FoxNews v. Dominion: How badly could the Dominion suit hurt Fox News?

Updates: Fox News and Dominion Voting Systems reached a settlement on Tuesday just as the trial was starting. read the latest here. Our earlier story is below.

The high-stakes legal battle between Fox News and Dominion Voting Systemsset to kick off in court on Tuesday, poses serious risks for the media company should it lose the defamation case.

Most legal experts think Dominion is in a strong position to win, citing the breadth of evidence that has emerged in deposits and court filings, as well as a series of judicial decisions to date that found Fox News statements were false.

“I have never seen a case involving a public figure where the evidence of actual malice they will have to put before a jury is stronger,” Lee Levine, a retired First Amendment lawyer, told “CBS Sunday Mornings.” Levine has been litigated on behalf of major media companies, including CBS and Fox.

Although Fox was able to handle the direct financial blow from a large legal judgment against the company, analysts say the network faces a tricky balancing act in presenting its case in Delaware state court while also placing viewers who support former president Donald Trump.

financial risks

Dominion is seeking $1.6 billion in damages against Fox, which the it accuses of lying about its tabulation of votes in the 2020 presidential election. That figure would wipe out Fox’s entire profits for 2022, for which it reported net income of $1.2 billion. Still, with about $14 billion in revenue last year and cash holdings of over $4 billion, the company has the financial might to take the hit.

“A billion-six is ​​painful, but that is certainly doable from a financial point of view,” Douglas Arthur, an equity analyst at Huber Research Partners, told CBS MoneyWatch.

Fox would likely appeal a ruling for Dominion. Meanwhile, the media company would likely end up paying far less if it chose to settle the case. The bigger risk is that a drawn-out legal spectacle turns off viewers and advertisers, Arthur said. “It’s not going to be great for their advertisers to hear all this stuff come back out into the public over a six-week period. And the advertisers pay the bills.”

Advertising accounts for about half of Fox’s revenues, according to the company’s financial reports, with most of the rest coming from fees that stations pay to run the cable channel.

In a statement to CBS News, Fox called Dominion’s suit “a political crusade in search of a financial windfall.”

Audience blowback?

A major concern of Fox executives, revealed in emails and text messages that have surfaced in the Dominion’s lawsuit, was that the network’s audience would reject the truth of the 2020 election — that Joe Biden won fairly and that there is no evidence of widespread fraud.

“If Fox loses the lawsuit and is eventually forced to apologize and admit that its coverage was full of lies — which could take a long time because of appeals — that could enrage its core audience,” Jay Rosen, a journalism professor at New York University , said in an e-mail.

Ironically, that’s precisely the fate Fox was trying to avoid in the weeks after the 2020 election and a major reason it amplified the claims of election deniers, Rosen noted.

Rosen also said Fox could have trouble attracting network talent if it loses, with a loss potentially “persuading journalists that the risk of reputational harm from having Fox on your résumé is too great.”

Dominion’s defamation case against Fox News


For now, Fox’s audience appears mostly to be sticking by the network, according to ratings data. Yet the Dominion suit, as well as a suit from Smartmatic, another voting machine company, has already led to changes at the company. Three hosts named in Smartmatic’s suit, filed in 2021, read statements on their programs downplaying claims of election theft. Fox cut ties with one of them, Lou Dobbs, a day after Smartmatic’s lawsuit was filed, despite Dobbs’ show having the highest rating at the time.

Typically, if a news organization loses a defamation suit, “There are wider costs to the organization’s reputational status and its ongoing ability to be trusted to do the work of news gathering,” said RonNell Andersen Jones, a former newspaper reporter and editor who is now teaches law at the University of Utah.

When it comes to the 2020 election, Fox also faces the challenge of preserving its relationship with Trump supporters. The evidence revealed so far, including messages in which Fox News host Tucker Carlson declared of then-President Trump, “I hate him passionately,” threatens to drive a wedge between the networks and its base. In the run-up to the 2024 election, it could also could further alienate Trump himself, who has already charged Fox executives for not supporting the stolen-election narrative.

“The blowback from this evidence — about what key players at Fox thought and said about their sources, about Trump, and about the network’s own audience — is potentially the one cost of the trial that Fox could have real difficulty weathering,” Andersen Jones said .

She added: “The central premise of Dominion’s case here is that Fox made a conscious corporate decision to platform falsehoods about the company because its audience craved those conspiracy theories and was gravitating elsewhere to get them. If that same demand continues to exist, Fox is in a real bind.”

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