Roger Ailes Repositions Fox News

Roger Ailes photographed at the Fox News Headquarters in New York on September 20, 2011. Jake Chessum for Newsweek

It was partpolitical spectacle, part American Idol, part YouTube extravaganza, a pure Roger Ailes production—and the latest sign that the Fox News chairman is quietly repositioning America's dominant cable-news channel.

Hours before last week's presidential debate in Orlando, Ailes's anchors sat in a cavernous back room, hunched over laptops, and plotted how to trap the candidates. Chris Wallace said he would aim squarely at Rick Perry's weakness: "How do you feel about being criticized by some of your rivals as being too soft on illegal immigration? Then I go to Rick Santorum: is Perry too soft?"

"That's going to get some fireworks going," said managing editor Bill Sammon, grinning.

When showtime arrived, producer Marty Ryan choreographed the action from a crowded trailer outside the convention hall: he called for a two-shot when Wallace invited Mitt Romney to criticize Perry's immigration stance, so the audience could watch both men's agitated expressions. But Ryan barked, "Let's just be on Perry," as the Texas governor demanded to know whether Santorum had ever been to the Mexican border, capturing the moment. Afterward, Ailes phoned a top lieutenant: "Tell the team we've been kicking ass in these debates."

Ailes has always been a master showman—he even gave advice on triple-checking the audio—and Fox's partnership with Google produced striking videos, graphics, and a backstage smoothie bar. But the real eye-opener was the sight of his anchors grilling the Republican contenders, which pleases the White House but cuts sharply against the network's conservative image—and risks alienating its most rabid right-wing fans.

More than 40 years after helping to elect Richard Nixon, Ailes is more in demand than ever as the man to see for Republicans with designs on the White House. Perry stopped by his midtown Manhattan office a few months back, Newsweek has learned, when he was still weighing whether to make a run, and confided that he was worried about being able to raise the big bucks. "Money will find you if people believe in your message," Ailes assured him. Afterward, Ailes concluded that Perry had a look that "if he tells people he's gonna kick their ass, he might actually do it, which is useful for a president."

Three weeks after dropping out of the race, Tim Pawlenty showed up to ask for a gig at Fox. But there was a complication: Pawlenty was on the verge of endorsing Romney. "I'm not sure I want to sign you as a paid spokesman for Romney," Ailes said.

When Romney himself sought out Ailes for a pasta dinner, the Fox chief was struck by a sense of humor rarely displayed in public. "You ought to be looser on the air," he said while dropping off the former Massachusetts governor at his hotel.

The left has long branded Fox a propaganda arm for Ailes's pugnacious conservatism, and while his journalists maintain they play it straight, the network has certainly provided ample fodder for liberal detractors. But as President Obama's popularity has plummeted and the country has grown increasingly sick of partisan sniping, something unexpected happened. Roger Ailes pulled back a bit on the throttle.

He calls it a "course correction," quietly adopted at Fox over the last year. Glenn Beck's inflammatory rhetoric—his ranting about Obama being a racist—"became a bit of a branding issue for us" before the hot-button host left in July, Ailes says. So too did Sarah Palin's being widely promoted as the GOP's potential savior—in large measure through her lucrative platform at Fox. Privately, Fox executives say the entire network took a hard right turn after Obama's election, but, as the Tea Party's popularity fades, is edging back toward the mainstream.

While Fox reporters ply their trade under Ailes's much-mocked "fair and balanced" banner, the opinion arm of the operation has been told to lower the temperature. After the Gabrielle Giffords shooting triggered a debate about feverish rhetoric, Ailes ordered his troops to tone things down. It was, in his view, a chance to boost profits by grabbing a more moderate audience.

As he embarks on his last hurrah—Ailes's contract is up in 2013—he is acting not like a political operative but as a corporate chieftain who knows that fostering friction and picking fights make for good television—and good business. Next fall's election could well pivot on whether Ailes is more interested in scoring political points or ramping up ratings and revenue.

The 71-year-old Ailes ambles toward a conference room, where 15 Fox executives await his arrival. Balding and heavyset, he is not an imposing presence; his voice is a low rumble. But when he takes his seat at the head of the table, there is no doubt about who is in charge.

The Fox News/Google GOP Debate in Orlando, Florida. Charles Ommanney / Getty Images for Newsweek

Told that the network has secured an interview with Palestinian leader Mahmoud Abbas, Ailes mentions that he's been chatting with Prime Minister Benjamin Netanyahu—and insists Abbas should be asked about the extent of the U.S. commitment to Israel.

The talk turns to terrorism. Ailes is angry about an Associated Press report that 29 worshipers were killed by a suicide bomber in Baghdad's largest Sunni mosque during prayers. "How do we know they were worshiping?" he demands. "I think the AP is so far over the hill, they've become left wing, antiwar. Gotta watch their copy."

The topics bounce from CNBC's weekend ratings ("They have shows about hookers and stuff, don't they?") to Fox's own security ("Listen, one out of every 25 people in America is a psychopath"). Ailes raises a Fox initiative that he cooked up: "Are our producers on board on this 'Regulation Nation' stuff? Are they ginned up and ready to go?" Ailes, who claims to be "hands off" in developing the series, later boasts that "no other network will cover that subject … I think regulations are totally out of control," he adds, with bureaucrats hiring Ph.D.s to "sit in the basement and draw up regulations to try to ruin your life." It is a message his troops cannot miss.

With the debates, Fox has created a reality-TV show, with the built-in combat needed to win viewers. It's working—Thursday night's showdown was the best-watched debate of the year thus far—but Ailes's approach has rankled the right. Following the network's previous face-off in Iowa, Rush Limbaugh proclaimed that "Fox wants these people to tear each other up, 'cause they want approval from the mainstream media." Ailes declares his love for Limbaugh before challenging the critics: "Because they see conservative thinking on our channel and don't see it on any other channel, they think we're in someone's pocket."

