Former Fox News star Bill O'Reilly had a deal with the 21st Century Fox network that he couldn't be fired over unproven harassment allegations, a fresh revelation that casts doubt over corporate-governance standards at Rupert Murdoch's media empire.
O'Reilly's contract said he couldn't be dismissed based on an allegation unless it was proven in court, Jacques Nasser, an independent Fox director, told Britain's Competition & Markets Authority, according to a summary published on Wednesday.
O'Reilly, the former host of "The O'Reilly Factor," has denied all wrongdoing.
Fox has been dogged by criticisms over its handling of sexual-harassment claims made against O'Reilly and Roger Ailes, the now-deceased former CEO of Fox News. While Fox made changes to governance and policies, the controversy has weighed on its ??11.7 billion ($19 billion) bid for British pay TV company Sky. Competition regulators are reviewing the deal for factors including its impact on media plurality and the Murdochs' adherence to UK broadcast standards.
"It's another nail in the standards coffin as far as Fox is concerned," said Steven Barnett, a professor of communications at the University of Westminster. "It speaks volumes about the nature of a company if you can pile up multiple accusations and be protected by such a clause."
Fox declined to comment.
Contractual clauses such as the one described by Nasser are coming under scrutiny as sexual-harassment claims sweep through Hollywood and beyond, following the downfall of Harvey Weinstein, the movie mogul accused of rape and other wrongdoing at the studio he ran.
Weinstein's contract at The Weinstein Co. said that as long as Weinstein covered the costs of settlements and judgments for misconduct including sexual harassment, he could keep his job, according to a report by TMZ, which cited the 2015 contract. Weinstein has denied any non-consensual sexual activity.
Nasser, at a hearing with regulators on October 25, said that when the board was informed of sexual harassment allegations against Ailes, it reacted quickly and he left the company within days. But with O'Reilly, it was advised that the situation was different due to the terms of the employment agreement and because the evidence was uncertain.
Board members debated the timing of O'Reilly's dismissal, Nasser said. Some wanted to dismiss him immediately, while others wanted to wait for his contract renewal, he said. The board didn't know the value of settlements O'Reilly had made with various accusers, Nasser said, in line with public comments from Fox Chief Executive Officer James Murdoch.
When Fox renewed the contract, it included protections for the company aimed at harassment, including that O'Reilly could be dismissed if the company was made aware of other allegations or if additional relevant information was uncovered in a company investigation, Fox has said.
Fresh allegations of misconduct against O'Reilly surfaced in April, following a New York Times report that five women had received payments from Fox or O'Reilly for agreeing not to sue or talk about their allegations that O'Reilly verbally abused them, subjected them to unwanted advances or made lewd comments.
Fox News announced his departure on April 19, referencing a "thorough and careful review of the allegations."
In hindsight, there could have been better governance structures in place at Fox News to ensure the board knew of the allegations at an earlier stage, Nasser, a former Ford Motor CEO, told the British competition regulator.
Oversight of Fox News was also addressed by Nasser at the hearing with the CMA. Critics of the Sky takeover have warned of the risk of a "Foxification" of Sky News, alluding to Fox News's reputation as a network more sympathetic to right-leaning viewpoints, though others have pointed to regulatory commitments that would prevent that.
Murdoch mum on Disney merger talks
The news of O'Reilly's contract were revealed in Britain hours before Fox News' parent 21st Century Fox reported quarterly earnings in New York.
Executive Chairman Lachlan Murdoch declined to comment on reports the company held talks to sell assets to Walt Disney, but said the movie and TV business built by his father Rupert was well positioned in a tough climate for media companies.
"Fox has the required scale to continue to both execute on our growth strategy and deliver increased returns to shareholders," Murdoch said Wednesday on a call with investors, after the company reported quarterly sales that beat analysts' estimates.
The comments followed reports this week that Disney held talks to buy Fox's film and TV studio, along with cable networks including FX at National Geographic. Fox would have retained the Fox News Channel, the flagship broadcast networks, local stations and sports programming. The discussions have ended, according to people familiar with the matter.
The news raised questions about where the Murdochs, who hold almost 40 per cent of the voting power in Fox, plan to take the company, with the Sky takeover being slowed down by the regulatory scrutiny.
Fiscal first-quarter profit of 49 US cents a share, excluding some items, met Wall Street estimates. Sales rose 7.6 per cent to $US7 billion, buoyed by double-digit growth in the fees cable channels including Fox News and FX collect from pay-TV systems.
The continued strength of news and sports may explain why those businesses weren't on the table when Fox discussed selling assets to Disney. Fox's movie studio is in a tougher spot and would be easier to part with.
Profit at Fox's broadcast division, which also wouldn't have been included in the Disney deal, slumped 36 per cent on higher costs for sports programming, though sports helped generated growth in ad revenue.
Oversight of Fox News was also addressed by Nasser at the hearing with the CMA. Critics of the Sky takeover have warned of the risk of a "Foxification" of Sky News, alluding to Fox News's reputation as a network more sympathetic to right-leaning viewpoints, though others have pointed to regulatory commitments that would prevent that.
Bloomberg
