Global Courant 2023-04-17 19:52:23
Fox Corporation can likely withstand even the harshest financial penalty that could result from the Dominion Voting Systems lawsuit, analysts say.
The blockbuster lawsuit — originally scheduled to begin in a Delaware court on Monday before being adjourned a day — will determine whether Fox Corporation can be held liable for false allegations made on Fox News, the media company’s eponymous cable TV property, which Dominion’s voting machines were used to rig the 2020 presidential election.
Dominion’s lawsuit is seeking $1.6 billion in damages, an amount experts said would likely be significantly reduced depending on the jury’s verdict or in an out-of-court settlement.
The media company is denying any liability claims or damages sought by Dominion, with a Fox spokesperson calling the lawsuit “a political crusade in search of a financial windfall, but the real cost would be cherished First Amendment rights.”
If Dominion wins the case, said Lyrissa Lidsky, a professor of constitutional law at the University of Florida, it’s very unlikely the jury will award Dominion all the money she’s seeking for what she believes is the reputational damage Fox News broadcasts have claimed. .
In theory, Lidsky said, the jurors could also order punitive damages to punish Fox for “extremely wrongful conduct” and award an even higher financial penalty than Dominion had asked for. But she said she had not seen any evidence so far to suggest there will be damage of that magnitude, even though the damage could be very large.
“There’s a process strategy to asking for more than you think you can really get to anchor the number high,” Lidsky explains.
With more than $4 billion in cash on its balance sheet as of the end of 2022, Fox could probably cover even the maximum amount Dominion is seeking without having to sell any of its existing assets. In his most recent quarterly figuresFox said it did not expect the “ultimate resolution” of claims from the lawsuit to have a “material adverse effect” on its business.
Wall Street analysts say the publicly traded company’s stock is likely to take a hit as a result of the lawsuit.
Bank of America Securities estimated in a March 28 note that for every $500 million in damage, shares of Fox Corporation would lose about $1 per share. Shares of the company, which traded at $33.62 late Monday morning, are down more than 10% since Dominion filed its lawsuit in March 2021, a period when the Dow Jones Industrial Average rose more than 2%.
BofA Securities suggested the lawsuit would likely keep Fox’s stock from moving substantially over the course of what is expected to be a six-week trial as court proceedings continue to reveal details of debates within Fox over the broadcasting untruths about Dominion.
“The constant barrage of negative headlines should at the very least be an overhang for near-term investor sentiment,” the BofA Securities analysts wrote.
The Fox spokesperson did not comment on the business impact of any damages it might have to bear or the stock outlook.
The case has also put the media company’s editorial strategy under scrutiny, as signs have emerged of gaps between what aired on-air and what some insiders – apparently with Fox’s business in mind – indicated they knew to be it was true.
Details from the case show that Fox News personalities are increasingly concerned about the loss of viewers to rival network Newsmax in the days following the 2020 election. Texts and emails revealed in Dominion’s file suggest Fox hosts subsequently balked at efforts to straighten out the election results put – supposedly to prevent viewers from switching channels.
After an instance where a Fox reporter noted there was “no evidence” of fraud with the voting system, primetime host Tucker Carlson texted fellow Fox host Sean Hannity calling for her to be fired.
“It hurts the business measurably. The stock price has fallen. No joke,” Carlson texted on Nov. 12, 2020.
The company’s 2019 decision to exit its TV and film businesses may have added pressure to retain viewers, said Gabriel Kahn, a journalism professor at the University of Southern California. After bought Disney the entertainment assets of 21st Century Fox for $71 billion in 2019, the rest of Rupert Murdoch’s media company – henceforth known as Fox Corporation – focused on its news, sports and corporate broadcasting businesses.
After the deal, Kahn said, “they doubled down on audience polarization and fragmentation,” adding that it became “definitely, existentially important to keep that audience engaged.”
Still, Fox News dominates the cable news rankings. According to Nielsen live plus data, ‘The Five’, ‘Tucker Carlson Tonight’ and ‘Jesse Watters Primetime’ were the three most watched cable news programs in 2022. About that time, Fox’s ad revenue grew by almost 9%.
The relationship between editorial decisions at Fox and the company’s business strategy, Lidsky said, could be relevant in the case, as Dominion seeks to prove that Fox broadcast false information with “reckless contempt” — part of the legal standard that will be key in determining whether Dominion was defamed.
“A business incentive to ignore the truth or falsehood of what they put out could tend to show reckless contempt,” Lidsky said.
