Fox Settles With Gretchen Carlson for $20 Million - and Offers an Unprecedented Apology

By Sarah Ellison, Vanity Fair

06 September 16

Act II of the Ailes saga may have just begun.

t has been exactly two months since Gretchen Carlson, a former Fox News anchor, sued her old boss, Roger Ailes, for sexual harassment. The suit inaugurated a frenetic series of events, not only within Fox News’s subterranean newsroom—where staffers feared for their jobs and, in one case, even the network’s future—but also throughout the media, as other women came forward to share their own stories of harassment. It all resulted in Ailes’s dramatic, and nearly mind-boggling, ouster from the news network that he co-founded 20 years ago. (Ailes has repeatedly, and fervently, denied all allegations of sexual harassment.)

On Friday, Ailes biographer and New York writer Gabriel Sherman, who has broken key elements of the story, published a lengthy cover article detailing Ailes’s downfall. As I have reported, Ailes’s own apparent paranoia increased around the time that Sherman began reporting his unauthorized biography, which was published in early 2014. According to a person close to Ailes, he hung a wooden door, now dismantled, that obscured any view into his office suite; according to numerous people, he also recorded anyone who entered. Ailes kept guns in the office (a Glock and Smith & Wesson were discovered by 21st Century Fox after his ouster). Carlson and others, including former Fox News booker Laurie Luhn, also detailed Ailes’s alleged harassment, much of it outlined by Sherman in his coverage.

In the early days of the Ailes saga, many applauded how 21st Century Fox was handling the crisis. Rather than defending Ailes, C.E.O. James Murdoch and Executive Chairman Lachlan Murdoch heralded a new era at the media empire by investigating him. Their swift decision to launch an internal investigation into the allegations, handled by the top-flight law firm Paul, Weiss, signaled that the younger Murdochs were prepared to adopt a different tack than their laissez–faire father, Rupert Murdoch, who is famously loyal to his deputies and whose relationship with Ailes went back decades. In doing so, they seemed determined to leave the seamiest aspects of Fox News’s culture behind for good.

But there was always a tension between cleaning things up and preserving Fox News, which makes $1 billion in annual profit. The Murdochs appear intent on putting the Ailes saga behind them as they move into the last stretches of an election and an attempt to corral crucial anchors, such as Megyn Kelly, to re-sign with the network. Now the company has agreed, on behalf of Ailes, to settle Carlson’s suit for a stunning $20 million, according to three people familiar with the settlement. To reinforce their seriousness about creating a new culture in a post-Ailes world, the company offered Carlson a public apology as part of the settlement. "We sincerely regret and apologize for the fact that Gretchen was not treated with the respect and dignity that she and all of our colleagues deserve,” the statement noted. (The company, according to two people familiar with the discussions, has also reached settlement agreements with two other women.)

Though Carlson’s case is against Ailes personally, Fox is essentially his insurer for any settlement, according to two people familiar with the arrangement, and discussions between Ailes’s legal team and 21st Century Fox’s legal team became very tense regarding how much Ailes might pay in a settlement. (At press time, it was unclear how much Ailes was personally on the hook for.) As part of the language at the end of the settlement, numerous people with knowledge of the deal told me, Carlson has agreed not to bring any further legal action against other executives at Fox News, or against the company itself.

The settlement punctuates an important chapter in the Ailes scandal. While the Paul, Weiss investigation interviewed more than 20 women, according to two sources familiar with the process, it never officially expanded to examine the broader culture of Fox News. The firm, according to numerous people familiar with the process, was apparently never ordered to scour the company’s hard drives for all evidence of sexual harassment or bawdy culture. In some ways, according to one person familiar with the process, the Paul, Weiss investigation simply got a revenue machine back on track.

The settlement provides a relatively swift closure to an ugly chapter in the company's history—one that, ironically, gave the Murdoch brothers their first major leadership test. But as much as the Murdochs may wish to put this episode behind them, Ailes, who was fairly silent during the Carlson suit, may just be getting started.

On Friday, as the F.T. first reported, Ailes’s newly retained libel lawyer, Charles Harder, sent “demand” letters to both Sherman and New York magazine asking them to retain all documentation related to Sherman’s reporting. (A spokesperson for New York confirmed receipt of the letter.) Harder recently represented Terry Bollea, a.k.a Hulk Hogan, in his successful $140 million lawsuit against Gawker Media. Harder also recently represented Melania Trump.

Ailes has a history of threatening litigation. On Sunday, Ailes’s attorney representing him in the Carlson suit, Susan Estrich, of Quinn Emanuel, issued the following statement in response to my question about Harder’s letter to New York and Sherman: “Quinn Emanuel’s role remains unchanged,” with respect to Mr. Ailes, adding that “Mr Harder is advising Mr. and Mrs. Ailes on possible defamation actions against NY Magazine and Mr. Sherman.” Harder, for his part, did not respond to a request for comment. (A 21st Century Fox spokesperson told me that the company has no involvement in Ailes’s retention of Harder.)

Ailes may be targeting Sherman and New York, but the move may also have the added effect of keeping the dispute with Fox alive. Ailes was not in the driver’s seat throughout the negotiations with Carlson, which presumably frustrated the political operative and master manipulator within him. Now that the Carlson suit has settled, he can move on to his next battle. This has been a remarkably uncertain couple of months within the Fox News bunker. All that is certain, it seems, is that the uncertainty is poised to continue.