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Could advertiser revolt mean a Fox without O'Reilly?

O'Reilly Financial Fallout
More companies pull ads from Fox News' flagship anchor 05:42

Advertisers continue to flee from “The O’Reilly Factor,” the most-watched cable news show, following revelations that media giant 21st Century Fox (FOXA) shelled out $13 million in recent years to settle five sexual harassment lawsuits against host Bill O’Reilly.

At least 35 companies have pulled ads from the Fox News program, including drugmaker Eli Lilly (LLY), which had been promoting its diabetes treatment Trulicty; carmaker Subaru; diet company Jenny Craig; legal services provider LegalZoom; and Align Technologies, maker of Invisalign dental implants.

They join marketers that had previously announced plans to quit the show, including automakers BMW, Lexus, Mercedes-Benz and Mitsubishi; drugmakers GlaxoSmithKline (GSK) and Sanofi (SNY); financial services stalwarts Allstate (ALL) and T. Rowe Price (TROW); and lesser-known brands such as email marketer Constant Contact.

“There was a time when controversy sold,” Mellody Hobson, a CBS MoneyWatch contributor and president of Arial Investments, told CBS News. “It doesn’t anymore. It has big implications for Fox because we are talking about a lot of ad dollars.”

Behind the harassment allegations against Fox News' Bill O'Reilly 05:12

According to Kantar Media, “The O’Reilly Factor” generated about $178 million in ad revenue in 2015 and $119 million during the first nine months of 2016, the latest available data. Like other media companies, 21st Century Fox doesn’t provide the profitability of individual shows. Cable is the largest business by revenue for 21st Century Fox and the most profitable.

According to the Pew Research Center’s latest State of the Media Report, Fox News was expected to generate $2.3 billion in revenue in 2015. That’s almost double the $1.2 billion projected for Time Warner’s (TWX) CNN and more than quadruple the $518 million expected for MSNBC, which is owned by Comcast (CMCSA). Fox News has been the most-watched cable news channel for more than a decade.

21st Century Fox, whose other properties include the 20th Century Fox film studios as well F/X and other cable channels, is providing concerned advertisers with commercial spots on other Fox News programs.  

“There is always some concern when you have advertisers in some numbers not willing to advertise on your key program,” said James Dix, an analyst with Wedbush Securities, who rates 21st Century Fox as “outperform.”

CBS MoneyWatch/Irina Ivanova

“Probably the majority of its revenue comes from affiliate fees, not advertising, but the advertising is still a relevant part of the business. It’s not immaterial,” said Dix. “Depending on how long this goes on for ... it could have some impact on their affiliate fees down the line because people will be wondering what the Fox News brand means.”

O’Reilly, 67, denies wrongdoing. In an April 1 statement, he said his high-powered job at Fox makes him “vulnerable” to lawsuits and that in his 20 years at Fox News he has never been the subject of a complaint filed with the company’s HR department.

The beleaguered broadcaster got a vote of support from President Donald Trump, who told The New York Times that he considered O’Reilly to be a “good person.” Mr. Trump was dogged by sexual harassment allegations during the presidential election campaign, which he vehemently denied.

Fox News stuck by O’Reilly when he faced sexual harassment allegations more than a decade ago from a former producer. The network settled out of court without admitting wrongdoing. In a previous statement, 21st Century Fox said that while the Fox News host “denies the merits of these claims, Mr. O’Reilly has resolved those he regarded as his personal responsibility.”

O’Reilly’s former boss, Roger Ailes, was ousted from Fox News last year after he was accused of sexual harassment by broadcasters Megyn Kelly and Gretchen Carlson, who have left the network.

“The O’Reilly Factor” has been part of the Fox lineup since 1996 and attracts an audience of about 4 million viewers a night.

“[It’s] hard to imagine Fox without O’Reilly,” said Frank Sesno, director of George Washington University’s School of Media and Public Affairs and a former CNN Washington bureau chief, in an email. “But it was impossible to imagine Fox without Roger Ailes. Or, at one time, without Greta Van Susteren. Once upon a time, no one could imagine CBS without Dan Rather. Or the earth without the brontosaurus. No one is indispensable. It’s just a matter of timing.”

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