation with an African-American caller — didn’t renew her terrestrial radio contract and shifted to satellite service Sirius XM in 2011.
Even Limbaugh’s empire appeared to be threathened after he called law student Sandra Fluke “a slut” in 2012. The radio host lost advertisers, and his syndicated program was chased off some key affiliates in major cities.
Still, despite the blow to his business model Limbaugh and distributor iHeartMedia announced a four-year contract extension in August, though almost surely for less money as he might once have commanded.
Fox has thus far expressed support for O’Reilly, and the fact that the network chose to renew his deal despite knowing about the settlements would seem to indicate a desire to have him continue and eventually leave on his and Fox’s own terms. (In an interview with Adweek last July, O’Reilly hinted at retirement as an option, saying, “I don’t want to work this hard much longer. I know that.”)
The larger question, perhaps, is what impact a prolonged pressure campaign will have on O’Reilly himself. In the past, the host has proved sensitive to criticism, from accusations he exaggerated his war-reporting experience to initial coverage of Andrea Mackris’ sexual-harassment lawsuit against him in 2004.
O’Reilly enjoyed unwavering backing from Ailes through past controversies. In removing Ailes, 21st Century Fox has appeared more responsive to public perceptions under the stewardship of mogul Rupert Murdoch’s heirs, James and Lachlan Murdoch.
Still, both Rupert Murdoch (who is now overseeing Fox News) and his sons still look reluctant to lose the advantages that come with employing the highest-rated host on cable news. But that could change if more allegations — and a truly sustained loss of advertisers — follow.
CNNMoney (Los Angeles) First published April 5, 2017: 11:39 AM ET