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Analysts: Sexual-Harassment Suit Won't Have 'Any Major Impact' on Fox News

Analysts: Sexual-Harassment Suit Won't Have 'Any Major Impact' on Fox News
(Noam Galai/Getty Images for GIFF)

By    |   Wednesday, 06 July 2016 07:47 PM

Fox News Channel anchor Gretchen Carlson's sexual-harassment lawsuit against CEO and Fox News architect Roger Ailes shouldn't damage the company's value and isn't expected to have "any major impact" on related stock prices.

Carlson alleged her former boss wrongfully fired her after she rebuffed years of unwanted advances.

“It's very surprising to us and certainly not expected, but frankly I don't think it's going to have any major impact on the stock one way or another,” S&P Capital IQ analyst Tuna Amobi told CNBC.

“If anything, I would view it as a headline. Obviously Roger is a very important personality within Fox. This isn't something that one would have predicted but if you're senior management that's a potential distraction.”

Carlson is publicly taking on one of the most powerful men in the media business, the AP reported. Ailes built Fox News Channel from scratch in the 1990s, turning it into the top-rated television news network with a profound influence on politics. Fox is highly profitable for its parent company News Corp. and is a source of more than $1 billion in profit a year. Ailes also has served as a media consultant for several Republican presidents.

Pacific Crest analyst Andy Hargreaves agreed that the lawsuit won’t hurt the company and really is just gossip fodder. “Right now you have to see the merits and if it has merits, it has to be discussed at a higher level. But for the time being, it's just news headlines.”

Hargreaves said Fox is “at the top” of the list of media enterprises his company follows and cited its healthy earnings potential.

Carlson, 50, claimed in a lawsuit that Ailes, a former Republican political consultant who built the Fox News television network into the most-watched U.S. cable news channel, took her off the morning show "Fox & Friends" in 2013 and cut her pay because she refused to have a sexual relationship with him, Reuters reported.

She also claimed in the lawsuit that Ailes called her a "man hater" and that he criticized her for getting offended when she had confrontations with male coworkers including former co-host Steve Doocy.

Lawsuits alleging sexual harassment typically name the employer as a defendant, but Carlson’s lawyer, Nancy Erika Smith, told Reuters that she had no reason to believe that Fox condoned or authorized the behavior of Ailes, the network's chairman and CEO. The lawsuit was filed in Superior Court in New Jersey's Bergen County, where Ailes owns a home.

Ailes was a media consultant for several U.S. Republican party presidents, including George H.W. Bush. He has also been a confidant of 21st Century Fox Executive Co-Chairman Rupert Murdoch, who named Ailes founding chief executive of Fox News Channel in 1996. Fox News remains a subsidiary of 21st Century Fox.

The lawsuit accused the 76-year-old Ailes of wrongfully firing her and before that "ostracizing, marginalizing and shunning her after making clear to her that these 'problems' would not have existed, and could be solved, if she had a sexual relationship with him."

21st Century Fox said in a statement that it will conduct an internal review based on Carlson’s charges.

“The Company has seen the allegations against Mr. Ailes and Mr. Doocy. We take these matters seriously. While we have full confidence in Mr. Ailes and Mr. Doocy, who have served the company brilliantly for over two decades, we have commenced an internal review of the matter,” Fox said in a statement.

Ailes also issued his own statement.

"Gretchen Carlson's allegations are false. This is a retaliatory suit for the network's decision not to renew her contract, which was due to the fact that her disappointingly low ratings were dragging down the afternoon lineup," he said in a statement.

"When Fox News did not commence any negotiations to renew her contract, Ms. Carlson became aware that her career with the network was likely over and conveniently began to pursue a lawsuit. Ironically, Fox News provided her with more on-air opportunities over her 11 year tenure than any other employer in the industry, for which she thanked me in her recent book. This defamatory lawsuit is not only offensive, it is wholly without merit and will be defended vigorously," he said.

Fox News-parent 21st Century Fox and Wall Street Journal-owner News Corp. were part of the same company until mid-2013. Value of the related entities were little changed by the news.

21st Century Fox closed Wednesday at $26.74, up 0.09 cents, or 0.34 percent in Nasdaq trading. News Corp. closed at $11.68 on the Nasdaq, up 0.03 cents, or 0.21 percent.

(Newsmax wire services contributed to this report).

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Fox News most likely won't be hurt after Former Fox News anchor Gretchen Carlson sued Fox News Channel architect Roger Ailes for sexual harassment, alleging her former boss wrongfully fired her after she rebuffed years of unwanted advances.
fox news, impact, gretchen carlson, roger ailes
Wednesday, 06 July 2016 07:47 PM
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