1. © 2016 Dow Jones & Company. All Rights Reserved. * * * * * THE WALL STREET JOURNAL. Wednesday, July 20, 2016 | B1
WSJ.D B4 | CROSSWORD B5 | MANAGEMENT B8
2008. The German auto maker
in September admitted to U.S.
environmental regulators that
the vehicles used software that
allowed them to pollute on the
road up to 40 times the amount
allowed. The Environmental
Protection Agency’s subsequent
disclosure of the cheating
sparked probes across the
globe and forced the resigna-
tion of Chief Executive Martin
Winterkorn.
The latest lawsuit cites
emails and other documents to
allege a prolonged effort among
dozens of Volkswagen employ-
ees in the U.S. and Germany to
equip vehicles with the devices
and stonewall inquiries from
Please see VW page B2
Volkswagen AG’s emissions
cheating spanned more than a
decade and arose from deliber-
ate efforts by dozens of em-
ployees to mislead regulators
and consumers about diesel-
powered vehicles, according to
a lawsuit from New York’s top
law-enforcement official.
The decision to use software
to manipulate emissions tests
traced back as far as 1999,
when engineers at the com-
pany’s Audi luxury unit devel-
oped technology to quiet diesel
vehicles, according to a lawsuit
filed Tuesday by New York At-
torney General Eric Schneider-
man. The technology, rolled out
in 2004, made vehicles exceed
European emissions standards,
so the engineers added soft-
ware they called “acoustic func-
tion” to turn it off during emis-
sions tests, the lawsuit said.
Volkswagen eventually de-
veloped the software, known as
defeat devices, for diesel vehi-
cles sold in the U.S. starting in
BY ARUNA VISWANATHA
AND MIKE SPECTOR
States Say VW Scheme Ran Deep
A prototype of Thyssenkrupp’s Multi elevator that can move vertically or horizontally, at the company’s innovation center in Spain.
THYSSENKRUPP
A Volkswagen Touareg diesel-powered car was tested at an EPA facility in Michigan in October.
CARLOSOSORIO/ASSOCIATEDPRESS
tice Department, with anti-
trust enforcers worried the
deals would reduce competi-
tion and harm consumers.
The companies, however,
have been given the chance to
try to persuade the department
that any antitrust problems
raised by the deals could be ad-
dressed by shedding assets to
competitors. The department
has been skeptical that asset
sales, or divestitures, would ad-
equately preserve the current
level of competition.
The government’s firm
stance is the latest sign that
antitrust enforcers, particu-
larly in the late stages of the
Obama administration, are re-
sisting large and potentially
transformative mergers in in-
dustries that already were be-
coming more concentrated.
“Especially in this environ-
ment, we cannot afford to let
up our efforts,” Bill Baer, the
acting associate attorney gen-
eral, said in a June speech.
Please see DEALS page B6
The U.S. government is
close to challenging two pro-
posed mergers between four
of the nation’s largest health-
insurance companies, accord-
ing to people familiar with the
matter, in what would repre-
sent strong pushback against
consolidation in the industry.
The Justice Department as
soon as this week could chal-
lenge Anthem Inc.’s proposed
acquisition of Cigna Corp. and
Aetna Inc.’s planned combina-
tion with Humana Inc. Antitrust
lawsuits against the planned
mergers would be the culmina-
tion of concerns the Justice De-
partment has had about the
deals from the outset. During a
yearlong review of the mergers,
the department’s skepticism
hasn’t subsided, people familiar
with the matter said.
The Wall Street Journal
previously reported the merg-
ers were in trouble at the Jus-
BY BRENT KENDALL
AND ANNA WILDE MATHEWS
Health Insurers Face
Challenges to Mergers
in Microsoft’s shares in after-
hours trading.
Microsoft has proved espe-
cially adept at selling its cloud
services to existing customers,
taking advantage of longstand-
ing relationships with compa-
nies that have run its software
in their own data centers.
“They are effectively get-
ting their customers to transi-
tion to the cloud,” Stifel Nico-
laus & Co. analyst Brad Reback
said.
Microsoft’s transition to the
cloud comes with an impor-
tant cost: eroded margins.
When the company relied on
software licenses sold to com-
panies every few years, it reg-
istered fat profits. But margins
on cloud services, which are
sold by subscription, are slim-
mer.
