As Fox News settles its lawsuit with Dominion, will it make any difference to how it reports?

The jurors were chosen. The packed court room was waiting for the lawyers’ opening statements in the defamation case launched more than two years earlier by Dominion Voting Systems against Fox News.

Then, without warning, the judge announced the two parties had agreed to settle. And what promised to be six weeks of the biggest media circus of recent times was abruptly cancelled.

Fox News had initially accepted Joe Biden’s victory in the presidential election, but when it found itself losing audience share to two small, even more right-wing, networks, and under attack from Trump himself, it made a radical pivot and adopted Trump’s false stolen election narrative.

In the next two weeks, according to Media Matters for America, Fox questioned the results of the election or pushed conspiracy theories about it at least 774 times. In commercial terms – winning back its audience – it was very successful.

Dominion had found itself collateral damage in Fox’s change of direction. It was several times pictured as a major perpetrator of this imaginary electoral fraud. Trump lawyer Rudy Giuliani said Dominion’s machines were developed to steal elections; that Dominion was an organised criminal enterprise, started in Venezuela with Cuban money.

Dominion responded immediately to Fox’s charges and communicated 3,600 times with members of the company, but with no effect. Later it isolated 20 occasions on which it had been defamed, and sought US$1.6 billion from Fox in the case that has now been settled.

Read more: Why Fox News' settlement with Dominion Voting Systems is good news for all media outlets

It takes two to settle, but typically the two sides come together with contrasting fears and hopes. For Dominion Voting Systems the reason to settle was clear. The company knew it was likely to win the case, but the dollar amount the jury would then award was completely unpredictable. Moreover, at the end of such a case Fox would definitely appeal, pushing any finality well into the future.

The settlement gave Dominion certainty and US$787 million (A$1.2 billion) in the bank. This figure dwarfs the previous largest defamation settlement on the public record in the US (remembering that many defamation settlements are confidential and so remain secret): in 2017 Disney/ABC paid US$177 million to a meat producer whose product was described as “pink slime”.

The case against Fox

The majority owner of Dominion is a company called Staple Street Capital, which paid $38.3 million for a 76% stake in 2018. Fox said Dominion was valued at about $226 million in run-up to 2020 election. Quite simply this is the most profitable pay day Dominion has ever had.

In contrast, Fox News knew it was almost certain to lose. The judge, Eric Davis, had already said it was “crystal clear” that all 20 of Fox’s assertions cited by Dominion were false. He also ruled against Fox’s open-ended interpretation of the First Amendment, saying there were limits to free speech; that it was unacceptable to falsely yell “fire!” in a crowded theatre or to utter threats against people. He also said Fox as broadcaster was responsible for what its interviewees said, as well as what its own employees said.

The key legal battleground was then going to be: did Fox broadcast the falsehoods with “actual malice” – the American test for false claims about public figures? Did the broadcaster give publicity to claims it knew were false or was reckless in testing their truth?

Dominion had already driven a discovery process, which put on the public record many telling internal communications of Fox employees. These showed they either thought the broadcast claims were nonsense or were worried about the lack of any supporting evidence.

Fox knew there would be five to six weeks of scheduled hearings that were going to be a parade of embarrassments and humiliation, and would cause yet further damage. Many people were looking forward to 92-year-old Rupert Murdoch being cross-examined. Murdoch described the experience of appearing before a British parliamentary committee during the phone-hacking scandal as the “most humble day” of his life. The court appearances promised to outdo it.

Just as important, though, would have been the humiliation of Fox’s talent, such as Tucker Carlson, Sean Hannity and Maria Baritomo. The assault on their credibility, as counsel went through what they said in private compared with what they said in public, could have further punctured their professional reputations. Celebrities do not always perform well under cross-examination, and all of these anchors could have been easily provoked into damaging admissions or outrageous assertions.

So a settlement was in Fox’s interest for quite different reasons. As Washington Post columnist Eric Wemple put it:

The resolution requires a great deal of something that Fox News has in wheelbarrows (money) and very little of something it has in teaspoons (editorial integrity).

What does it all mean for Fox and Murdoch?

Fox’s public statements since have been minimalist in both quantity and content. It was not required to make any on-air apologies or retractions, and the case has barely been mentioned on its own network (in contrast to its competitors’ networks). It “acknowledged” the court’s rulings that “certain claims” about Dominion were false. Acknowledge is short of accept, let alone apologise. So Fox traded money for the chance to avoid further reputational damage.

