The Fox Corp. can quite possibly withstand even the harshest financial penalty that could come from the Dominion Voting Systems lawsuit, analysts say.
The successful trial – originally scheduled to start in a Delaware court on Monday before be delayed a day — will determine whether Fox Corp. may be held liable for false claims made on Fox News, the media company’s eponymous cable television property, that Dominion voting machines were used to rig the 2020 presidential election.
Dominion’s lawsuit seeks $1.6 billion in compensatory damages, an amount that experts say would likely be significantly reduced depending on the jury’s judgment or an out-of-court settlement.
The media company is contesting any claims for liability 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 the cherished rights of the former amendment”.
In the event that Dominion wins his case, said Lyrissa Lidsky, professor of constitutional law at the University of Florida, the jury is highly unlikely to award Dominion all the money he is seeking for what he says. be the reputational damage caused by Fox News broadcasts.
In theory, Lidsky said, jurors could also award punitive damages to punish Fox for “extremely wrongful conduct” and award an even higher financial penalty than that sought by Dominion. But she said she had not seen any evidence “so far that suggests there will be damage of this magnitude, although the damage could be very significant”.
“There is a litigation strategy to ask for more than you think you can really get to anchor the high number,” Lidsky explained.
With over $4 billion in cash on its balance sheet at the end of 2022, Fox could likely cover even the maximum amount Dominion is looking for without having to sell any of its existing assets to do so. In his latest quarterly earnings reportFox said it does not expect the “ultimate resolution” of any lawsuit claim to have a “material adverse effect” on its business.
Wall Street analysts say shares of the publicly traded company may take a hit from the lawsuit.
Bank of America Securities estimated in a March 28 note that for every $500 million in damages, shares of Fox Corp. would lose about $1 per share. The company’s stock, which traded at $33.62 late Monday morning, has fallen more than 10% since Dominion filed its lawsuit in March 2021, a period in which the Dow Jones Industrial Average rose. more than 2%.
BofA Securities suggested the lawsuit was likely to prevent Fox shares from moving significantly in what is expected to be a six-week trial, as legal proceedings continue to uncover details of discussions within Fox over her spreading lies about Dominion.
“At a minimum, the constant barrage of negative headlines should be an overhang for near-term investor sentiment,” the BofA Securities analysts wrote.
Fox’s spokesman did not comment on the business impact of any damages it may incur or on its stock market outlook.
The case also raised scrutiny of the media company’s editorial strategy, as signs emerged of discrepancies between what was reported on air and what some insiders – apparently with an eye on business from Fox – indicated they knew to be true.
Case Details show increasingly worried Fox News personalities about the loss of viewers to rival network Newsmax in the days following the 2020 election. Leaked texts and emails in Dominion’s filing suggest Fox hosts later pushed back on efforts to hand over the clocks on the hour on the outcome of the election – allegedly to prevent viewers from changing channels.
Following a case in which a Fox reporter noted there was “no evidence” of fraud in the voting system, primetime host Tucker Carlson texted his fellow Fox presenter Sean Hannity, calling for the reporter to be fired.
“It measurably harms the business. The stock price is down. No joke,” Carlson wrote on Nov. 12, 2020.
The company’s decision in 2019 to exit its television and film businesses may have added pressure to hang on to viewers, said Gabriel Kahn, a journalism professor at the University of Southern California. After Disney bought the entertainment assets of 21st Century Fox for $71 billion in 2019, the rest of Rupert Murdoch’s media company – now known as Fox Corp. – focused on its news, sports and business activities.
After the deal, Kahn said, “they doubled down on audience polarization and fragmentation,” adding that it became “absolutely, existentially important to keep that audience engaged.”
Yet Fox News tops the cable news rankings. According to Nielsen live data, “The Five”, “Tucker Carlson Tonight” and “Jesse Watters Primetime” were the three most-watched cable news shows in 2022. During this period, Fox’s advertising revenue increased by almost 9%.
The relationship between Fox’s editorial decisions and the company’s business strategy, Lidsky said, could be relevant in the case as Dominion tries to prove Fox spread false information in “reckless disregard” – part of the legal standard that will be essential in determining whether Dominion has been defamed.
“A commercial inducement to ignore the truth or falsity of what they were posting, which might tend to show reckless disregard,” Lidsky said.