Ailes is exploiting the reality-TV tension—even as the contestants are seeking his advice. Perry is right to be wary of talking to news organizations, the chairman says: "They will set a trap for him and ask him who's the leader of Uzbekistan and run with that for a week." Michele Bachmann was clearly joking when she said God was sending a message with Hurricane Irene: "The way they're playing it on the networks is that she's a Jesus freak." As for the longtime description of Romney as a weak frontrunner, that's because "'weak' is a word the mainstream press will give to all Republicans always, as a precursor to killing them off … It saddens me. America used to be able to get straight journalism."

It may seem funny to hear the man who gave the world Sean Hannity, Bill O'Reilly, and Beck lamenting the demise of straight journalism. But Ailes has brought in—and built up—anchors and correspondents who could succeed anywhere. Chris Wallace had been at ABC and NBC, where he moderated Meet the Press. Bret Baier worked his way up as a Pentagon and White House reporter.

Megyn Kelly, who had been a Washington lawyer, so dazzled the network that she was hired without a vacancy. She did a sultry photo shoot for GQand exudes on-air feistiness, but was nervous that at the debate she would "blurt out something that'll be a career killer" (Ailes called with a pep talk). Kelly missed the rehearsal because she was nursing her 5-month-old daughter.

The anchors spent hours getting ready. In one prep session, Kelly said she wasn't afraid of Newt Gingrich's strategy of bashing the media: "If I see him gearing up, I'll say, 'Are you going to yell at me?'" Wallace, who had been denounced by the former House speaker for "Mickey Mouse" questions, dismissed the subject: "Let him be the crazy uncle in the attic if he wants to be."

Ailes has a blunt rejoinder to those who say he runs a biased outfit: "Every other network has given all their shows to liberals. We are the balance." Even MSNBC morning host Joe Scarborough, a former GOP congressman, "tacks to the center," Ailes complains, and "doesn't act like a conservative."

Ailes is a brawler, albeit one with a preference for lavender shirts, and he isn't one to mince words. A mention of New York Mayor Michael Bloomberg unleashes a tirade about the mayor's latest health crusade. "I like Bloomberg, he's a friend. But fuck him and the salt. I like salt. It's not his business."

He keeps his edge in part because after all these years, he still sees himself as an insurgent—an identity rooted in his blue-collar upbringing in Warren, Ohio. He likes to tell interns that he dug ditches as a teenager and was once fired for throwing a man off a loading dock. And then there was the time he got into a fistfight with a political consultant and "took him out."

His outsider self-image is ironic, considering that he's been an establishment power broker for decades, burnishing the images of Ronald Reagan, George H.W. Bush, and Rudy Giuliani before launching Fox 15 years ago. Now he earns as much as $23 million a year, and Rupert Murdoch calls him almost every day, often to gossip about politics. (Ailes picks his battles; he avoided offering advice about the phone-hacking scandal that engulfed Murdoch's News of the World tabloid.)

Fox, of course, still has its share of Obama bashers. Hannity's show uses a logo that asks, "Can You Afford Four More?" Ailes calls him "predictable," but Hannity says he's not a party man: "I'm a registered conservative; I'm not a registered Republican." O'Reilly, who chatted up Obama during this year's Super Bowl, occasionally defends the president against harsh attacks. Ailes says O'Reilly has "moderated" his views and that "Beck scared him"—meaning Beck was so popular on the right that O'Reilly had to find a different niche.

For his part, O'Reilly says he supported most of George W. Bush's policies and gave Obama's economic plans a chance for 18 months—before opposing them as unworkable. "I took flak from the far right all day long. They attacked me viciously," he says. He waves off any talk of moderation and insists he never worried about the now-departed Beck: "He's a performer, I'm a journalist."

(Ailes seems to relish the feuding among his stars, saying, "O'Reilly hates Sean and he hates Rush because they did better in radio than he did.")

Ailes keeps a wary eye on anchor Shepard Smith, who occasionally backs aspects of the Obama record: "Every once in a while Shep Smith gets out there where the buses don't run and we have a friendly talk." And Ailes likes to tease O'Reilly: "You gonna suck up to Obama so you can get another interview at the next football game?" Democrats have noticed the change. Says former Obama aide Anita Dunn: "You have the sense that they're trying to at least appear less of the hyper-partisan political network they had been."

On the day that Obama is to deliver his jobs speech to Congress, Bret Baier attends a secret White House meeting. Over Dover sole in the Red Room, the president tries to sell his $450 billion plan to a handful of anchors. The earnest, square-jawed Baier is animated upon returning, briefing two news executives in the hallway.

Obama "painted a picture of a double-dip recession" and said if the bill "does not get through, I will blame Republicans" for their "irresponsible position," Baier says, reading from his scribbled notes. Although the two men clashed during an interview last year in which Baier repeatedly interrupted the president, Obama made a point of praising the previous Fox debate, telling Baier: "By the way, you guys did a great job in Iowa."

A producer calls to remind Baier that he is to preview the Obama speech on Kelly's afternoon show. Baier begs off, saying it would be too "awkward" after the off-the-record luncheon. The phone rings again. Baier stands firm, saying it's "ridiculous" for him to pretend he doesn't know what's in the speech. He is now a Washington insider.

It was Baier who led the aggressive questioning at last week's debate, where the panelists orchestrated yet another round of sparring between Romney and Perry over health care, Social Security, and immigration. But after the debate, Romney, holding hands with his wife, Ann, strolled down the hall for the first of several candidate interviews with registered conservative Sean Hannity. In some ways, Fox is still Fox.