The O'Reilly Fracture

How the blustering, bullying Fox News star paid off a woman staffer he sexually harassed Lisa Miller/Reuters

The letter was hand-delivered to the office of the head of Fox News, Roger Ailes, on the morning of Wednesday, September 29, 2004. Although it was short, just six terse paragraphs, the words on the page left little doubt that Ailes had a serious problem on his hands.

It was sent on letterhead from the law offices of Benedict P. Morelli & Associates, a boutique Manhattan firm specializing in high-profile personal injury and employment cases. Morelli wrote that he represented "a young woman employee of Fox."

His unnamed client had endured "constant and relentless sexual harassment" from "one of Fox's most prominent on-air personalities."

Morelli indicated that a settlement was the most favorable course of action. If not, he would sue, an outcome, he warned, that "would be extremely damaging to both Fox's reputation and the reputation of the individual involved."

Morelli was a virtuoso trial lawyer who needed to be taken seriously. He claimed to have lost only two cases in 20 years, and was a fixture on New York's tabloid stage. Dianne Brandi, Fox's legal chief, went to investigate.

Brandi met Morelli at his office on the East Side of Manhattan and reported back. Morelli's client was a 33-year-old associate Fox News producer named Andrea Mackris. The alleged perpetrator of the "constant and relentless sexual harassment" was her boss: Bill O'Reilly.

Having handled employment matters for Ailes, Brandi had presumably seen a lot in her time at Fox. "Dianne would often say, 'Get out of this place. They don't treat anyone well here,' " a Fox colleague recalled.

And she may herself have felt out of step at Fox. "Not my politics," she once told a TV agent. Sex was a fact of life at Fox. "The whole Fox culture, like the New York Post newsroom, had a whole sexualized nature to it," a former female Fox producer said.

But the Mackris suit was something new.

In their meeting, Morelli showed Brandi a draft of the five-count lawsuit. The document stipulated that settling each count would cost O'Reilly $100 million—but Morelli explained that Mackris would be willing to take "10 cents on the dollar, but nothing less." The discounted settlement amounted to the staggering sum of $60 million.

Mackris was not saying that O'Reilly ever touched her. What was detailed in the draft complaint was perhaps more damaging. The complaint told a strange tale that started with inappropriate office banter and culminated two years later with a late-night phone call at the 2004 Republican National Convention, in which O'Reilly masturbated while telling Mackris his sex fantasies.

In exacting detail, the suit portrayed O'Reilly as a hypersexualized misogynist with a romance novelist's imagination. In one infamous exchange, O'Reilly described taking Mackris on a Caribbean sexcapade.

"You would basically be in the shower and then I would come in and I'd join you and you would have your back to me and I would take that little loofa thing and kinda' soap up your back . . . rub it all over you, get you to relax. . . . So anyway I'd be rubbing your big boobs and getting your nipples really hard, kinda' kissing your neck from behind . . . and then I would take the other hand with the falafel [sic] thing and I'd put it on your pussy but you'd have to do it really light, just kind of a tease business . . ."

It wasn't just Mackris's recollection—she'd recorded him. The audio, if released, would certainly humiliate him—and potentially blow up his whole career. "O'Reilly couldn't afford to let [the lawsuit] go forward," Morelli told Brandi in one meeting.

The trouble had started not long after O'Reilly hired Mackris away from NBC a few years earlier. In short order, she impressed him with her hustle. "She was a very strong booker," a colleague recalled. But professional boundaries were allegedly crossed after she began confiding in him about her breakup with her long-term boyfriend.

O'Reilly responded by giving her a raise—and romantic advice. Over dinner one night in May 2002, he told her that she should get "manicures and pedicures" and "pick up 23-year-old men in bars."

From there, according to the suit, things got weird. Mackris said it was during this dinner that O'Reilly broached the topic of phone sex. Mackris described another dinner in which O'Reilly regaled her and a female college friend about his carnal conquests and propositioned the women to have a threesome. He said he could teach them "lessons."

The saga's bizarre final act commenced in January 2004. Feeling underpaid at Fox, Mackris left for a position on Paula Zahn's CNN program, but soon found she was unhappy in the job, and asked O'Reilly if she could return.

In mid-April, she joined O'Reilly for dinner at Milos, an upscale Greek restaurant a few blocks from the Fox studios. She told him she would return to Fox but only if he laid off the dirty talk. He agreed. "Of course," O'Reilly said, according to her account, "because then you'd be working for me and I'd have power over you, so that couldn't happen."

