Fox’s $787.5 Million Settlement Doesn’t End Its 2020 Liability

Fox News’s agreement to pay $787.5 million to settle a voting machine maker’s defamation lawsuit over the network’s 2020 election broadcasts leaves a similar, $2.7 billion suit by voting technology company Smartmatic Corp. to reckon with.

Tuesday’s settlement with Dominion Voting Systems Inc., for almost half the $1.6 billion Dominion sought, was struck on the brink of a potentially embarrassing six-week trial. Now Fox must grapple with Smartmatic’s suit, which a judge declined to dismiss last year. After the settlement, Smartmatic said in a statement that it would “expose the rest” of Fox’s “misconduct.”

The Dominion deal came to light in a Wilmington, Delaware, courtroom after more than two years of legal skirmishing over whether the network defamed the company by airing bogus claims that it rigged the vote against Donald Trump. A jury of 12 had been selected, and the trial was about to get underway.

Instead, following an unexplained one-day delay Monday, it was held up for hours more in the sweaty final moments of the deal-making. At that point, Fox Corp. Chairman Rupert Murdoch was soon to take the witness stand to be grilled over evidence that Fox knew the claims were unfounded.

Rupert Murdoch

Photographer: Neil P. Mockford/Getty Images

“The parties have resolved their case,” Delaware Superior Court Judge Eric M. Davistold the jurors after he had them brought back into the courtroom. “That means your service is done.”

Smartmatic Ahead

Tuesday’s outcome shows Fox is willing to settle such fights if it thinks it’s in its interest. Fox Corp. had more than $4 billion of cash and cash equivalents on hand at the end of 2022, according to a corporate filing.

Fox didn’t immediately reply to a request for comment on the Smartmatic litigation.

Bloomberg Intelligence had reckoned a Dominion settlement at about half a billion dollars. It estimated that if the trial played out and the jury found Fox liable, it might have awarded Dominion damages of about $375 million.

Even that fraction of the sum the voting machine maker sought would have been one of the biggest defamation awards of all time and would have amounted to roughly two-thirds of Fox’s adjusted profit in its most recent quarter.

Fierce Battle

The settlement ends one of the most fiercely contested legal battles to emerge from the election. Evidence uncovered in the case showed that the 92-year-old media titan and other top Fox executives, as well as superstar hosts like Tucker Carlson, privately derided the conspiracy theory as loony even as they promoted it.

“Truth matters,” Dominion’s lead attorney, Justin Nelson, said at a press conference after court. Nelson said Fox’s broadcasts had created an “alternative universe” that caused “grievous harm to Dominion and the country.”

Read More: Fox Settlement Talks With Dominion Heat Up on Eve of Trial

The network offered a very different version of the pact, saying in a statement it was “pleased” to have settled the case.

“We acknowledge the court’s rulings finding certain claims about Dominion to be false,” it said. “This settlement reflects Fox’s continued commitment to the highest journalistic standards. We are hopeful that our decision to resolve this dispute with Dominion amicably, instead of the acrimony of a divisive trial, allows the country to move forward from these issues.”

Tucker Carlson

Photographer: Jason Koerner/Getty Images

According to Dominion’s March 2021 lawsuit, current and former Fox hosts including Carlson, Sean Hannity and Jeanine Pirro gave guests such as lawyers Rudy Giuliani and Sidney Powell a platform to repeat defamatory statements that Dominion used computer algorithms to shift votes away from Trump to Joe Biden. The guests vividly described a vast plot that included foreign hackers, corrupt Democratic election workers and malignant software tied to the deceased Venezuelan dictator Hugo Chavez.

First Amendment

Fox argued it was simply reporting on issues of national importance, that a sitting president’s claims of election fraud are newsworthy and that its broadcasts were protected as free speech under the US Constitution’s First Amendment.

Read More: Murdoch, Fox Face $1.6 Billion Trial Over 2020 Trump Claims

After court on Tuesday, reporters shouted questions at Dominion’s lawyers, asking whether the settlement would include an apology from the network, but got no response. As Fox’s lawyers left the courthouse, a man holding a sign that said “Fox Lies” chased after them.