For the quarter, gross mar-
gins slid 14% to $12.64 billion.
Microsoft Chief Financial
Officer Amy Hood expected
margins to decline slightly in
the next year as well, she said
in an interview.
Chief Executive Satya Nadella
in his two years on the job has
orchestrated the shift. In the
process, he has pulled Microsoft
back from its mobile-phone in-
vestments championed by his
predecessor Steve Ballmer.
In May, Microsoft further
dismantled the acquisition of
Nokia Corp.’s handset busi-
ness, contributing to a $1.1 bil-
lion charge in the quarter. Ms.
Hood said the charge “reflects
all of our judgments today”
about the business.
Microsoft’s decision to roll
back the phone business—
along with a continuing de-
cline in sales of personal com-
puters that run its Windows
operating system—led the
company to post its first de-
cline in annual revenue since
2009. Sales fell 8.8% to $85.32
billion in fiscal 2016.
For the year, revenue from
the segment that includes Win-
dows and mobile phones fell
6.3% to $40.46 billion. For the
fourth quarter, sales in that
segment fell to $8.9 billion, a
decline of 3.7% year over year.
The decline in annual reve-
nue didn’t trouble investors.
“It’s really important to fo-
cus on what’s growing and
what’s falling,” Mr. Reback
said. “Everything that matters
grew and grew at a good clip.”
The biggest gains came in
the segment that includes the
Azure cloud computing ser-
vices. There, revenue amounted
to $6.71 billion, a rise of 6.6%,
or 9.6% in constant currency.
Notably, revenue for Azure
alone grew 102% (108% in con-
stant currency) year over year.
Microsoft posted $3.12 billion
in fourth-quarter net income, or
39 cents a share, compared with
a loss of $3.2 billion, or 40 cents
a share, a year ago. The year-
earlier results included $8.4 bil-
lion in charges related to the
company’s mobile-phone opera-
tion.
Revenue slid 7.1% to $20.61
billion and was $22.64 billion
on an adjusted basis.
Microsoft Corp. remains a
distant second to Ama-
zon.com Inc. in cloud comput-
ing, but the software giant’s
latest quarterly results sug-
gest it is effectively managing
the transition from selling
software licenses to selling on-
demand computing services.
In its fiscal fourth quarter,
sales of the Redmond, Wash.,
company’s Azure cloud com-
puting service more than dou-
bled, offsetting a decline in
the segment that includes its
flagship Windows operating
system and its struggling mo-
bile-phone business.
The strength of Microsoft’s
cloud business surprised in-
vestors. The company beat ex-
pectations for both sales and
profit, which spurred a 4% rise
BY JAY GREENE
Microsoft Gets Lift From Cloud Gains
Going Higher
Microsoft's cloud segment is
growing while the Windows and
phone unit declines.
THE WALL STREET JOURNAL.
Source: the company
Note: Fiscal year ended June 30.
10
–20
–15
–10
–5
0
5
%
FY ’16 1Q 2Q 3Q 4Q
Intelligent cloud
$6.7B s7%
More Personal
Computing
$8.9B t4%
Change from previous year
An Elevator That Does Away With Cables
Thyssenkrupp designs futuristic magnetic-levitation mover; skeptical rivals take less-dramatic steps
Imagine an elevator that
moves without attached ca-
bles, and can travel horizon-
tally or vertically, sharing a
shaft with several other
cabs.
That is the vision of Ger-
man industrial conglomerate
Thyssenkrupp AG, which
aims to use magnetic-levita-
tion technology to revolu-
tionize a business that has
essentially delivered the
same product for over a cen-
tury.
Thyssenkrupp hopes that
by adapting “maglev” tech-
nology used in high-speed
trains, it can elbow aside ri-
vals including United Tech-
nologies Corp.’s Otis unit,
the world’s largest and old-
est elevator maker.
Otis and Thyssenkrupp’s
two other global competi-
tors, Finland’s Kone Corp.
and Switzerland’s Schindler
Group, are taking incremen-
tal approaches to innovation
for their people-movers.
Kone offers carbon-fiber
elevator cables that have
higher tensile strength than
traditional metal, permitting
taller shafts. Otis and Schin-
dler have focused on improv-
ing the computers that man-
age how banks of elevators
operate, seeking to cut pas-
sengers’ waiting times and
improve efficiency. Thyssen-
krupp offers similar systems.
