Last week, Gawker reported that, in the summer of 2013, according to multiple sources with knowledge of the events, Fox News executives had retaliated against star anchor Shepard Smith because he had voiced his desire to come out as gay. Fox News called the report “100% false and a complete fabrication,” and pointed out—directly and through cooperative reporters—what it thought were discrepancies in our account.

Our report, indeed, contained an error. We wrote that when Smith brought his boyfriend to a company picnic, Fox executive Bill Shine had been present and had reacted negatively. In fact, Shine was not at the picnic; he had flipped out after the event, when word got back to him about the boyfriend’s attendance. We had misunderstood our sources’ accounts, and we’re happy to take our punches for getting it wrong.

Given Fox’s reaction, however, we went back to our sources to confirm, in even greater detail, the timeline of events. And it turns out that Fox’s other complaints, the full list of which was published by Politico’s Dylan Byers, were little more than a smokescreen.

The story stands. And we’ve learned even more about how Fox treats anchors who want to come out.

Contract Negotiations

Fox’s most forceful complaint was that we reported that during “contract negotiations,” Ailes had told Smith not to come out. We described Smith and Ailes as having discussed the subject in July—when, as Fox pointed out, Smith signed his contract, giving him the role of managing editor, in early June.

How could a conversation that “came up during contract negotiations” have occurred after contract negotiations ended? And how could Fox “demote” Smith after he'd signed his contract?

To the first question: Our original report failed to make it clear that the conversation in July was not, in fact, the only conversation Ailes and Smith had about Smith’s sexuality, and how the anchor might go about acknowledging it in public. A Fox source clarified that the two men “also met several times in late spring and early summer discussing this,” placing their initial discussions squarely within the period when Smith was negotiating his Fox contract.

The reason Smith brought this up a year ago is easy to guess. Around the same time, he was spotted throughout Manhattan with his relatively new boyfriend, a Fox producer named Gio Graziano.

Still, Ailes clearly resisted the idea of Smith coming out, or coming out in the way Smith wanted to. “The conversations,” a Fox source said, “were not resolved” by the time the anchor renewed his contract on June 7.

Which brings us to the second question: How could Fox “demote” Smith after he signed his contract? Here is how: By removing Smith, after he signed his contract, from Fox’s prime-time block.

It is true, as Business Insider reported last September, that Smith’s renewed contract gave him the title of managing editor of Fox’s breaking news division. But it was later in the summer that Fox executives decided that Smith would be axed from the channel’s most visible programming. Indeed, the July 2 press release announcing Smith’s contract renewal also noted that the channel’s new prime-time lineup had not yet been determined.

Bill Shine

The executive who masterminded Smith’s removal, as we previously reported, was Bill Shine, Fox’s Vice President of Programming. While he did not attend Roger Ailes’s July 4 picnic, to which Smith brought his boyfriend, word about their appearance quickly got back to him. He didn’t hide his reaction from his colleagues: Fox’s audience is not ready for a gay anchor.

“He didn’t call one big meeting to announce this,” a Fox source said, clarifying an earlier characterization of Shine’s objections. Instead, during the month of July, Shine “mentioned it throughout the company. He told a lot of people at Fox what he thought. He said, ‘Our audience can’t handle it.’” One of Shine’s confidantes, another source said, was Ailes, who continued talking with Smith about coming out (and recommending he not do so).

Things came to a head in early August, when Ailes and other Fox executives, from both the news and opinion sides, convened to determine the new prime-time schedule. Fox had already announced Megyn Kelly’s move to prime-time, but the channel still needed to decide which talent she would replace. “They had to make a decision,” a Fox source with knowledge of the meeting put it flatly, “about what to do with Shep.”

It was at this meeting, according to a Fox source with familiar with its details, that Shine re-aired his worries about the audience’s potential reaction to Smith coming out, which by then had begun to seem, thanks to Shine’s whisper campaign, like a serious threat to Fox’s ratings.

(This is consistent with Shine’s carefully-worded response to Gawker’s initial report. “We have never asked Shep to discuss or not discuss his private life,” Shine said, “and the notion of us having an issue with anyone’s sexuality is not only insulting, but pure fiction.” That is, the executive did not profess any personal concerns about Smith’s sexuality, but he did have an issue with how Fox’s audience might react to Smith coming out.)

In any case, the campaign worked. The executives decided that Smith would depart prime-time, instantly reducing his visibility on the network. The tension around this decision was acute. “Everyone knew that Shep was getting demoted,” a Fox source told us. “And the coming out thing was a significant part of that.”

Did Shep Know?

It’s not clear that Smith himself knew how much of this was going on. He didn’t work with or report to Shine, and he was not present at the meeting where his prime-time fate was decided. He only knew that Ailes wasn’t sure about the wisdom of coming out, at least right now. The big press tour Fox arranged for Smith’s new 3 p.m. show made any lingering suspicions easy to ignore.

That might be why, in a Wednesday memo to his staff, Smith called our report “horseshit” and compared it, awkwardly, to CNN’s coverage of the the missing Malaysia Airlines passenger jet.

It was a funny email. But what else could he have said? The anchor is deeply devoted to his boss. But in no realistic scenario would Smith have known as much about his removal from prime-time as did Ailes and his coterie of executives. And in no universe would Smith’s personal well-being trump fears, real or imaginary, about Fox’s ratings.

Fox News did not respond to requests for comment.

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