For 21st Century Fox, the controversy stemming from Roger
Ailes's alleged sexual misconduct didn't end when the Fox News
chief resigned from the company three weeks ago.
Instead, new allegations are surfacing, bringing with them new
potential liabilities for the media giant, as it carries out an
internal probe through law firm Paul, Weiss, Rifkind, Wharton &
Garrison LLP.
The number of women who have come forward in the investigation
to say they were victims of Mr. Ailes reaches into the
double-digits, people familiar with the matter said.
21st Century Fox is anticipating having to reach settlements
with some of those accusers, the people said. One factor for the
company is that victims of sexual harassment have three years from
the time of the misconduct to sue in New York state and New York
City, according to legal experts and a person familiar with the
inquiry. So settling complaints within that window could forestall
further litigation.
The scandal erupted when former Fox News anchor Gretchen Carlson
sued Mr. Ailes last month, alleging that after she rebuffed his
sexual advances and complained about a hostile work environment,
her contract at the network wasn't renewed.
Mr. Ailes, who ran Fox News since its launch in 1996 and has
been a power player in Republican politics, denied those claims. He
resigned after additional accusations became public.
Still, more women have been coming forward. New York Magazine,
for example, reported that in 2011, former Fox News employee Laurie
Luhn received a settlement of $3.15 million after making a
complaint of sexual harassment against Mr. Ailes. She told the
Paul, Weiss investigators that she had been harassed by the
executive for more than 20 years, according to the article. Mr.
Ailes has denied the allegations. His lawyer Susan Estrich didn't
respond to requests for comment.
According to 21st Century Fox, the parent company of Fox News at
that time—News Corp—was unaware of that settlement.
Fox News anchor Andrea Tantaros went public this week with
allegations against Mr. Ailes, saying she made complaints about his
behavior in 2015 to senior Fox News executives, a claim network
officials deny. 21st Century Fox declined to comment.
When Rupert Murdoch split his media empire in 2013, the
publishing assets, including The Wall Street Journal, went to News
Corp and the entertainment assets, including Fox News, went to 21st
Century Fox.
Mr. Murdoch has assumed the role of chairman and acting chief
executive of Fox News in the wake of Mr. Ailes's exit. His elder
son, Lachlan Murdoch, serves alongside him as co-executive chairman
of 21st Century Fox, and younger son James Murdoch is the company's
chief executive.
Beyond unearthing the allegations, 21st Century Fox's
investigators are also examining whether others knew of Mr. Ailes's
alleged improper behavior or enabled it, the people familiar with
the matter say.
"You have to convince the public that you are willing to uncover
any dirt and fix the problem," said Ralph Walkling, founder of the
Center of Corporate Governance at Drexel University's LeBow College
of Business.
Debra Katz, a founding partner at law firm Katz, Marshall &
Banks LLP, whose focus includes sexual harassment cases, said a key
issue will be whether victims of alleged harassment told managers
about their experiences, and how they were then treated inside the
company.
"Did other executives turn a blind eye?" she asked.
Under Mr. Ailes, Fox News operated with a tremendous amount of
autonomy. But some experts said 21st Century Fox should have been
aware of a significant payment to settle a lawsuit like Ms. Luhn's,
if proper controls were in place.
"The blame would lie on the part of upper management," said
Steve Kardell, a partner at the Dallas firm of Clouse Dunn LLP, who
specializes in employment issues including executive malfeasance
and corporate ethics. "If you're looking for who's to blame here
that allowed it to keep going on, it is the lack of controls at the
top."
In a statement, 21st Century Fox said it has a "robust
compliance structure and strong controls embedded across our
company," and noted the speed with which Mr. Ailes departed the
company after Fox commenced its probe.
Determining whether any of the other top executives at Fox News
knew about or enabled Mr. Ailes's alleged activities could slow the
naming of a permanent new chief executive for the channel, since
some top candidates for the job are in-house, people within Fox
said.
Write to Joe Flint at joe.flint@wsj.com, Sara Randazzo at
sara.randazzo@wsj.com and Jeffrey A. Trachtenberg at
jeffrey.trachtenberg@wsj.com
(END) Dow Jones Newswires
August 11, 2016 15:45 ET (19:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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