O'Reilly had other fantasies on his mind that night. He launched into a rant about his nemesis, Al Franken. "If you cross Fox News Channel, it's not just me, it's Roger Ailes who will go after you," he assured Mackris. "I'm the street guy out front making the loud noises about the issues, but Ailes operates behind the scenes, strategizes and makes things happen so that one day BAM! The person gets what's coming to them but never sees it coming."

"Look at Al Franken, one day he's going to get a knock on his door and life as he's known it will change forever," O'Reilly said. "That day will happen, trust me. . . . Ailes knows very powerful people and this goes all the way to the top."

"Top of what?" Mackris asked.

"Top of the country. Just look at who's on the cover of his book," O'Reilly replied, referring to Persident George W. Bush and his vice president, Dick Cheney. "They're watching him and will be for years. He's finished, and he's going to be sorry he ever took Fox News Channel on."

Mackris rejoined O'Reilly's staff in July. A few weeks later, O'Reilly called her at her apartment on the Upper West Side after he had interviewed two porn stars and allegedly talked dirty to her while masturbating.

Shortly after 11:00 p.m. on September 1, O'Reilly called Mackris on her cell phone. Mackris returned the call a few minutes later. She turned on a tape recorder. She later said she told O'Reilly she was not interested but he steamrolled ahead. He explained he was watching a "porn movie" and "babbled perversely" about having sex with her. Mackris alleged O'Reilly was pleasuring himself during the phone call.

As Brandi negotiated with Morelli, Ailes learned the tawdry details of the allegations. He faced no good options. The press would run wild if Mackris sued. The story line was a ready-made tabloid soap opera: here was one of Bill Clinton's fiercest pursuers entangled in his own sex scandal with a female employee 22 years his junior.

Even worse, O'Reilly—whose wife had just given birth to their second child a year earlier—was scheduled to promote his new book, The O'Reilly Factor for Kids. In one passage, he wrote: "Guys, if you exploit a girl, it will come back to get you. That's called 'karma.' "

Ailes was furious. So was Murdoch, who made it clear that O'Reilly—and not News Corp—would be responsible for any settlement. Ailes may have been livid at his star, but he needed to protect Fox's biggest brand.

Morelli continued to play hardball and reject Fox's offers, which were said to approach $2 million. Morelli's refusal to descend out of the stratosphere of $60 million pushed Ailes into a corner.

He huddled with Brian Lewis to map out possible attack lines. There were unanswered questions that could pick apart Mackris's narrative. Why did she return to work for O'Reilly if she had been harassed by him? Why didn't she file a complaint with Fox's HR department or anyone in management? Why was she dining out at expensive restaurants with O'Reilly and winding up alone in hotel rooms late at night? And just who was Andrea Mackris, really?

Lewis worked his sources inside the newsroom to find out. He was pleased to learn Mackris was unpopular in some corners. A colleague revealed that Mackris was struggling financially. "When she was with her boyfriend, he made a lot of money, and she had a good life," a friend said.

And Fox found evidence that complicated Mackris's claims of being distressed working for O'Reilly. Just three weeks before filing her lawsuit, she gushed about Fox in an email to a friend at CNN. "To answer your question, things are: wonderful, amazing, fun, creative, invigorating, secure, well-managed, challenging, interesting, fun and surrounded by really good, fun people. I'm home and I'll never leave again," she wrote.

The more Lewis learned, the better he felt about O'Reilly's chances to survive the tsunami of schadenfreude that would blow his way. Sure, the tapes, if released, would be humiliating. But ultimately, it was a he-said, she-said situation. There was enough raw material about Mackris that Fox could use to construct an image of her as an opportunist shaking down a celebrity.

When O'Reilly asked Lewis at one point how bad things looked on a scale of one to ten, Lewis replied, "Personally, I think it's a nine. Professionally? It's a four."

On the evening of Tuesday, October 12, O'Reilly's personal lawyer, Ronald Green, joined the talks. He accompanied Brandi to Morelli's office to try to hammer out a deal.

After a half dozen meetings, Morelli was still holding firm. "If you don't resolve this case for the $60 million tonight, we are going to go public with this tomorrow," he told Green and Brandi.

Green got back to O'Reilly. "This is indeed absolute extortion," Green said. O'Reilly agreed. He wanted to go to war. They launched the preemptive strike at 9:01 the next morning. Green filed a lawsuit against both Mackris and Morelli in Nassau County Supreme Court. Morelli filed Mackris's suit hours later.