Only the German steel-
and-engineering company is
proposing to eliminate the
elevator cable altogether.
Thyssenkrupp already runs a
scaled-down mock-up and
later this year aims to dem-
Please see LIFT page B2
BY CHRISTOPHER ALESSI
102%
The amount that revenue for
Microsoft’s Azure cloud
computing service grew.
21st Century Fox is negoti-
ating the exit of Fox News chief
Roger Ailes following a sexual
harassment lawsuit filed by a
former network anchor, people
familiar with the matter said, in
what would be a staggering fall
for a titan of cable-TV news.
Fox was discussing an exit
package with Mr. Ailes’s legal
team as of Tuesday, the people
said, and reaching agreement
could take some time. He will
likely be asked to assist with
the transition, given how inte-
gral he is to the running of the
network, one of the people said.
In a tweet, Fox said, “Roger
is at work. The review is ongo-
ing. The only agreement that
is in place is his existing em-
ployment agreement.”
Mr. Ailes is fighting a law-
suit by former anchor Gretchen
Carlson, who claims her con-
tract with the network wasn’t
renewed as retaliation for her
complaints about a hostile
work atmosphere at Fox News
and improper advances by Mr.
Ailes. Mr. Ailes has denied the
charges, saying she was let go
because of performance issues.
Mr. Ailes, 76 years old,
launched Fox News in 1996 and
built it into one of the most
powerful news and opinion
platforms in the U.S. Fox
News’s mix of news coverage
and conservative talk struck a
chord with viewers, and it eas-
ily trounces rival news channels
CNN and MSNBC in the ratings.
Please see AILES page B2
BY JOE FLINT
Roger Ailes
In Talks
With Fox
Over Exit
BUSINESS&TECH.Facebook Will Pay
Web Celebs to Stream
SOCIAL MEDIA | B4
Unilever to Acquire
Dollar Shave Club
CONSUMER PRODUCTS | B5
THEDOLLARSHAVECLUB
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com

2. B2 | Wednesday, July 20, 2016 * * * * * THE WALL STREET JOURNAL.
INDEX TO BUSINESSES
These indexes cite notable references to most parent companies and businesspeople
in today’s edition. Articles on regional page inserts aren’t cited in these indexes.
A
Aberdeen Asset
Management.............C6
Aetna...........................B1
Alphabet......................B4
Amazon.com.....B1,B5,C1
American Securities...C1
Anthem.......................B1
Areva...........................B7
ARM Holdings........B4,C3
B
Bank of America..C2,C10
Bank of The Ozarks....C1
Bank of Tokyo-
Mitsubishi.................C3
Bayer...........................B3
Blackstone Group........C1
BuzzFeed.....................B4
C
Cardtronics..................C3
Catamaran...................B6
Charter Communications
.....................................B2
China National
Chemical...................B3
Cigna............................B1
Citigroup...............C2,C10
CME.............................A2
CNH Industrial............B2
Comcast...............B5,C10
Comerica......................C2
Credit Suisse Group...B2
D
Daimler........................B2
Dell..............................B4
Deutsche Bank............C1
Dollar Shave Club.......B5
Dow Chemical.............B3
DuPont........................B3
E
eBay.............................C1
EMC.............................B4
F
Facebook......................B4
Fidelity National
Information ServicesC3
Fiserv...........................C3
Fortune Shepler
Saling........................B2
G
Goldman Sachs
Group...................C1,C4
Green Dot....................C3
H
Hasbro.........................B5
Henderson Global
Investors...................B3
Hulu...........................C10
Humana.......................B1
Hyperloop One............B4
I - J
Instagram....................B4
Johnson & Johnson
.........................B6,C4,C10
J.P. Morgan Chase
.........................C1,C2,C10
K - L
Kone............................B1
LendingClub.................C3
Lockheed Martin.........B7
M
MAN............................B2
MarketAxess Holdings
.....................................C3
Mattel..........................B5
Microsoft.....................B1
Mizuho Financial
Group.........................C3
Monsanto....................B3
N
Nasdaq.........................C3
Netflix..........................C4
New York Times.........B4
Novartis.......................B6
O
Omni Hotels................D1
1Malaysia Development
.....................................A1
P
Paccar..........................B2
PayPal Holdings..........C1
Philip Morris
International.............B6
Procter & Gamble.......B5
Q
Qualcomm...................B4
R
Regions Financial........C2
Rio Tinto.....................B6
S
Schindler Group..........B1
Sears Roebuck............C1
Sekerbank....................C3
SoftBank Group.....B4,C3
Starbucks....................B8
Stifel Financial............C3
Sumitomo Mitsui
Banking.....................C3
Syngenta.....................B3
T
TD Ameritrade
Holding......................C2
Tesla Motors...............B3
Thyssenkrupp..............B1
Twitter...................B3,B4
21st Century Fox
........................ B1,B2,C10
U
Ulterra Drilling
Technologies.............C1
Unilever.......................B5
United Continental
Holdings....................B7
UnitedHealth Group....B6
United Technologies...B1
V
Visa..............................C3
VMware.......................B4
Volkswagen............B1,B2
W
Wal-Mart Stores.........B5
Walt Disney..............C10
Y
Yapi ve Kredi Bankasi.C3
YouTube.......................B4
BUSINESS NEWS
Race to the Top
Source: Credit Suisse
THE WALL STREET JOURNAL.
