Fox pays high price to end bruising defamation case

Squinting in the late afternoon sun on a square in downtown Wilmington, Delaware, on Tuesday, lawyer Justin Nelson told the world’s media there would finally be “vindication and accountability” for lies spread about election fraud following former US president Donald Trump’s defeat almost 30 months earlier.

A last-minute $787.5mn settlement from Fox, accused of airing false claims about his client, voting-machine maker Dominion, was a “ringing endorsement for truth, and for democracy,” the Texas-based litigator said. It was, he seemed to suggest, a moment of reckoning for the role conservative outlets played in disseminating conspiracy theories that later helped fuel a deadly riot on Capitol Hill, and which remain an article of faith for hardline Republicans.

Just moments earlier, the outcome of Dominion’s legal battle was far from clear, amid the latest delay to a six-week trial that was supposed to start on Monday in Delaware, a favoured legal domicile for America’s large businesses.

A 12-person jury, which had been painstakingly chosen from a pool of hundreds, failed to return from lunch to a courtroom packed with members of the press eagerly awaiting Dominion’s opening statement. After a lengthy wait, the judge finally appeared. The parties, he said, had “resolved their case”. The trial was off.

What convinced Fox to throw in the towel at the last moment and agree one of the largest defamation awards in US history was not immediately apparent, even if legal experts seemed to concur that the company faced ever tougher odds the longer the case continued.

Some theorised that Fox realised the game was up when a jury that seemed to resemble the demographics of the district from which the members hailed — heavily Democratic, with a railway station named in Joe Biden’s honour — was finally seated that day.

Other analysts went back a few days earlier, to when Judge Eric Davis, who was overseeing the case, warned Fox’s lawyers that they had a “credibility problem” after a dispute over disclosures to the court.

For George Washington University law professor Catherine Ross, it was largely over last month, when Davis departed from his usual dry prose to declare in a written opinion that it was “CRYSTAL clear” statements made by Fox about the alleged rigging of Dominion voting machines were false. The US Constitution’s free speech protections did not extend to telling lies, he added.

The judge “basically eviscerated all of Fox’s defences . . . they had just about nothing left,” Ross said. “Fox really had its feet to the fire.”

Yet others pointed to the trove of internal Fox emails and texts unearthed by Dominion in pretrial discovery, which included presenter Tucker Carlson, a once vocal Trump proponent, confessing to hating the former president “passionately”. In other excerpts, Fox News employees admitted they did not believe the election had been stolen but were afraid viewers would leave in droves for rightwing competitors if they said so on air.

The fact that the 92-year-old Rupert Murdoch would be forced, at Dominion’s behest, to testify in person about his role in the months-long affair may have provided more impetus for last-gasp settlement talks, commentators said.

Despite the high bar for US defamation cases, however, Fox’s fate was sealed from the moment Dominion sued Fox in 2021, said Lee Levine, a retired First Amendment lawyer who represented large media groups in his 40-year career.

The 443-page complaint was the “strongest plaintiff’s defamation case against a media company that I have ever seen”, Levine said, in part because of the real-time warnings issued by Dominion to Fox anchors and executives about the false assertions in the weeks following the election.

At the time of the November 2020 vote, Dominion was a small, relatively unknown Denver-based business without a full-time public relations specialist. But it sprung into action as Trump’s allies began speculating about the company on air and hired an expensive external communications team led by Tony Fratto, a former White House deputy press secretary under George W Bush.

Realising that Fox was “refusing to go look” at evidence, the team sent more than 3,600 emails and texts to Fox staff, a person familiar with the strategy said, enclosing reams of evidence that they suggested showed the accusations made by the Trump campaign to be demonstrably false.

“We knew that we were building a record,” the person said. “It will be a playbook for what people do in the future”.

Dominion’s private equity investors were also veteran operators. Staple Street co-founder Hootan Yaghoobzadeh is an alumnus of Cerberus Capital, known as one of the fiercest firms on Wall Street. He and Staple Street’s other founder, Stephen Owens, also spent time working at Carlyle, one of the largest buyout groups in the world.

Many of Fox and Murdoch’s most vocal detractors had urged Dominion to “finish” Fox by taking the case to trial. Some hoped for a damages award so large that it would cripple the company financially.

While the settlement payout is large, it is not an existential threat to Fox. In Fox Corp’s last full-year earnings, the cable network programming division in which Fox News sits reported earnings before interest, taxes, depreciation and amortisation of $2.93bn. The company as a whole reported net income of $1.23bn. 

Nor is it the biggest hit suffered by Murdoch’s media empire, with the financial fallout from the phone-hacking scandal at the now defunct News of the World tabloid exceeding £1bn, according to the UK’s Press Gazette.

In a statement released after the settlement, Fox said it acknowledged “the court’s rulings finding certain claims about Dominion to be false” but stopped short of an outright apology.

“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,” it added.

But it is not in the clear yet. One shareholder has already filed suit in the Delaware Court of Chancery, accusing the company’s board members of failing to stop the damaging allegations from being aired.

It also faces a defamation claim from another voting-machine manufacturer, Smartmatic, also a target of the network’s conservative hosts.

Dominion, while unlikely to see a settlement of this magnitude again, is separately suing former Trump lawyers Sidney Powell and Rudy Giuliani, as well as more radical media outlets Newsmax and One America News Network.

As Davida Brook, a key member of Dominion’s victorious legal team told assembled reporters, “we will see you at the next one”.

Additional reporting by Andrew Edgecliffe-Johnson and Antoine Gara in New York

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