Illustration by Joe Ciardiello.

One evening not long after he was appointed Fox Corp. C.E.O., Lachlan Murdoch invited Modern Family co-creator Steve Levitan for dinner at Giorgio's, in Santa Monica. Murdoch was trying to quell a nascent rebellion. Levitan, whose Emmy Award-winning sitcom is produced by Fox's entertainment division and has been the longest-running comedy series on ABC, had joined Family Guy creator Seth MacFarlane and Ghostbusters director Paul Feig in publicly denouncing Fox News's cheerleading of Trump's immigration policies. “I'm disgusted to work at a company that has anything whatsoever to do with @FoxNews. This bullshit is the opposite of what #ModernFamily stands for,” Levitan wrote on June 18, in response to Fox News host Laura Ingraham's calling migrant-children detention facilities along the Mexican border “essentially summer camps.”

Like many in the media business, Levitan hoped that the ascension of the younger generation of Murdochs would usher in more moderate politics at Fox News—glasnost, at long last. Levitan told Lachlan that Fox News was destroying America and implored him to control Ingraham, Sean Hannity, and Tucker Carlson, a person briefed on the conversation told me. But Lachlan quickly dashed that dream. According to the source, Lachlan told Levitan that he wasn't embarrassed by Fox News. He reminded Levitan that the Murdochs had never censored shows like his or The Simpsons or Family Guy, so why couldn't Levitan live with a few conservative voices on one cable-news network?

For Lachlan, at the time, the call was easy enough. The Murdochs were in the process of divesting themselves of Levitan's show, along with the rest of the family's entertainment business, in a $71 billion deal with Disney. The Trump-hostile assets would be gone; peace would reign in Murdoch world. But for Lachlan and Fox, the Trump dissonance didn't end post-Disney deal—in some ways, it's even gotten worse. The network has never been more powerful—and at the same time so vulnerable. Fox programs influence Trump daily, but that has opened the network up to charges that it is State TV. Inside Fox, a long-running cold war between the network's journalists and right-wing, prime-time hosts has turned hot. Fox journalists, bristling at being branded an arm of the Trump White House, are lobbying Fox News C.E.O. Suzanne Scott and president Jay Wallace to rein in Fox & Friends, Sean Hannity, Lou Dobbs, and Jeanine Pirro. “Reporters are telling management that we're being defined by the worst people on our air,” a frustrated senior Fox staffer told me last month. News staffers are feeling emboldened to go after Trump in increasingly visible ways. Fox's opinion hosts, meanwhile, have made the case that the prime-time lineup not only reflects the audience's worldview but is responsible for the majority of the network's advertising revenue and fees paid by cable companies that carry Fox. “We make the money,” an anchor close to Hannity told me. According to a source, prime-time staff complained to Fox management in March when a Muslim producer on Bret Baier's staff tweeted criticism of Jeanine Pirro. “You can't have a producer attacking talent. [Roger] Ailes would never have allowed that,” a prime-time staffer said. While Fox's prime-time shows generate the lion's share of the network's ratings and ad revenues, there have been increasing issues with lost advertising. Many blue-chip companies don't want to buy time on those shows because of the divisive pro-Trump content. “Executives are very worried Fox & Friends will be next. If advertisers start bailing on them, they're screwed,” an insider said. (Marianne Gambelli, Fox's president of ad sales, responded: “Advertisers know the value of our loyal and engaged audience and we expect no change in our business going forward.”)

Going forward, though, Lachlan is in a trap. He can't simply issue a directive to temper the pro-Trump coverage to win back advertisers and calm restive reporters, because he would risk antagonizing the network's most important viewer: Trump. That happened in March when Fox suspended Jeanine Pirro for delivering an offensive monologue questioning Democratic congresswoman Ilhan Omar's patriotism. Trump quickly criticized Fox and lashed out at Fox journalists, tweeting: “Were @FoxNews weekend anchors, @ArthelNeville and @LelandVittert, trained by CNN prior to their ratings collapse? In any event, that's where they should be working, along with their lowest rated anchor, Shepard Smith!” He implored Fox to “keep fighting for Tucker”—Media Matters had uncovered a series of offensive statements Tucker Carlson had made while calling in to Bubba the Love Sponge's radio show—“and fight hard for @JudgeJeanine.”