The main control room in the new Al Jazeera America television broadcast studio on West 34th Street August 16, 2013 in New York. Al Jazeera America, which will launch on August 20, will have its headquarters in New York. AFP PHOTO/Stan HONDA (Photo credit should read STAN HONDA/AFP/Getty Images)

Cheers broke out in Al Jazeera America’s midtown Manhattan newsroom on Wednesday afternoon as staff received word from the US cable news channel’s parent company in Doha. Al Anstey, a respected veteran journalist, was named chief executive, replacing Ehab Al Shihabi, the unpopular management consultant who had led the venture since its founding two years ago.

But the celebration was soon cut short when an email landed in their inboxes from Mr Al Shihabi, saying he was staying on as chief operating officer and looked forward to working with Mr Anstey.

One Al Jazeera executive maintains that Mr Al Shihabi’s departure is “imminent”, however. “It’s time for a new team. We need a clean start,” they say.

Whatever the outcome of this week’s management shake-up, it has come as the US channel faces the most dire challenges of its short existence and raises questions about Qatar’s ability to project soft power through the ruling family’s backing of parent company Al Jazeera.

In the two weeks before Mr Al Shihabi was replaced, AJA lost three senior executives and was slapped with a $15m lawsuit from a former employee alleging sexist, anti-Semitic and anti-American behaviour by a manager.

“There has been a lot of turbulence inside the organisation. There have been understandable issues with morale,” admits Kate O’Brian, the channel’s president.

Even before the latest turmoil, there had been months of job cuts and agitation among the staff over the direction of the channel. Despite flashy hires and hefty investment — estimated by people familiar with the situation at up to $2bn — the US network has failed to reach significant levels of viewership and advertising revenue since its launch in 2013 with the $500m purchase of Al Gore’s Current TV.

“They completely overpromised and underdelivered,” says one former employee.

Ms O’Brian acknowledges the company has gone through “some rocky parts”. But “the changes that have been put in place are going to calm some of those turbulent waters”.

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Insiders, analysts and industry experts say missteps dating back to AJA’s inception reflect fundamental misunderstandings by executives in Doha and New York of four key issues: management, the reach of Al Jazeera’s brand, the competitive nature of US television news and the digital revolution sweeping through media.

These issues, they say, have hampered the channel’s ambition to break the mould of US cable news, despite its backers’ deep pockets.

“I don’t see any prospect for success no matter how many petrodollars they decide to pour down the drain,” says Andrew Heyward, a former president of CBS News.

The enthusiastic reception in AJA’s newsroom to the appointment of Mr Anstey reflects the respect many staffers hold for the man who has run Al Jazeera English since 2010, a separate English-language news service with global reach.

But it also underlines the escalation in recent months of bitter antipathy towards Mr Al Shihabi, whom several staff members described as controlling and vindictive.

Internal dissatisfaction became public in late April when Matthew Luke, a former employee, filed a wrongful termination lawsuit against the company and Osman Mahmud, a manager, seeking $15m in damages. Mr Luke claimed he was fired after complaining about Mr Mahmud’s alleged sexism, anti-Semitism and anti-Americanism.

Mr Mahmud has dismissed the allegations as “lies” and Ms O’Brian says the company has “zero tolerance for any kind of discrimination and zero tolerance for any kind of retaliation for speaking up”.

“We are about speaking truth to power on screen. We need to be about speaking truth to power internally,” she adds.

But the flurry of news coverage may have set the company back in another area that has proved problematic: its reputation in the US.

“In this case, the damage is to the brand,” says Ken Doctor, media analyst at Newsonomics. “People who might otherwise be open to their coverage may think, ‘That’s what I thought, that’s what I was afraid of’.”

Al Jazeera has been fighting for years to change Americans’ perceptions. It has faced tough questions over its coverage, particularly on its Arabic channel, and over the influence of Qatar’s monarchy. Mr Al Shihabi bristled when asked about the subject at the Aspen Ideas Festival in 2013, when he was promoting AJA’s debut.

“It is run by American staff,” he said. “The firewall between [the owners’] influence and editorial, it exists. It strongly exists.”

Ms O’Brian says the channel has made progress. “We came into a marketplace with a lot of preconceived notions by our potential audience and competitors and others. We have shown through our content that we are creating a product that people really respond to.”

Still, she adds, the lawsuit and the coverage it sparked have been “truly unfortunate . . . because that isn’t who we are”.

A bigger concern for AJA’s leaders, however, may be the fundamental economics of US television news. Taking on established rivals such as CNN and Fox News has put AJA into a difficult and expensive competition for talent and viewers.

“This market is so news saturated,” says Christopher Vollmer, who leads the global media practice at Strategy&, the consultancy. “If you look at the traditional players, their ratings really only go up around a few key things: major breaking news and elections. They’re not what they were in the golden age of news.”

Median viewership across Fox News, CNN and MSNBC dropped a combined 7 per cent in 2014 to 1.8m, according to Pew Research Center’s analysis of Nielsen data. In the most lucrative primetime hours, the decline was 8 per cent.

“I don’t see any real evidence that there was a hunger for another news channel,” says Mr Heyward, the former CBS News executive. “There’s plenty of 24-hour news. There’s no unmet need.”

The cable news audience is not only contracting, it is also ageing as younger consumers turn to digital devices and outlets to get information and entertainment on demand.

“You have a generation coming of age that shows no real intention to consume news in a linear fashion,” says Mr Heyward. “As people’s habits switch from TV to online to mobile, it’s an odd time to invest in the very old-fashioned and derivative 24-hour television business.”

At a time when legacy news organisations are turning to online video and digital outlets such as Vice Media are pushing into international reporting, AJA faces restrictions on how much of its programming it can put on its website and platforms such as Facebook.

Several of the channel’s carriage agreements with cable providers include such limitations, which staffers say have hamstrung its digital operation. Only a certain amount of video can go online and, until recently, online clips were deleted after a set period.

Ms O’Brian says those limits have “evolved”. But with AJA averaging just 31,000 primetime viewers this season, it may have limited leverage to renegotiate with cable providers.

Before AJA, US audiences could watch Al Jazeera English’s feed online and in November 2012 a total of 971,000 unique visitors did so, according to ComScore.

But when AJA went on air, AJE’s US feed went dark. Some of the English-language network’s programming is carried on the US cable channel and Al Jazeera has launched a San Francisco-based digital news channel, AJ+, but Al Jazeera’s overall US reach has become more limited since AJA’s launch.

“No one will ever pay more for a TV station than we paid,” says one employee. “For a fraction of that, I could have given you the best news website on earth and everybody could have watched that.”

“If you’re going to start a 24/7 news channel in 2013, you put it online,” says another staffer who has left the company. “You don’t pay Al Gore half a billion dollars.”

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