A headline about then-President Donald Trump is displayed outside Fox News studios in New York on Nov. 28, 2018. (AP Photo/Mark Lennihan, File)
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After Fox’s $787.5 million settlement averted a historic defamation trial, pundits across the political spectrum rushed to play down the deal.
For Fox News critics on the left, the payout amounted to less than half of what Dominion Voting Systems demanded, avoided an embarrassing six-week trial, and would be dusted off the shoulders by an unrepentant news giant. The Atlantic flatly declared: “Fox News Lost the Lawsuit but Won the War,” and a prominent reporter for Mother Jones poo-pooed it as the network’s cost of doing business. News outlets on the political right largely whistled past the legal earthquake that had just transpired. Fox News went on with its regular programming, and the pro-Donald Trump outlet The Federalist simply ignored it.
Inside the media bar, attorneys were far less blasé. Three prominent First Amendment lawyers uniformly agreed that Fox’s settlement was record-setting, massive, and would be too painful for the network to ignore.
“We’re going to take half”
The first uncomfortable fact for the naysayers: Fox Corporation reported $1.2 billion in earnings for 2022, and in one fell swoop, more than half of that may be gone.
“Imagine if someone came up to you and said that all of that money that you earned last year, we’re going to take half of it,” First Amendment scholar Jeff Kosseff told Law&Crime. “I don’t think many people or companies would be very happy with that or consider it a win.”
Fox Corp. earnings for 2022 (Screenshot from company’s Form 10K)
That figure is all the more staggering because that’s what the network’s parent company reported, not the network.
Though Fox’s revenue that year approached nearly $14 billion, experts say that’s the wrong metric.
“For a mature company, shareholders care about profits, not top-line revenue,” noted Mitchell Epner, a former federal prosecutor who now practices media law as a partner at Rottenberg Lipman Rich PC.
Quick to flag the company’s Securities and Exchange Commission filing showing the hit Fox took to its profits, Epner noted that Fox still faces more potential financial pain.
On the eve of the Dominion trial, Fox settled a Venezuelan businessman’s similar lawsuit on undisclosed terms, and it still faces a pending lawsuit by another voting machine company: Smartmatic, which is demanding more than Dominion ever did.
Epner thought it wouldn’t be unreasonable for Smartmatic to expect a comparable payout.
“If you assume that they will have to do at least as much for Smartmatic, it has wiped out all of the net profits for Fox Corp. — which is much bigger than Fox News — for 2022,” he said, predicting it could conceivably tip the company “in the red for 2023.” Of course, every expert believed that Fox will survive the settlement, but that hardly makes the deal a win for the network.
No expert interviewed by Law&Crime could think of a larger defamation settlement paid by a media organization. In a distant second, ABC News settled a case with a South Dakota meat processing company for $177 million in the 2017 “pink slime” litigation. Conspiracy theorist Alex Jones was ordered to pay more than $1 billion to the Sandy Hook families by a multiple juries, but he fought his liabilities tooth and nail, refusing to settle the case.
“That is a blowout”
First Amendment expert Ken White, a popular legal commentator known by the nom de plume Popehat, understands why the public may be cynical about 11th hour deals, but this one’s different.
“Most settlements, you can say, are a hardheaded business decision about risk management and the cost of litigation and the consumption of time of your executives: $787.5 million is not one of those cases,” White said. “That is a blowout.”
It remains an open question whether, or how much, of that settlement may be covered by insurance.
“How much of it is covered is a complex coverage law issue that depends on the terms of their policy, but generally intentional acts are not covered,” White said. “So if they were found to have committed defamation — not negligence, but actual malice — then that almost certainly could not be covered under most policies.”
A settlement eliminates such a finding by a jury.
“I don’t know what sort of robust policy they have, but there aren’t many policies that contemplate, again, three quarters of $1 billion,” White added.
Kosseff also raised the issue about what will happen to Fox’s coverage in the future, but he predicted any insurers would want institutional reform.
“I think it probably would will be much more difficult to get media insurance for Fox after this,” he noted. “I don’t know who who rationally would want to provide coverage, and if they did, I would assume the premiums would be astronomical. But if there was an insurer, I think they might drive some of the some of the changes.”
At a minimum, Kosseff said, Fox would have to be more careful about what they put in writing. Dominion obtained damaging internal Fox communications appearing to show executives and hosts privately ridiculing the 2020 presidential election conspiracy theories that they later put on blast.
“I would first take a serious look at how they communicate because I think that was really apart from from any issues with their journalism,” Kosseff said. “It was the fact that they contemporaneously documented all of their doubts about the claims that they were airing.”
Tucker Carlson (Photo by Chip Somodevilla/Getty Images)
In one message, top-rated host Tucker Carlson urged Fox to fire a reporter for accurately fact-checking false election claims. Rupert Murdoch himself scorched Rudy Giuliani’s wild press conference as “really crazy stuff,” even though his network aired it in its entirety — and allegedly lashed out at then-White House correspondent Kristen Fisher for daring to fact-check it.
For Kosseff, Dominion’s mountain of internal Fox communications gave them leverage at negotiations.
“Without that, I don’t know whether you would have had a settlement,” Kosseff said, adding the case could even have been dismissed without those communications because of the doctrine of actual malice.
Established by the Supreme Court more than half a century ago under New York Times v. Sullivan, the actual malice standard forces public figures suing for defamation to prove that news organizations published false information knowingly or with reckless disregard for the truth.
“A very, very difficult way to run a news organization”
With another presidential election just one year away, the settlement leaves many observers wondering whether the financial pain is enough to change the way Fox or other news organizations will report on the race.
“There’s a pretty good chance that someone’s going to be claiming problems with the 2024 election, and I can’t imagine that Fox’s lawyers would be happy about the newsroom using the same kind of freewheeling coverage where they let anyone on the air to make wild claims,” Kosseff says.
At minimum, experts agree that the settlement might spur Fox to train their hosts, reporters and executives not leave doubts about their reporting in writing. White counted himself among those skeptical Fox was capable of systemic change.
“I think that they may be a little more careful there with the way they put crazies on about some things, but I don’t think there will be a fundamental change in the way they do business,” White said. “This is this is who they are. This is what they are. This is what their audience wants. If anything, they’re losing audience as a result of that, continuing to do this more vigorously.”
He agreed that Fox might opt to “hide the ball better.”
“You can expect some uncomfortable conversations with people about, you know, ‘Let’s not admit in writing that we know the stuff we’re putting on the air is false,’” White said. “You might find some shorter time periods for document control policies about how quickly things get deleted.”
Skeptical that cosmetic changes would be enough, Epner said that he wouldn’t be surprised to learn about shake-ups inside the Fox newsroom, at the executive level.
“I think that you’re going to see a lot of people moved out of their jobs behind the scenes,” he said.
Epner doubted that simply leaving less on paper would be a viable long-term option.
“If Fox wants to get better at getting away with defamation, they will start organizing themselves like a criminal conspiracy where nothing is committed to writing unless it’s in code,” Epner said. “But that is a very, very difficult way to run a news organization.”
Fox News declined to comment beyond their carefully worded statement that they were “pleased” to “resolve this dispute with Dominion amicably,” acknowledging only that a judge found their broadcasts false. The network declined to reveal whether they were contemplating any major changes in the wake of the settlement — and wouldn’t respond to key points from these interviews, except to call questions about the company’s financial health “outright ridiculous.”
Listen to Law&Crime’s podcast “Objections” for more on the settlement below:
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