The future is unwritten, even for Fox News.
When anchor Megyn Kelly's star was shining brightly in early 2016, well before the network's co-founder, Roger Ailes, was dismissed amid sexual harassment allegations, 21st Century Fox (FOXA) CEO James Murdoch said he was eager to sign her to a long-term contract.
After all, Fox News' audience skews older than those of its cable TV rivals. Securing a popular, telegenic woman for its prime-time lineup -- Kelly turned 46 in November -- seemed a sensible and timely idea. Fox News' ratings continue to eclipse those of Time Warner's (TWX) CNN and Comcast's (CMCSA) MSNBC, but the Murdochs certainly know nothing lasts forever.
But nine months after Ailes was abruptly dismissed following a blistering lawsuit filed by former anchor Gretchen Carlson, Fox News' biggest star, Bill O'Reilly, similarly was forced out of the company, also amid multiple allegations of sexual harassment. Besides Fox declaring it will foster "a work environment built on the values of trust and respect," the Murdochs were forced to make changes to Fox News' lineup that look to be stopgap measures awaiting further tweaks.
The new schedule undoubtedly was made easier by the surprisingly impressive ratings for Tucker Carlson Tonight, the conservative's 9 p.m. Eastern show that had the good fortune of following O'Reilly, whose ratings hit record levels in the first quarter, a stunning feat considering that he had already anchored the highest-rated show on cable TV news for more than 16 years.
But truth be told, Carlson did benefit from an O'Reilly lead-in. Additionally, he caught some wind from debuting in January during one of the most hyped-up periods in recent political history: the inauguration and first 100 days of a president who enthusiastically embraced Fox's conservative inward-looking nationalism as well as its penchant for vilifying liberal ideas and icons.
Carlson's show during the first quarter averaged 3.27 million viewers, easily outdistancing his predecessor, Megyn Kelly. By comparison, The O'Reilly Factor attracted an astounding average of 3.98 million viewers, with many shows exceeding 4 million viewers. It's hard to imagine that Tucker Carlson Tonight can sustain that viewership for Fox News' 8 p.m. hour.
It's quite possible that O'Reilly's departure could have a negative ripple effect on the network's ratings, which means less advertising and revenue.
In 2016, Fox News posted more than $1.67 billion in gross profit, a record for a network that routinely has generated more than $1 billion in annual profit. Fox's cable TV network group, of which Fox News is the largest piece, is expected to account for more than 72% of the company's profit for its current fiscal year, which ends in June, according to Douglas Arthur, media analyst at Huber Research Partners.
The O'Reilly Factor was the most profitable hour within Fox News, which has long been the most profitable part within 21st Century Fox as well as its previous parent, News Corp. (NWSA) . During the first three months of 2017 -- the third of fiscal 2017 -- Fox News posted the highest ratings for any quarter in the history of 24-hour cable TV news.
Owners of Fox shares had been bracing for the anchor's possible departure ever since The New York Times on April 1 reported that O'Reilly and Fox News had paid $13 million since 2004 to a number of women in exchange for their agreement not to sue or talk publicly about their charges of sexual harassment.
Shares fell 0.9% on Wednesday to $30.39, adding to a 6.2% loss since the Times report.