Fox faces financial squeeze
Rupert Murdoch’s television news group has hit legal trouble over claims relating to the 2020 presidential election. Matthew Partridge reports
Fox News (part of Fox Corporation) has been forced into “a last-minute $787.5m deal” to settle a $1.6bn lawsuit from US voting machine company Dominion, says Bernd Debusmann Jr on the BBC. The lawsuit alleged “that Fox had damaged its business by spreading false claims that its machines had helped rig the 2020 election in Joe Biden’s favour”. By settling the lawsuit Fox managed to “avoid a lengthy and potentially embarrassing defamation trial”. But it was forced to acknowledge that “certain claims it made about Dominion were false”. That puts it at odds with “vast swathes of its audience ahead of the upcoming 2024 election”.
Despite having to pay a large amount of money, however, Fox “may not have a huge incentive to change its profitable ways”, says Erik Larson on Bloomberg. After all, the parent company reported $7.8bn in sales for the first half of its 2023 fiscal year, with earnings before interest, taxes, depreciation and amortisation (Ebitda) rising to $1.62bn. Two-thirds of that profit came from Fox’s cable TV networks, which include Fox News, Fox Business and Fox Sports 1. Fox News is the most popular cable network in prime time and has been gaining viewers.
Dodging the streaming wars
The price tag of $787.5m may be “far less than the $1.6bn that Dominion had sought in damages”, and will easily be covered by current cashflows and any insurance, says Lex in the Financial Times. But it is still a” huge figure” for a business that “while financially resilient, faces sharp shifts in how video content is consumed”. Fox’s focus on live sports and news means that it has managed to avoid getting involved in the “expensive content spending war” between the various streaming companies. But the number of subscribers has dwindled as people have quit cable television for cheaper internet packages. This means that the “financial margin for error is clearly narrowing”.
And Fox’s legal bills may end up rising further as there are still “a raft of legal threats” remaining, says David Parsley in the i newspaper. These include a “$2.7bn lawsuit from another voting machine group, Smartmatic”, which claims that “more than 100 false statements were broadcast by Fox News hosts and guests”.
Both the settlement and the threat of further lawsuits already seems to be prompting changes at Fox, says The Economist: witness the “unceremonious departure” of star host Tucker Carlson along with another prominent supporter of Trump. While Carlson was more sceptical of the voting machine conspiracy theory than many at Fox, his “hard-right” views, and wild claims about the 6 January riots, as well as a discrimination lawsuit by a former staffer, may have persuaded them to get rid of him. At the very least, these “severed heads” serve “to remind its employees of the distinction between pandering to its base, and actually defaming people or companies that might sue”.