Global market share for elevator
equipment, maintenance and
modernization in 2015
Otis
Schindler
Kone
Thyssenkrupp
19%
14.3%
13.3%
12.2%
41.2%
Other
INDEX TO PEOPLE
A
Ailman, Christopher....C2
B
Ballmer, Steve............B1
BamBrogan, Brogan....B4
Barrdear, John.............C1
Bassi, Fabio.................C3
Blankfein, Lloyd..........C1
Boltansky, Isaac..........C2
Bubis, Daniel...............B3
C
Cannon, Fred...............C3
Carlson, Gretchen.......B1
Carry, Tim...................B2
Caruso, Dominic........C10
Chandhok, Rob............B4
D
Dixmier, Franck.........A10
Draghi, Mario............A10
E
Ellison, Dave...............C1
Esiner, Omer...............C4
F
Foxx, Anthony.............B3
Frame, Andrew...........B4
G
Goodhart, Charles.......C2
Gorsky, Alex................B6
Graf, Tim...................A10
H
Hamzaoglu, Turker......C3
Hewson, Marillyn.......B7
Hood, Amy..................B1
Huang, Chieh...............B8
J
Jakob, Olivier..............C4
K
Kelly, Megyn...............B2
Kumhof, Michael.........C1
L
Levanon, Gad..............B8
Lue-Fong, Simon.........C3
M
Maharaj, Thushka.....A10
Manafort, Paul............C2
McNamara, Paul..........C3
Moffett, Craig...........C10
N
Nadella, Satya............B1
O
Otsuki, Nana...............C3
P
Penn, Kevin.................C1
R
Rahman, Asim............B3
Ray, Rebecca...............B8
S
Saadi, Malik................B4
Schierenbeck, Andreas
.....................................B2
Schorr, Glenn...............C1
Schwartz, Harvey........C1
Stella, Peter................C2
T
Tomczyk, Fred.............C2
W
Weill, Sanford...........C10
Wheeler, Graeme........C7
Z
Zuckerberg, Mark.......B4
will be “to develop a working
system that would be cost-
competitive” and to convince
developers they should take
the risk of using its unique
and proprietary system.
Today’s high-speed single
elevators typically cost be-
tween $400,000 and
$600,000 a shaft, he said. A
Thyssenkrupp spokesman
said pricing estimates for
Multi aren’t yet available but
“the savings in reduced foot-
print for super-tall and
mega-tall buildings is enor-
mous and pays off easily.”
Replacing an installed ele-
vator system could cost mil-
lions of dollars, and in some
structures could be impossi-
ble. So developers shun risk.
“This will be a very niche
market,” said Andre Kukhnin,
an equity analyst at Credit
Suisse, noting that buildings
would need to be designed
entirely around Thyssenk-
rupp’s system. Mr. Kukhnin
said an evolutionary technol-
ogy like Kone’s carbon-fiber
rope may have a bigger im-
pact on the industry.
Kone’s Mr. Ehrnrooth said
its synthetic belts, which are
already in use, are much
lighter than traditional steel
cables, so its system con-
sumes less energy and costs
less to maintain. Kone says
its “UltraRope” will allow el-
evators to double today’s
maximum shaft height of
about 500 meters.
Longer shafts reduce the
need for elevator transfer
lobbies on high floors, boost-
ing rentable space, experts
say.
