Inside the E! Scandal: What's Next for Giuliana Rancic After Zendaya Controversy?

Giuliana Rancic: Next Steps after Zendaya Dreads Scandal
Giuliana Rancic

02/26/2015 AT 04:00 PM EST

Giuliana Rancic is taking the heat for comments she made about Zendaya's dreadlocks on Fashion Police after the Oscars.

The E! personality has since apologized on air for her remarks, which were construed as a racially insensitive, but she's still catching flak from many in Hollywood.

So what does this mean for Rancic, and what's going on at the network? Insiders weigh in on the controversy.

Where Did the Comments Come From?

Judging the K.C. Undercover actress's appearance on the post-Oscars Fashion Police special, Rancic said Zendaya looked like she smelled of "weed" and "patchouli" because of the dreadlocks she rocked.



"I want to say to Zendaya, and anyone else out there that I have hurt, that I am so, so sincerely sorry. This really has been a learning experience for me," Rancic later said in her on-air apology. "I've learned a lot today, and this incident has taught me to be a lot more aware of clichés and stereotypes, how much damage they can do – and that I am responsible, as we all are, to not perpetuate them further."

An E! insider tells PEOPLE that Rancic simply spoke before thinking.

"She was trying to say something cool and edgy and sort of controversial where it could create a moment on set for that second, but she definitely didn't want it to be the kind of moment it turned into," the insider says. "She's mortified."

Another source believes Rancic was trying to channel former cohost Joan Rivers. (Rivers, who died in September, was known for her acidic, bordering-on-mean jokes about red carpet looks.)

"Giuliana is trying to be Joan. She can't be," the source says. "No. 1, she is not that funny – and she shouldn't be. That's what happens when you let a news anchor do a comedy show."

On Thursday, Rivers's daughter Melissa, a Fashion Police executive producer, showed her support for Zendaya on Instagram with a #TBT photo of her mother with the Disney star.

#TBT We @e_FashionPolice have nothing but love for @Zendaya then and now. A repeat guest host. #MelRivers #JoanRivers

A photo posted by Melissa Rivers (@mel_rivers) on



What Are the Repercussions?

Fashion Police isn't expected to tape any more specials for several weeks, which plays in the personality's favor: The insider says it'll help the controversy blow over, noting, "It's not exactly Brian Williams." (NBC Nightly News anchor Williams was suspended for six months without pay after lying about being in a helicopter that was shot down in Iraq while on assignment.)

The insider says Rancic originally Tweeted her own apology, but higher-ups ordered the on-air apology. "She's smart enough to know she's got to do it," the source says, noting the controversy "[wasn't] going to go away" otherwise.

Counters an E! Insider, "Giuliana was not forced to apologize. It was her idea."

While there were whispers Rancic might get the axe following the media storm, the source slams that notion.

"There is still probably some mandate to keep 'G' in the fold. She's the name right now," says the source, who notes the network needs her star power with Rivers, Ryan Seacrest and Chelsea Handler out.

How Will It Affect Her Relationship with Kelly Osbourne?

Once Rancic was under fire for her comments, Fashion Police cohost Kelly Osbourne lashed out on Twitter, saying she didn't condone Rancic's inappropriate remarks.

"Kelly isn't someone to keep her mouth shut if she's bothered," the insider says of Osbourne, who is friends with Zendaya. "Not only is there tension with Kelly, but now [Giuliana]'s having to backtrack over something that honestly wasn't genuinely 'G.' "

Still, the second insider says the two have always gotten along and believes they will remain friends.

Not so, says the E! insider: "They will never be friends again."

Reporting by JENNIFER GARCIA and LYNETTE RICE

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