Laura Little, a Temple University law professor who specializes in First Amendment issues, said Fox may have paid a premium to avoid having to flatly apologize. Its roundabout reference to “certain claims about Dominion” was “as close to a retraction or apology as Dominion is going to get,” she said.

Fox News agreed to pay $787.5 million to settle a lawsuit with Dominion Voting Systems alleging the network defamed it in 2020 election broadcasts. Erik Larson reports on Bloomberg Television.

Source: Bloomberg

Little noted that getting close to half of a damage demand is a large recovery in any lawsuit.

“Dominion certainly held all the chips in the case,” she said.

‘Historic Settlement’

Dominion Chief Executive Officer John Poulos called it “a historic settlement.” He said in a statement that Dominion had sought and now won “accountability” through the evidence that came to light in the case.

Poulos also thanked Dominion’s biggest investor, Staple Street Capital, for its support in the case. Fox had cast the private equity firm as a baneful force behind the litigation. Staple Street paid $38.3 million to acquire 76% of the company in 2018.

Read More: Fox Defamation Trial Jury Is Selected After Push for Settlement

For Fox, the settlement heads off a trial in which Murdoch, the chairman of the network’s parent company, Fox Corp., and his son Lachlan would have had to testify about their oversight of the network’s news presentations. Carlson, who privately scoffed at the conspiracy theory, and other prominent Fox hosts were on Dominion’s witness list as well.

In a text shown in court, Carlson said Powell’s fraud claims were “obviously untrue” and “unbelievably offensive.” Hannity, one of Fox’s biggest stars, sent a text calling Powell, the architect of the conspiracy theory, an “F’ing lunatic,” Dominion said.

The Newsmax Factor

Dominion claimed Fox willfully ignored the obvious falsity of the “stop the steal” campaign it was promoting to keep Trump fans from changing channels to competitors like Newsmax. Evidence in the case showed Fox feared Trump’s wrath after it called the swing state of Arizona for Biden.

“Do the executives understand how much credibility and trust we’ve lost with our audience?” Carlson warned his producer in a text. “We’re playing with fire, for real ... an alternative like newsmax could be devastating to us.”

Read More: Fox News Hosts’ Emails Shown to Judge in Dominion Suit

MyPillow Inc. founder Mike Lindell may personify the economic stakes for Fox News during the election as well as anyone. Lindell, who is also being sued by Dominion and denies its allegations, is one of the most outspoken proponents of the election fraud claims — and one the biggest advertisers on Fox News.

Murdoch was asked at his deposition in January why the pillow pitchman was allowed to appear on Fox News shows. He said it was simple: Lindell “pays us a lot of money.”

‘Trump Explosion’

Murdoch’s answers at the deposition helped set off a firestorm in February when Dominion made excerpts of his testimony public. He had conceded under oath that some of the network’s biggest stars went beyond merely reporting on Trump’s stolen-election claims.

“Some of our commentators were endorsing it,” Murdoch said.

Internal emails showed Murdoch had specific suggestions for when the network should call the swing state of Pennsylvania for Biden, saying a lead of 35,000 votes would be sufficient but then bumping the threshold up to 50,000. He emailed Lachlan, the Fox Corp. CEO, after another network called the election for Biden to say it was good that Fox had waited.

“We should have and could have gone first but at least being second saves us a Trump explosion,” he wrote.

Read More: Fox News Is Hit With $1.6 Billion Dominion Voting Defamation Suit

The judge had already ruled that the constitutional right to free speech doesn’t automatically protect the spreading of falsehoods, especially unfounded allegations of criminal conduct.

“The evidence developed in this civil proceeding demonstrates that is CRYSTAL clear that none of the statements relating to Dominion about the 2020 election are true,” he wrote, with all the typographic bells and whistles.

It would have been up to the jury to decide whether the statements were made with “actual malice,” meaning the network knew they were false or aired them with reckless disregard for their truthfulness.

The case is Dominion Voting Systems v. Fox News Network, N21C-03-257, Delaware Superior Court (Wilmington).

To contact the reporters on this story:
Erik Larson in New York at elarson4@bloomberg.net;
Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net

To contact the editors responsible for this story:
Anthony Lin at alin364@bloomberg.net

Peter Jeffrey

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