The dueling lawsuits set up competing narratives. Mackris was telling a story about sex. O'Reilly tapped an equally potent force: politics.

O'Reilly's suit asserted that he was the victim of a plot to "extort 'blood money' " by liberals who wanted to destroy Fox News in the final weeks of the 2004 presidential race. The campaign had begun.

From the outset, Ailes and Brian Lewis sought to be in control of the message. Ailes made sure O'Reilly got the directive: if he opened his big mouth, he could eventually lose his show. Except for a few fleeting comments, O'Reilly remained silent about the headlines.

But O'Reilly had loud voices speaking for him. Fox's PR department and his lawyer, Ronald Green, fed the pack of tabloid reporters a steady supply of nasty gossip about his accuser. To gather dirt, O'Reilly hired the celebrity private investigator Bo Dietl.

Sources with damaging anecdotes were tracked down. "This could be a message to people," Dietl said on MSNBC on the evening of October 15. "When you file these frivolous lawsuits . . . we're going to investigate you and we're going to uncover things."

Fox had a crucial ally in the war over O'Reilly: Murdoch's New York Post. On October 15, the front-page headline blared "Exclusive: O'Reilly Accuser in Bar Blow Up." The article, the first in a series of personal attacks on Mackris, quoted a pastry chef named Bethenny Frankel accusing Mackris of provoking a fight with her at the bar of the Peninsula Hotel after Frankel asked to borrow a chair from her table. "She literally verbally attacked and abused and harassed us . . . like a raving lunatic," Frankel told the tabloid.

A few days later, one of O'Reilly's private investigators convinced Matthew Paratore, the owner of a bar and restaurant on the Upper West Side that Mackris frequented, to talk to O'Reilly's lawyers. On October 19, the Post ran a story headlined "Boozy Boast," which quoted Paratore alleging that Mackris had recently dined with Al Franken and that a few months before returning to Fox, she bragged about writing a book to "take [O'Reilly] down."

O'Reilly's lawyer also told the Post that Mackris once drunkenly started stripping off her clothes in front of Paratore. "If you think I'm going to f*** Bill O'Reilly, I'm going to f*** you even more," Green quoted her as saying.

Mackris's camp worked the Post's archrival, the Daily News. On October 17, the paper reported Mackris had the upper hand. "For Extortion, O'Reilly's Suit Might Not Fit: Accuser May Have Outfoxed Network Star, Legal Experts Say," a headline declared. On October 20, Mackris and Morelli sat down with the Daily News for her first extended print interview.

In response, Fox News worked to inject its point of view into the Daily News's coverage. Green went after Mackris viciously. He told the paper Mackris was "insolvent" and that when she was a White House intern in 1991, she gave herself the nickname "Andrea Mattress." "It speaks volumes to what was going on then," he said.

Brian Lewis told people he was thrilled with how the campaign was going, but O'Reilly was getting weak-kneed. Several days after filing the lawsuit, Morelli consented to allow O'Reilly's lawyers to listen to excerpts of Mackris's audio recording. By Friday, October 22—10 days into the scandal—settlement talks resumed.

"Word came down Bill wanted to settle," one person who heard the tapes said. The following Thursday, it was over. The Daily News played it big. "Call Him Owe-Reilly!" the headline blared. O'Reilly, the tabloid reported, paid Mackris as much as $10 million to make the whole thing go away.

"This brutal ordeal is now officially over, and I will never speak of it again," O'Reilly told Factor viewers that night. Lewis was disappointed. He told executives that Fox could have prevailed if he had been allowed to continue the PR campaign.

The success of Fox's PR offensive was validated by the most important measure: ratings. Like Bill Clinton, O'Reilly survived a sex scandal by retaining the support of his fans. Ratings for the Factor jumped 30 percent during the heat of the scandal. On Monday, October 25, the show pulled in 3.7 million viewers.

After it was all over, Ailes recalled that he had been confident that O'Reilly would weather the worst of it. "About a week after we were in the middle of it, and I sent word down to the executive producer, 'How's Bill doing?' And he said the staff just says, 'It must be going well, because he's back to being a prick.' "

The Loudest Voice in the Room: How the Brilliant, Bombastic Roger Ailes Built Fox News -- and Divided a Country
Random House

Excerpted from The Loudest Voice in the Room: How the Brilliant, Bombastic Roger Ailes Built Fox News – and Divided a Country by Gabriel Sherman. Reprinted by arrangement with Random House, an imprint of Random House, a division of Random House, LLC. Copyright© 2014 by Gabriel Sherman