Fox News’ record-shattering $787.5 million settlement with Dominion Voting Systems may come as a surprise to its parent company’s shareholders, who have repeatedly been told in SEC filings that the lawsuit was unlikely to adversely affect it.
Fox Corp, Fox News’ parent company, minimized the potential damage posed by Dominion’s defamation lawsuit in at least 8 filings with the Securities and Exchange Commission from May 2021 to February 2023. The lawsuit stemmed from Fox’s repeated smears of the company for purportedly helping to rig the 2020 presidential election against Donald Trump.
Fox Corp. stated in its most recent annual report, filed with the SEC in August 2022, that the company considers the Dominion lawsuit and a similar matter involving the Smartmatic election technology company “without merit and intends to defend against them vigorously,” adding, “The Company does not currently anticipate that the ultimate resolution of any such pending matters will have a material adverse effect on its business, financial condition, results of operations or cash flows.”
The report is signed by Chairman Rupert Murdoch, Executive Chairman and CEO Lachlan Murdoch, and the other members of the Fox Corp. board, including director and former House Speaker Paul Ryan. Both Rupert Murdoch and Ryan acknowledged they had not believed the false claims of election fraud that were promoted on Fox News, according to court documents filed by Dominion.
Identical language appears in Fox Corp.’s 2021 annual report, filed in August of that year and also signed by the Murdochs and the rest of the board of directors, as well as in six quarterly reports signed by Lachlan Murdoch and filed on February 8, 2023; November 1, 2022; May 10, 2022; February 9, 2022; November 4, 2021; and May 6, 2021.
But on Wednesday, the company acknowledged that it had agreed to pay Dominion $787.5 million to settle the suit. A form filed with the FEC on Wednesday, signed by Fox Corp. Chief Legal and Policy Officer Viet Dinh, states in part:
On April 18, 2023, Fox Corporation (“FOX” or the “Company”) and its subsidiary, Fox News Network, LLC, entered into a Release and Settlement Agreement with Dominion Voting Systems, Inc. and certain of its affiliates (“Dominion”), pursuant to which such parties agreed to resolve the lawsuits among them for $787.5 million to be paid to Dominion.
Judge Eric M. Davis announced in court on Tuesday that the parties had come to terms, and Dominion’s lawyers said in a subsequent press conference that Fox had agreed to a $787.5 million payout. The figure more than quadruples the largest publicly known amount a U.S. media company had ever paid to settle a defamation suit and represents roughly half of Fox Corp’s 2022 profits. But Fox News declined to mention the sum during its scanty on air coverage that day, with Howard Kurtz, host of the network’s media criticism show, saying he had not “been able to independently confirm” the size of the settlement and that “often, in these cases, you don't find out” the amount of the payout.
In reality, Fox Corp. is a public company that is required to disclose significant “material events” to the SEC in order to keep shareholders apprised, as it did with Wednesday’s SEC filing.
The Dominion saga revealed the extent to which the network functions as a propaganda factory and set the company up for a wide array of future dilemmas that may prove financially ruinous – including lawsuits from shareholders who may argue Fox misrepresented its exposure from Dominion’s suit. At least one shareholder lawsuit is already underway, which claims that the Murdochs and other board members violated their fiduciary duty by allowing Fox to smear Dominion, and numerous law firms are also seeking plaintiffs.