Fox stuck in hole?

Fox News Channel marks its 10th anniversary this week in an unusual position: knocked back on its heels.

The network is in the midst of its first-ever ratings slump. Cable news’ most stable lineup is being juggled.

And the blow-up over Bill Clinton’s recent interview with Chris Wallace – in which Wallace pressed the former president on why he didn’t try harder to eliminate Osama bin Laden, which could have headed off the 9/11 attacks – suggests that Democrats are attacking Fox because they perceive the same vulnerability in the network as they do in the Bush administration.

Maybe some of this was on Fox News chief Roger Ailes’ mind the other day when he rode the elevator to the 22nd floor of News Corp.’s office tower for an 8:45 a.m. stroll through the network’s ad sales department.

“Mr. Ailes? What are you doing up here,” someone wondered aloud.

“Taking attendance,” the hard-charging motivator replied.

Message delivered.

Loved by some, loathed by others, Fox News Channel has been the biggest success in the cable industry and profoundly changed television news since its signal turned on Oct. 7, 1996.

Ailes can still remember a reporter’s laughter during the news conference to introduce the network. But he had the last laugh: Fox News beat by a year his plan for overtaking CNN and grew to more than double its rivals in viewership. It made stars of Bill O’Reilly and Sean Hannity and put “fair and balanced” into news history textbooks.

Opinionated talk is now a staple on the TV dial, with Keith Olbermann on MSNBC, Lou Dobbs on CNN and Nancy Grace on CNN Headline News. Fox was first.

“I watched CNN for a week before I went on and I kept trying to wake myself up,” Ailes says. “I kept nodding off and I realized they are biased, they are boring, they looked like a network that has never had any competition.”

Ailes, a former Republican political operative, says simply presenting different points of view made Fox seem like a contrast to left-leaning news coverage elsewhere.

Before Fox, many in the media scoffed at the notion of a liberal bias and figured only a handful of people really believed that, says Erik Sorenson, former MSNBC president.

“Fox proved it’s a much larger group than anybody realized,” he says.

Its success clearly made others respond. The very idea that Rush Limbaugh would appear on a “CBS Evening News” segment called “Free Speech,” heavily promoted on Katie Couric’s first night as anchor, would have been unfathomable a decade ago, Sorenson says.

“I’ve had many people say to me we have forced people to think differently in their own newsrooms,” says Ailes.

Fox’s critics consider “fair and balanced” camouflage for an agenda. Whatever the truth, news-watching became increasingly partisan: more Democrats watched CNN and more Republicans watched Fox, according to a 2004 study by the Pew Research Center for the People in the Press. The year Fox started, CNN had more Republican viewers than Democrats.

While he cautions not to overexaggerate Fox’s influence, former CBS News President Andrew Heyward suggests that industry sensitivity to Fox’s popularity, coupled with shock after the Sept. 11 terrorist attacks, combined to dampen aggressiveness in questioning the government’s assumptions leading up to the Iraq war.

Ailes dismisses that theory with an epithet.

Less attention has been paid to the look of Fox News. But during its peak, it appeared more colorful, more graphically innovative and more urgent; it made CNN look stodgy.

But the years of explosive growth have ended at Fox. Viewership over the first eight months of the year was down 5 percent compared to 2005, with a steeper 13 percent decline in prime time, according to Nielsen Media Research.

For 12 straight months, Fox’s prime-time audience has been smaller than the year before. Meanwhile, CNN viewership inched up 5 percent this year through August.

Still, on a typical day this year, Fox’s audience is 845,000 while CNN’s is 466,000.

“It’s hard,” Ailes says, “to win the Super Bowl every year.”

The timing is inopportune, since Fox is about to negotiate new fees with cable and satellite providers to replace contracts agreed to when the network first started.

As a startup, Fox accepted low fees from cable providers and believes its success made those deals a bargain. Now Fox wants them to pay up, and in some cases is asking providers to quadruple their payments.

Theories abound on the ratings decline, and include simple rules of gravity: Ratings can’t go up forever.

Some believe there’s a correlation to the declining popularity of President Bush and concern about the Iraq war.

“The rah-rah enthusiasm that was there in 2002, four years later has dissipated,” Sorenson says.

Some of the bigger stories of the past year, such as Hurricane Katrina and the wars in the Middle East, played better to the newsgathering strengths of CNN, says Heyward.

Olbermann’s growing popularity – and growing partisanship – along with the response to Clinton’s “Fox News Sunday” interview also indicate that Fox’s foes have less fear about taking the network on.

Fox has recently made a handful of lineup changes, most notably yanking E.D. Hill from the popular “Fox & Friends” and giving her a daytime anchor slot, replacing her on the morning show with Gretchen Carlson.

Ailes is also up to his old motivational tricks, including calling the occasional 5 a.m. meeting. (“I think it’s useful to wake people up and remind them of how they get their paycheck,” he explains.)

A large trade publication ad placed recently saying the network was looking for aggressive new producers was seen – for good reason – as being directed as much internally as at job seekers.

Despite the slump, Ailes is quick to point out that Fox News still consistently beats all competitors throughout the day and evening.

“I have to be careful because I’m never satisfied unless we’re going upward,” he says. “But the truth is, I wouldn’t change places with anybody else and they would change places with me in a heartbeat. For all the attacks we get, do you think MSNBC or CNN wouldn’t want to be where we are?

“I don’t want to be where they are,” he says. “I don’t want to be sucking canal water every morning thinking, ‘What am I going to do today to make things better?’ You have to keep it in perspective, which I try to do.”