Advertisers bail from 'O'Reilly Factor' following payments to settle sexual harassment claims

Bill O’Reilly’s nightly program has long been the foundation of the Fox News Channel’s top-rated prime-time lineup.

But as more than a dozen advertisers flee from “The O’Reilly Factor” over the sexual harassment allegations made against the anchor, the network is at risk of seeing that foundation collapse.

Big-name advertisers including BMW, Lexus and Allstate pulled their spots Tuesday in response to revelations that $13 million was paid to women who accused O’Reilly of sexual harassment or inappropriate behavior. The National Organization for Women and other advocacy groups on Tuesday called on Fox News to fire the combative commentator.

O’Reilly has denied the merits of the claims and said he settled to protect his family from any embarrassment that would come from the publicity of a legal action.

The defection of big-name advertisers Tuesday compounds the woes facing Fox News and parent company 21st Century Fox, which has faced multiple claims from women who alleged they were mistreated by current and former employees.

Mercedes-Benz, Hyundai, T. Rowe Price, the men’s clothing brand Untuckit, pharmaceutical company GlaxoSmithKline and Sanofi Consumer HealthCare are bolting from “The O’Reilly Factor.” The remaining advertisers are being pressured to follow them.

“The controversy around ‘The O’Reilly Factor’ program and allegations made against Bill O’Reilly are matters that we take seriously and will continue to monitor,” said a spokesperson for Sanofi. “We do not endorse the behavior or opinions of program hosts or the content.”

Billie Gold, vice president and director of programming research at Amplifi US, said the moves reflect how advertisers do not want to risk alienating consumers by appearing to support O’Reilly or his behavior.

“The speed at which this is happening is somewhat unprecedented, but no company or corporation can take a chance in these times of social media pressure to stand behind any person or program that derogates woman,” Gold said. “Backlash by consumers can be swift, so most companies are erring on the side of caution. ...You can find big ratings in other TV environments, but once your customer believes you stand behind a belief or support something that is wrong, it is hard to get them back.”

Fox News Channel acknowledged the advertiser defections. Paul Rittenberg, executive vice president for ad sales, said the network is trying to accommodate O’Reilly’s advertisers by moving their spots to other programs on the channel.

"We value our partners and are working with them to address their current concerns about ‘The O'Reilly Factor,’” he said in a statement.

Advertisers were reacting to a report in the New York Times that revealed that five women received settlements from Fox News or O’Reilly after making accusations against him.

The claims made against O’Reilly include one from a former on-air talent who said she was propositioned by the anchor and suffered recriminations and a loss of opportunities within Fox News after turning him down.

Despite the advertiser rush to distance itself from O’Reilly, Fox News is likely to be extremely patient before giving up on its signature star, who recently extended his $18-million-a-year contract.

Losing O’Reilly would be a severe blow to a network that has recently seen one of it rising stars, Megyn Kelly, defect to NBC.

“Bill really does set up their entire prime time,” said Jonathan Klein, a former president of Fox News competitor CNN. “Everyone who follows out of his show loses audience. So without him, what happens? It becomes a very different landscape for the entire network.”

Fox News will not immediately feel the financial impact of the defections as advertisers who pull out of specific programs typically reallocate those dollars to other time slots on the same network as they need to reach their audience targets.

But if O’Reilly, 67, cannot survive the cascading tide of advertiser defections, the negative impact on Fox News Channel’s ratings — highest in all of cable TV — would be significant.

TV industry executives said a sudden O’Reilly departure would result in a 30% decline in Fox News’ prime-time ratings.

“The O’Reilly Factor” had its best ratings ever in the first quarter of 2017, with 3.98 million viewers. His program feeds viewers into the rest of the Fox News lineup of “Tucker Carlson Tonight” (3.27 million viewers in the first quarter) and “Hannity” (2.87 million). Fox News was able to sustain the recent defection of Kelly to NBC, as O’Reilly’s strong following has the potential to turn whoever airs after him into a hit.

If “The O’Reilly Factor” leaves the schedule there is no obvious successor who could serve as the same kind of tent pole for the prime-time lineup. O’Reilly no longer works Friday, and his fill-ins on the night — typically Eric Bolling and Jesse Watters — do not draw as well as the program’s eponymous host during the rest of the week.

Fox News does have the wherewithal to ride out O’Reilly advertiser defections, as only about 30% of the network’s revenue comes from commercials. The remainder comes from subscriber fees paid by cable and satellite companies to carry the channel.

Still, ad revenue for “The O’Reilly Factor” is significant. The program brought in $69.8 million in estimated ad revenue in 2016, according to Standard Media Index. The program was ahead of that pace this year, with $15.2 million in January and February.

Fox News has parted ways in the past with a major star who lost advertisers. Glenn Beck, the libertarian firebrand, was a big hit on the channel with his early evening program that aired from 2009 to 2011. But some of his inflammatory comments, including one in which he said that President Obama had “a deep-seated hatred for white people and white culture,” drove away all conventional advertisers from the program.

Fox News cut Beck loose once the show became economically unfeasible.

O’Reilly’s audience is much larger than Beck’s and intensely loyal. Many of its conservative viewers are not likely to care about sexual harassment claims brought to light by the so-called mainstream media.

O’Reilly’s audience is also one of the few non-sports programs on TV that draws a predominantly male audience. In March 2017, only 42% of O’Reilly’s viewers in the 25-to-54 age group advertisers seek with news programming were female.

But even if O’Reilly’s viewers stick around, the anchor’s presence on the network could become a troubling reminder of the mounting legal challenges facing Fox News, which has been shaken by sexual harassment complaints since former anchor Gretchen Carlson filed a lawsuit against the network’s former chief executive, Roger Ailes, in July.

The company removed Ailes and has investigated sexual harassment claims that occurred under his watch, resulting in multiple settlements with female employees. It's also led to several lawsuits, including one filed Monday by Fox News contributor Julie Roginsky against Ailes and current Fox News co-president Bill Shine.

Ailes has denied all of the sexual harassment allegations made against him. Fox News also is facing a lawsuit from women who allege they were subjected to racial harassment by former controller Judith Slater, who was dismissed from the company.

Lingering controversies could put Fox News at a disadvantage when it comes time to negotiate new carriage deals with cable and satellite companies, the main source of its revenue.

“O’Reilly becomes symbolic of something negative around the network, and that can impact the sub fees,” said Klein. “In negotiations, it gives the person across the table a little more ammo.”

stephen.battaglio@latimes.com

Twitter: @SteveBattaglio


UPDATES:

6:10 p.m: This article was updated with additional comments from analysts.

This article was originally published at 12:50 p.m.

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