What's next for Megyn Kelly?

"Nightline" discusses the impact of Kelly's comments on blackface and breaks down the significance of the controversy.
7:16 | 10/26/18

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Transcript for What's next for Megyn Kelly?
Reporter: Take a look at what some now say is an offensive costume. Reporter: Tonight, Megyn Kelly's fate hangs in the balance just days after the journalist defended wearing blackface on her morning show. What is racist? Because truly, you do get in trouble if you are a white person who puts on blackface on Halloween R a black person who puts on why is face. Back when I was a kid, that was okay as long as you were dressing up as a character. Reporter: Kelly and her panel were discussing costumes like this one, worn by real housewife dressed as Diana Ross. People said that was racist. And I don't know. I felt, like, who doesn't love Diana Ross? Reporter: The comment sparked fierce backlash, even inside NBC, with Kelly taken to task on air by members of her own network. She owes a bigger apology to folks of color around the country. Because this is a history going back to the 1830s, minstrel shows, to demean and denigrate a race. Reporter: And according to "Variety," NBC news chairman Andrew lack condemned those remarks during a staff town hall, saying, "There is no place on our air or in this workplace for them." The level and frequency of criticism was pretty unprecedented. This is supposedly someone who is one of the top talents on your network and you basically turned against her. Reporter: Kelly, first apologized in an e-mail to her colleagues, saying, in part, I realize now that such behavior is indeed wrong and I am sorry, she wrote. The history of blackface in our culture is abhorrent. The wounds too deep. I've never been a PC kind of person, but I understand that we do need to be more sensitive in this day and age. But that wasn't enough. Just 24 hours after the initial comments -- And I want to begin with two words. I'm sorry. Reporter: A second apology. Some say too little too late from Kelly who had a history of making racially charged statements. Santa Claus should not be a white man anymore. Jesus was a white man too. I think anyone who has followed her career is going to be surprised. NBC executives were very aware of her history and they decided to risk it and take a gamble on her, and now it's blown up. Reporter: In response to the fallout, NBC decided to use Megyn's live show the next day as a teachable moment, inviting journalist Roland martin to speak to the issue of blackface and cultural appropriation. Roland, I did listen yesterday, and what was very clear in what I read and what I heard is that the history here, when it comes to that term and this issue is deeply disturbing. I think the problem is for African-Americans we know the history and too many white Americans don't know or won't accept it. What was your initial reaction when you heard Megyn Kelly's comments on Tuesday. Surely it was shocking to hear someone who's been in national media for a very long time actually say they didn't really understand what the big deal was about blackface. Reporter: What's wrong with the PC defense and why do you think so many people had a problem with that? When she made her initial apology, and she used the phrase, PC, that still rankles people because what has happened is when we've had discussions, historically, about issues of race, in the last 20, 30 years, it's been put into this framework of, oh my god, we're PC. And so, as if we can't talk about these issues and not be upset about it. What they have to understand is that allowing those things to just take place over these decades and centuries has been the problem. We must deal with racism. We must deal with bigotry. Reporter: For decades, cartoonish portrayals of black people appeared in songs, books, movies and as enduring American characters. You know what trouble I was talking about. Reporter: Like mammy, uncle Ben, and aunt jemimi. When you see those images, you now begin to understand how white supremacy was able to tell African-Americans not only are you second class citizens, but you're less than. You're ugly. You're nasty. You're nothing. Reporter: Flash forward to today. In 2013, Julie Ann huff darkened her skin when she dressed as a black character on the TV show "Orange is the new black." She later apologized on Twitter, writing, it certainly was never my intention to be disrespectful or demeaning to anyone in any way. I realize my costume hurt and offended people and I truly apologize. And on college campuses, where costume parties make headlines year after year. The disturbing phenomenon was even depicted in the 2014 movie "Dear white people." We've seen this. How many white fraternities or sororities have been suspended because they had thug parties and ghetto parties. People don't understand that that caricature comes right out of the minstrel shows. Something's a little off about Luann's costume. Reporter: And that real house wives Diana Ross costume, even the house wives cast shocked by her choice. Her costume is so disrespectful. I think she's tone deaf when it comes to cultural stereotypes. Reporter: Obviously, this is something that we have seen before. Halloween seems to be a trigger. What is it that you would say to white people who are now saying, oh, so I can't dress up like Diana Ross? I can't dress up like my favorite black personality for Halloween? You can dress up like Diana Ross. Just don't put no damn black paint on your face. Reporter: Kelly's position on the costume has sparked a broader conversation about race. The issue is in this nation, we have a long history of taking what is black and then whites then doing it and enriching themselves and black folks going, what the hell. We created that and now all of a sudden you switch it up and now it's accepted? That's the root and the foundation of cultural appropriation. Reporter: Meanwhile, reports that Kelly is out at NBC have been circulating but remain unconfirmed. As we speak, there is a meeting scheduled between Megyn's lawyer and NBC executives for Friday morning, and after that meeting, we will have a clearer sense of what Megyn Kelly's future is. Reporter: After Netflix confirmed that the cast of "House of cards" backed out of an appearance on her show, NBC decided to air a rerun of Kelly's show today while execs mull over exactly what to do. It's a stunning fall for Megyn Kelly, who was a coveted get for NBC after she left Fox News. The network reportedly signed her to a multiyear contract worth nearly $70 million. This is just a really unfortunate situation on all grounds. You know, I think Megyn Kelly is an undeniable talent as a broadcaster, but seems she was miscast in this role and then made a big misstep. Reporter: While it's unclear if this is the end of Kelly's career at NBC, it is perhaps the beginning of a much-needed dialogue in America. When I walked off her show, I tweeted that. I said, this should not be the end of this conversation. It should be the beginning of a conversation. In New York. Up next, forget mastering the ABCs.

This transcript has been automatically generated and may not be 100% accurate.

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