This is a rush transcript from "Fox News Watch," February 12, 2011. This copy may not be in its final form and may be updated.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ANITA DUNN, FORMER WHITE HOUSE COMMUNICATIONS DIRECTOR: The reality of it that Fox News almost operates as either the research arm or the communications arm of the Republican Party. When they want to treat us like they treat everyone else -- but let's not pretend they're a news network like CNN is.

(END VIDEO CLIP)

JON SCOTT, HOST OF "FOX NEWS WATCH": That's former White House Communications Director Anita Dunn in 2009 making it clear what the Obama White House thought of Fox News then. But now, that opinion seems to have changed, as Bill O'Reilly learned earlier this week.

(BEGIN VIDEO CLIP)

BILL O'REILLY, HOST OF "THE O'REILLY FACTOR": Do you think you're being treated fairly by Fox News now?

PRESIDENT OBAMA: I would say that the news guys I think try to do a good job.  Although look let's face it, Fox News, I think, has a point of view. There's nothing wrong with that. There's a strong history in America of all news having some sort of point of view, and Fox News has a point of view. And I think that's part of our democracy.

O'REILLY: Do you respect it?

OBAMA: Absolutely.

(END VIDEO CLIP)

SCOTT: So, what about it, Alan, are the views that Anita Dunn expressed gone at the White House?

ALAN COLMES, RADIO HOST,  "THE ALAN COLMES SHOW": I don't see much difference. Look, the president did make a point. He did say there's a point of view. We do employ how many potential Republican presidential candidates.  We do appeal to hard-core audience. I understand what he's saying. And he said that's fine in a democracy. Do you have a problem with that? I don't think so. He never said let's shut down Fox News.  He never said they shouldn't exist. This was never an issue.

JIM PINKERTON, FELLOW, NEW AMERICA FOUNDATION: The difference is that, two years ago; when Anita said that, she was trying to boycott Fox. She was citing Chairman Mao as her inspiration.

COLMES: That's not what she said.

PINKERTON: Buy was very -- yes, she did. She cited Chairman Mao.

COLMES: That's not --

PINKERTON: Folks, Google it.

COLMES: That's not what she said.

PINKERTON: Anita Dunn, Chairman Mao, you'll see it. Alan's wrong.

COLMES: She did not say --

(LAUGHTER)

COLMES: That's not what she said, Jim, come on.

PINKERTON: The point is, they were trying to organize a boycott against Fox, which lasted about two weeks. And now Obama figured out, correctly, it will help him get reelected.

(CROSSTALK)

COLMES: You're falsely in implying by the same thing, that she invoked Mao that he wanted to shut down -- White House would shut down Fox like a police state would do.

PINKERTON: She called Mao her favorite political philosopher.

COLMES: In a certain way.

PINKERTON: And that is not conducive with free speech or the existence Fox News.

COLMES: Not in a way that they would use it to shut down -- the state would shut down the media empire.

RICH LOWRY, EDITOR, NATIONAL REVIEW: OK. I always love it when debates about Mao break out.

(LAUGHTER)

So it's good times. But clearly, Alan, there was an effort to deny the legitimacy of Fox as an organization. And this is the key recalibration and this was the key thing Obama said, that the reporters are straight, and in America and a free society, have a diversity of opinions and not everyone has to be kind of the mushy liberalism --

COLMES: I don't think he ever said otherwise.

SCOTT: Let's go to Lynn Sweet.

Lynn, what about the overall press reaction to the O'Reilly-Obama interview?

LYNN SWEET, WASHINGTON BUREAU CHIEF, CHICAGO SUN-TIMES: Well, I think the reaction was muted. Bill O'Reilly wrote some interesting interviews, an interesting blog beforehand, I think, talking about how he was going to treat the president with respect. I think he had reasonable questions. They had an edge to them. But my questions do, too. And I think he went through the material he wanted to, questions of the day, plus some other stuff. There was no particular buzz one way or the other within the press corps that I heard about.

SCOTT: What about the --