Although the immediate dispute has been settled, the saga will be ongoing for both parties. Dominion lawyer Stephen Shackleford said: “Money is accountability, and we got that today from Fox, but we’re not done yet. We’ve got some other people who have some accountability coming toward them.”

Two of the “other people” are the smaller right-wing networks Newsmax and One America News Network, the two immediate beneficiaries of Fox News’s audience loss in November 2020. Both are much smaller than Fox, and one suspects a financial settlement such as the one Dominion and Fox have just consummated could be financially ruinous, even fatal, for them both.

Dominion is also suing the two most frequent interviewees on Fox, both at one stage Trump employees – Rudy Giuliani and Sidney Powell. Both acted outrageously and recklessly, and it is possible both could face disbarment as lawyers as well as financial bankruptcy over their scurrilous claims about Dominion.

The last individual being sued by Dominion is Mike Lindell, the owner of My Pillow, and Fox News’s biggest sponsor. On the Tucker Carlson show, Lindell challenged Dominion to sue him, and Dominion has obliged.

Fox is also facing a defamation suit from Smartmatic, another electronic voting system maker. Indeed its ambit claim against Fox is even bigger than Dominion’s was: US$2.7 billion (A$4.03 billion). Presumably, however, the starting point for their settlement will be the amount Fox gave Dominion. It is hard to see Smartmatic being willing to settle for less.

Fox Corp chief executive Lachlan Murdoch told a business group Fox had around US$4 billion (A$5.98 billion) in cash. These two suits could take around two-fifths of that amount, not a fatal blow for such a big company, but not trivial either.

Fox News is also being sued by a former employee, Abby Grossberg. She claims she was fired after accusing Fox’s lawyers of improperly coaching her for her deposition in the case. Although the financial costs of her case will be trivial compared to the two corporate cases, she has already shown her capacity to generate more embarrassment by leaking off-air conversations between Fox employees and Giuliani where he admitted not having concrete evidence about Dominion.

Finally, a shareholder, Robert Schwarz, has filed a lawsuit against Murdoch and four other directors for failing in their fiduciary duties. Schwarz claims they were aware the network was reporting false information but gave priority to ratings and revenue over accuracy, and that this has exposed the company to public ridicule.

Over the long term, the Murdochs have successfully managed their shareholders, and it is likely they will again. Nevertheless, a shareholder revolt last year stymied Rupert and Lachlan’s wish to join Fox and News Corp together again.

Fox said in its statement:

We are hopeful that our decision to resolve this dispute with Dominion amicably, instead of the acrimony of a divisive trial, allows the country to move forward from these issues.

On the eve of the trial, ex-president Trump issued a statement less than helpful to Fox:

Fox News is in big trouble if they do not expose the truth on cheating in the 2020 election. They should do what’s right for America. When Rupert Murdoch says that there was no cheating in light of the massive proof that was there, it is ridiculous and very harmful to the Fox case […] Rupert, just tell the truth and good things will happen. The 2020 election was rigged and stolen […] you know it and so does everyone else! […] Back up those patriots at Fox, instead of throwing them under the bus.

In other words, Trump was urging Fox to declare the truth of assertions the judge had already ruled were false.

Of larger significance is that it is clear that Trump himself refuses to “move forward”. So Fox will face the same issues that initially led it to adopt what turned out to be a disastrous strategy, of promoting the false stolen election narrative. If Fox opts for accuracy will this alienate its Trumpist audience? Will Fox find it hard with him still wielding so much power in the Republican Party? Can Fox chart a commercially viable but professionally respectable course among these competing demands and constituencies?

With the wider public, Fox News has sustained enormous damage to its credibility. As Wemple writes: “Every phase of this case has demonstrated the depravity of Fox News to the rest of the world.”

The “rest of the world”, however, is only of marginal importance to Fox’s viability. Conservative columnist George Will put the issue humorously. He began by quoting Trump’s bizarre boast from 2016 – “I could stand in the middle of Fifth Avenue and shoot somebody, and wouldn’t lose any voters.”

Then Will offered the 2023 Fox News version: A Fox News anchor

could report that John Wilkes Booth killed Marilyn Monroe on the grassy knoll in Dallas’s Dealey Plaza. And Fox News would not lose its core viewers.