Still, Thyssenkrupp’s Multi
is the first big break from
cables in 160 years. Rather
than operating like a yo-yo,
it hovers each cab vertically
or horizontally with mag-
netic fields.
Floating up a tower might
make some elevator riders
skittish but the average pas-
senger is “absolutely igno-
rant” about how elevators
work, said Mr. Trabucco at
the Council on Tall Buildings.
Enticing riders shouldn’t be
hard if the system is fast, he
said.
Thyssenkrupp said it is
still developing safety fea-
tures in coordination with
consultants and building de-
velopers. It said all Multi ele-
vators will employ a “multi-
step braking system” to
handle “all possible scenar-
ios of operation.”
onstrate a full-size working
prototype. If all goes well,
sales could begin as soon as
next year.
“It will definitely take
some years to filter through,
but it’s a start,” said Andreas
Schierenbeck, chief executive
of Thyssenkrupp’s elevator
division. He predicted the
technology, dubbed Multi,
would ultimately make eleva-
tors faster and more efficient
while transforming the way
buildings are constructed.
Rivals are skeptical.
“So far, these kinds of
concepts have not been com-
mercially viable,” said Kone
Chief Executive Henrik Ehrn-
rooth.
Silvio Napoli, Schindler’s
former chief executive and
now a director, said horizon-
tal elevator concepts are
“not that new for the indus-
try.”
“Competitors were work-
ing on this years ago but
found problems,” including
high energy consumption, he
said.
Otis in the 1990s designed
a system to run both verti-
cally and sideways, but its
intricate system of pulleys
and cables proved too com-
plex to install, according to
Dario Trabucco, a researcher
at the Council on Tall Build-
ings and Urban Habitat, a
nonprofit standards organi-
zation.
Otis declined to comment-
for this article.
James Fortune, an expert
at Fortune Shepler Saling
Inc., an elevator consultancy
that works with developers
and architects, said Thyssen-
krupp’s biggest challenges
Continuedfromthepriorpage
LIFT
Pushing Mr. Ailes out in the
heat of the U.S. presidential
campaign season would be a
dramatic step and could be
risky, given how crucial elec-
tion coverage is for cable-news
outlets. The Republican Na-
tional Convention, which got
under way in Cleveland this
week, is likely to be a ratings
blockbuster for Fox News.
The suit by Ms. Carlson
doesn’t name Fox News-parent
21st Century Fox as a defendant
but has become a distraction for
the company. Fox retained the
law firm of Paul, Weiss to con-
duct an internal investigation.
21st Century Fox and Wall
Street Journal-owner News
Corp were part of the same
company until mid-2013.
The controversy surrounding
Fox News has been the biggest
management test thus far for
James and Lachlan Murdoch,
who were elevated in the 21st
Century Fox media empire last
year. James serves as chief ex-
ecutive, while Lachlan and their
Continuedfromthepriorpage
11 million vehicles world-wide,
Volkswagen has said.
Mr. Schneiderman’s suit
seeks up to $450 million in civil
penalties for what it calls
Volkswagen’s “egregious and
pervasive violations” that
“strike at the heart” of state
environmental laws, and were
“the result of a willful and sys-
tematic scheme of cheating.”
Massachusetts and Maryland
filed similar lawsuits Tuesday.
A Volkswagen spokeswoman
called Tuesday’s allegations
“essentially not new,” adding
the company has been address-
ing them in discussions with
U.S. and state authorities. “It is
regrettable that some states
have decided to sue for envi-
ronmental claims now, notwith-
standing their prior support of
this ongoing federal-state col-
laborative process,” she said.
Volkswagen declined interviews
with individuals mentioned in
the New York suit.
In May 2014, a senior Volks-
wagen executive warned then-
CEO Mr. Winterkorn of growing
suspicions from regulators, the
lawsuit said. A year later, a
manager admonished a Volks-
wagen official in the U.S. for al-
lowing another employee to
send a frank email expressing
concerns, it added.
The emissions-cheating
scandal began in earnest in late
2006, when Volkswagen, facing
engineering challenges, adapted
technology Audi developed to
address other emissions prob-
lems and installed the defeat-
device software on hundreds of
thousands of Jetta, Golf and
other cars, the lawsuit alleged.
In October 2006, many
Volkswagen executives held a
conference call with California
regulators, with the latter re-
questing additional details on
emissions-control devices.
