Fox Settled With Dominion The Stock Market Was Never Worried The Case Was Not Tried
Fox Just Settled With Dominion. The Stock Market Was Never Worried.
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Fox Corp agreed to a large settlement to end a lawsuit. Even as the saga unveiled the company’s inner workings, viewers and investors stuck by Fox.
Spencer Platt/Getty ImagesThe past is never dead, as William Faulkner wrote, it isn’t even past. That goes some way toward explaining why, in 2023, we’re still talking about the 2020 election—in this case the $1.6 billion Dominion Voting Systems lawsuit that never really seemed to truly rattle Fox Corp stock.
Although a settlement brings an end to the well-publicized saga, and although it will cost a pretty penny, investors don’t appear to be overly troubled.
Rupert Murdoch and Lachlan Murdoch serve as chairmen of both News Corp (ticker: NWSA), publisher of Barron’s, and Fox News parent Fox Corp (FOXA). The latter was facing a defamation trial, centered on the television network’s false reporting on the 2020 presidential election. Dominion argued Fox’s coverage, which included baseless claims of voting fraud, hurt its reputation.
The two sides, however, reached a settlement late Tuesday, the same day the trial began after a one-day delay.
The settlement’s $787.5 million price tag—about half the damages Dominion originally sought—makes it the largest publicly known media firm defamation settlement in U.S. history. And while the agreement puts to bed an issue that’s garnered plenty of interest on both sides of the political aisle, the threat of the lawsuit overall hasn’t meant a whole lot for the stocks of either company led by the Murdoch family.
Of course, it’s still been tricky to be a media investor in general over the past year.
Fox Corp stock is up 12% since the start of 2023 through Tuesday’s close—News Corp stock is down just over 5%—although Fox and News Corp have each fallen 13% and 18.5% over the past year. Gannett stock (GCI) is down nearly 12% year to date, and down 58% in the past 52 weeks, while shares of its broadcasting arm Tegna (TGNA) are down roughly 19% and 24% over those periods. Sinclair Broadcast Group (SBGI) and New York Times stock (NYT) have both risen since the start of 2023, 32% and 22%, respectively, but are down 9% and 13%, respectively, over the past year.
Thus, Fox’s stock performance doesn’t betray any exceptional longstanding angst about the trial, as it isn’t an outlier in the industry.
There was good reason for investors not to be too concerned, as they were likely already factoring in some payout.
Many industry watchers were surprised that the trial even got under way, so advantageous did it seem for Fox News to reach a settlement and avoid having some of its most popular TV hosts take the stand. Indeed, court hearings and documents already included plenty of unflattering details.
Moreover, even in the case of a trial, the deck is generally stacked against plaintiffs in defamation cases because they must prove “actual malice” on the part of media companies, as it isn’t enough for the latter to have simply reported untruths.
In other words, the question is not whether or not Fox spread lies about Dominion’s voting machines being rigged: The judge already ruled that Dominion wouldn’t have to prove the falsehood of those claims. Rather, legal culpability hangs on whether or not Fox hosts and reporters knew they were lies, and still broadcast them with wrongful intent, or were irresponsible enough to wholly ignore the facts.
In this Dominion did enter with a bit of a boost, as the judge previously said Fox couldn’t argue it needed to cover the known falsehoods about the voting machines simply because they were newsworthy. Nonetheless, the burden of proof still rested with Dominion, not Fox, giving the former a higher hurdle to clear.
Then there’s the fact that the lawsuit hasn’t stopped Fox from doing brisk business: Fox has held on to its longstanding title as the nation’s most-watched cable news network.
Fox’s free cash flow was nearly $1.6 billion last year, and it had some $4 billion in cash at the end of its fiscal second quarter, reported in February. So while nearly $800 million isn’t chump change, it isn’t a crippling amount, as the reaction of Fox stock on Wednesday would suggest. Shares were down 1.3% to $30.81 at 12:27 p.m., while the S&P 500 was off 0.1% and the Dow Jones Industrial Average had fallen 0.3%.
Nonetheless, Fox still faces another, similar lawsuit from voting technology firm Smartmatic, and the Dominion payout will likely impact the company’s ability to repurchase stock or make acquisitions, so it isn’t as if investors aren’t impacted.
Their worries, though, don’t appear to have shown up in the stock. For all the sound and the fury of the headlines, for Fox stock the Dominion saga has largely signified nothing.
Write to Teresa Rivas at teresa.rivas@barrons.com
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