Later that year, Leonard
Kata, a Volkswagen manager,
emailed colleagues that govern-
ment officials were interested
in whether emissions-control
devices were illegal defeat de-
vices and detailed how agencies
make such determinations, said
the lawsuit.
Volkswagen executives in
subsequent years discussed the
development and use of defeat
devices to dupe tests, including
a direct report to Mr. Winter-
korn, heads of Audi’s power-
train development; and other
division heads, the lawsuit al-
leged.
regulators. The deception went
far beyond the “couple of soft-
ware engineers” whom Michael
Horn, then Volkswagen’s top
U.S. executive, blamed in Octo-
ber, according to the suit. Some
managers, engineers and execu-
tives named in the suit haven’t
been previously identified; oth-
ers have been suspended or re-
signed since regulators dis-
closed the cheating.
In June, Volkswagen agreed
to pay up to $15 billion to settle
claims with environmental reg-
ulators, owners of 475,000 ve-
hicles with two-liter diesel en-
gines and some state
authorities. The software is on
Continuedfromthepriorpage
VW
the EU added.
“The settlement ends the
EU antitrust investigation.
Daimler regrets these occur-
rences and took appropriate
action some time ago,” the
company said in a statement.
Volvo said the €650 million
previously set aside largely
covers the cost of the fine but
that an additional provision of
€20 million to pay the full
penalty would impact operat-
ing profit in the third quarter.
“While we regret what has
happened, we are convinced
that these events have not im-
pacted our customers,” Volvo
Chief Executive Martin Lund-
stedt said in a statement.
In a statement, Paccar said
it didn’t believe “the exchange
of factory list prices among
manufacturers had (any) effect
on truck sales prices negoti-
ated between DAF’s indepen-
dent dealers and its custom-
ers.” CNH, owner of Iveco,
declined to comment.
At a news conference Tues-
day, Ms. Vestager divulged
more details about how senior
managers at the companies
founded the cartel in January
1997 when they met in “a cozy
hotel” in Brussels. She said the
truck makers met regularly to
manage the cartel, sometimes
at the margins of trade fairs
and other events.
—Matthias Verbergt in
Stockholm and Ilka Kopplin
in Frankfurt
contributed to this article.
BRUSSELS—The European
Union on Tuesday imposed its
highest-ever cartel fine—about
€2.93 billion, or roughly $3.22
billion—on five truck makers
for colluding on prices and the
implementation of emissions
technologies.
“We have today put down a
marker by imposing record fines
for a serious infringement,” said
EU Competition Chief Mar-
grethe Vestager, adding it was
“a clear message to companies
that cartels are not accepted.”
The European Commission,
the bloc’s antitrust regulator,
said Volkswagen AG’s MAN
SE, Volvo AB, Daimler AG,
Paccar Inc.’s DAF and CNH
Industrial NV’s Iveco colluded
for 14 years, between 1997 and
2011, on the factory prices of
medium and heavy trucks.
They also coordinated on
when to implement new emis-
sions technologies and agreed
to pass the extra costs of com-
plying with the stricter envi-
ronmental standards onto cus-
tomers, the EU said.
Daimler faces the largest fine
of around €1 billion, followed by
DAF with penalties of €753 mil-
lion. Volvo has to pay about
€670 million, and Iveco approx-
imately €500 million. MAN
hasn’t been fined, avoiding a
penalty of roughly €1.2 billion
because it revealed the cartel to
the commission, the EU said.
All the companies except
MAN had set aside hundreds
of millions of dollars in provi-
sions in preparation for the
decision. The truck makers ac-
knowledge their involvement
and agreed to settle the case,
BY NATALIA DROZDIAK
Record EU Fine for Truck Makers
MAN and other heavy trucks sit in an Autobahn traffic jam outside Deggendorf, Germany, this year.
ARMINWEIGEL/EUROPEANPRESSPHOTOAGENCY
Big Load
The EU slapped its heaviest
cartel fine ever on a handful of
truck makers.
€1=$1.11 Source: Eurostat
THE WALL STREET JOURNAL.
€2.93 billion
€1.41
€1.19
€0.95
€0.83
2016 Trucks
2012 TV/computer monitor tubes
2008 Car glass
2014 Automotive bearings
2007 Elevators/escalators
Top five EU cartel fines
father, Rupert Murdoch, are co-
executive chairmen of the en-
tertainment powerhouse. Ru-
pert Murdoch also is executive
chairman of News Corp.
The brothers have made their
stamp on the business in various
ways—carrying out buyouts to
trim costs and restructuring the
international channels business.
But the claims by Ms. Carlson
and the resulting frenzy in the
media world have forced them
to make a difficult calculation
about Mr. Ailes’s future.
The elder Mr. Murdoch has
been in touch with his sons
about the matter and when he
returns from vacation next
week expects to bring it to a
resolution, one of the people
familiar with the matter said.
They can’t afford to have
management turmoil at Fox
News throw the business off
course. The network provides
about 20% of 21st Century Fox’s
profit and is used by the com-
pany as a club in broader chan-
nel-carriage negotiations with
pay-TV providers. Separately,
Fox News on Tuesday sued
Charter Communications Inc.,
alleging breach of contract.
New York Magazine re-
ported Tuesday that Fox News
star anchor Megyn Kelly told
investigators hired by Fox that
Mr. Ailes made unwanted ad-
vances toward her about 10
years ago. Responding to the
report, a lawyer for Mr. Ailes,
Susan Estrich, denied that he
had sexually harassed Ms. Kelly.
“In fact, he has spent much of
the last decade promoting and
helping her to achieve the star-
dom she earned, for which she
has repeatedly and publicly
thanked him,” Ms. Estrich said
in a statement.
Ms. Kelly couldn’t be
reached for comment and her
agent declined to comment.
A lawyer for Ms. Kelly, Wil-
lis J. Goldsmith, said late Tues-
day, “Megyn Kelly has made no
public comment on the matter,
nor will she while the review is
pending, other than to say she
has cooperated with the in-
quiry fully and truthfully.”
The exit package for Mr.
Ailes could include a payout in
the tens of millions of dollars,
one of the people familiar with
the matter said.
There is no obvious succes-
sor to Mr. Ailes. Potential candi-
dates as replacements, at least
on an interim basis, include Jay
Wallace, who is in charge of
news programming at the net-
work, and Bill Shine, who over-
sees Fox’s non-news and opin-
ion content. Another candidate
is Michael Clemente, executive
vice president of news specials
for the network. Some former
Fox News executives think the
younger Murdochs ultimately
would want to hire an executive
they are familiar with if they
make a change.
Mr. Ailes first rose to prom-
inence as a political operative.
He advised Richard Nixon on
television strategy ahead of
the 1968 presidential contest
and later was involved in the
campaigns of other Republican
presidents, including Ronald
Reagan and George H.W. Bush.
He returned to TV in the early
1990s, as executive producer of
Rush Limbaugh’s TV show and
then as president of CNBC.
AILES
Roger Ailes with his wife, Elizabeth Tilson, on Tuesday.
DREWANGERER/GETTYIMAGES
Fox News on Tuesday sued
Charter Communications
Inc., the nation’s second-larg-
est cable operator, for alleged
breach of contract and fraud.
The suit, filed in New York,
follows Charter’s recent $60
billion acquisition of Time
Warner Cable. Fox News, a
unit of 21st Century Fox Inc.,
claims Charter is illegally
seeking to apply Time Warner
Cable’s channel-carriage rates
to carry Fox News Channel
and its sister channel Fox
Business Network in all of its
roughly 17 million homes.
According to the suit, Char-
ter isn’t adhering to a 2014
agreement it signed with Fox
News to distribute the two
channels and instead is apply-
ing rates from an old agree-
ment the network had with
Time Warner Cable, which has
lower rates.
Both the Time Warner Ca-
ble and Charter agreements
with Fox News don’t expire
until 2018, a person familiar
with the matter said.
Despite the suit, a Fox News
executive said there are no
plans to attempt to remove
Fox News Channel or Fox Busi-
ness Network from Charter’s
channel lineup.
A spokesman for Charter
said the distributor has a con-
tract with Fox News that it ex-
pects to be honored.
“I would expect there are
other companies out there
that have these issues,” said
Tim Carry, executive vice
president of distribution for
Fox News.
Fox News parent 21st Cen-
tury Fox and Wall Street Jour-
nal owner News Corp. were
part of the same company un-
til mid-2013.
BY JOE FLINT
FoxNews
SuesCharter
OverRates
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com