Murdoch, Fox face $1.6 bn trial over 2020 election as Trump surges

By Erik Larson, Gerry Smith and Jef Feeley

Rupert Murdoch’s Fox News empire is going on trial for airing false 2020 election fraud claims, even as it continues to struggle over its relationship with the man who most stoked those conspiracy theories: Donald Trump.
 

Fox Corp. and the Fox News network are now facing a possible $1.6 billion damages award in a defamation suit brought by Dominion Voting Systems Inc., which was accused by hosts and guests on the conservative network of rigging the election for Joe Biden. The 92-year-old Murdoch could be called to the witness stand as early as Monday, to be grilled about his failure to rein in the network despite his own belief that Trump’s claims were baseless.

Jury selection in the Delaware state court starts Thursday, and a verdict could be costly. Bloomberg Intelligence estimates that if the jury finds Fox liable, it could award Dominion damages of about $375 million. Even that fraction of the $1.6 billion the voting machine maker is seeking would be one of the biggest defamation awards of all time and would amount to roughly two-thirds of Fox’s adjusted profit in its most recent quarter.

Potential for Humiliation
 

There’s also the potential for courtroom humiliation. Besides Murdoch, the trial is expected to see his son Lachlan, Fox Corp.’s chief executive officer, as well as Fox News CEO Suzanne Scott and superstar hosts like Tucker Carlson and Sean Hannity, take the stand — away from their carefully controlled studio environments and sworn to tell the truth.

Yet, to judge by recent programming, none of that has forced a rethink of Fox News’s approach to politics, or to Trump. The network and other Murdoch-owned media outlets like the Wall Street Journal sought earlier this year to promote Florida Governor Ron DeSantis as their preferred 2024 Republican candidate. But Fox has begun hosting the former president in its programming again as polls show him soaring among GOP primary voters, and especially since he was indicted by a grand jury convened by Manhattan District Attorney Alvin Bragg.

Panic among Fox News executives and hosts about the potential business consequences of losing Trump supporters spurred them to broadcast wild election lies, Dominion alleges. Emails, text messages and deposition testimony obtained by Dominion in the course of the litigation appear to bear that out, and are certain to be shown to the jury repeatedly during the six- to eight-week trial.

Shortly after the network called the pivotal state of Arizona for Biden, infuriating Trump diehards, Carlson texted his producer with a warning about the potential rise of right-wing competitor Newsmax. 

“Do the executives understand how much credibility and trust we’ve lost with our audience?” Carlson said. “We’re playing with fire, for real ... an alternative like newsmax could be devastating to us.”

If those fears moved the network to promote the plot served up by Trump stalwarts Rudy Giuliani and Sidney Powell, though, Carlson was among the Fox hosts and executives who privately rolled their eyes at the lurid theory. Powell’s claims were “obviously untrue” and “unbelievably offensive,” he wrote in emails shown in court. Hannity, one of Fox’s biggest stars, sent a text message calling Powell a “f—ing lunatic,” according to Dominion.

Fox plans to argue that it enjoys broad constitutional protections to report on claims being made by a sitting president and his attorneys, even if they later turn out to be false.

‘Political Crusade’
 

“Dominion’s lawsuit is a political crusade in search of a financial windfall, but the real cost would be cherished First Amendment rights,” the company said in a statement. “While Dominion has pushed irrelevant and misleading information to generate headlines, Fox News remains steadfast in protecting the rights of a free press, given a ruling for Dominion and its private equity owners would have grave consequences for the entire journalism profession.”

Dominion, in a statement Thursday, said it is a “strong believer” in the First Amendment but argued the lawsuit isn’t about free speech.

“As long-settled law makes clear, the First Amendment does not shield broadcasters that knowingly or recklessly spread lies,” Dominion said. “The Court has rejected Fox’s First Amendment ‘newsworthy allegation’ defense and held that Dominion’s lawsuit is consistent with the First Amendment.”

The conservative network is counting on a legal standard for defamation cases against public figures that was set in a 1964 Supreme Court ruling won by its frequent punching bag, the New York Times. Under that decision, Dominion must show that Fox aired the outlandish claims with “actual malice,” meaning the network knew they were false or recklessly disregarded whether they were true or not. 

It’s a tough standard to meet, and one that many conservatives, including DeSantis, have recently sought to undermine on the grounds that it gives too much protection to biased liberal journalists.

It is one of the few defenses Fox has left, after a series of brutal pretrial rulings by the judge. Delaware Superior Court Judge Eric Davis previously barred Fox from arguing that it couldn’t be sued for publishing false claims if those claims were inherently newsworthy. On Wednesday, Davis appointed a special master to examine whether Fox withheld evidence, which could result in a damaging instruction to the jury.

Dominion argues that the extensive internal emails and text messages uncovered in the suit amply demonstrate actual malice. The evidence shows that Fox personalities and executives knew the conspiracy theory was bogus even as the network repeated the claims over and over. Murdoch said in a sworn deposition in the case that Fox’s popular commentators “endorsed” Trump’s false claim that the election was stolen, even though Murdoch said he was skeptical from the outset.

Murdoch’s Doubts
 

“It is fair to say you seriously doubted any claim of massive election fraud?” Murdoch was asked by a Dominion lawyer.

“Oh, yes,” Murdoch said.

“And you seriously doubted it from the very beginning?” he was asked.

“Yes,” Murdoch replied.

Former House Speaker Paul Ryan, now a Fox board member, and Fox Corp. Chief Legal Officer Viet Dinh are also expected to testify.

And the claims about Dominion were particularly implausible. The theory, espoused by former Trump campaign lawyer Powell and longtime Trump attorney Giuliani, among others, held — and, among diehards, still holds — that Dominion flipped millions of votes away from Trump and toward Biden as part of a vast conspiracy that included foreign hackers, corrupt Democratic election workers and malignant software tied to the deceased Venezuelan dictator Hugo Chavez.

The ‘Brain Room’
 

Soon after the election, Fox began receiving extensive information debunking the elaborate plot, from state and federal election officials and US intelligence agencies to Trump’s own attorney general. Fox’s clutch of professional fact-checkers, known as the “brain room,” also determined the theory was “100% false” and that Dominion machines “accurately count ballots,” according to Fox records uncovered in the suit.

Nonetheless, Fox continued to host the theory’s most vocal advocates for weeks after the election, including Powell and Giuliani. Hosts Jeanine Pirro and Lou Dobbs amplified the idea. Dominion filed its suit in March 2021.

The unfounded theory had far-reaching consequences, from the January 2021 riot at the US Capitol to ongoing threats against state election officials. Apart from Fox’s fortunes, the trial could help set the record straight on the 2020 vote and affect “elections and election administration going into 2024,” said Lawrence Norden, director of the election reform program at the Brennan Center for Justice of New York University’s law school. 

Business Calculus
 

“There are a lot of people who don’t necessarily pay close attention to these issues, who may have heard things about voting machines and fraud, and they don’t really know what to believe,” Norden said. If Fox is found liable, it is “likely to break through to those people,” he said.

Whether it breaks through to Murdoch and others at Fox is a different matter. Even if a jury sides with Dominion on the defamation claim, it may not be convinced that Dominion suffered massive financial harm. 

Indeed, Fox argues that Dominion’s damages estimate is based on the false assumption that the voting machine maker will lose essentially all of its business by 2031 as a result of the broadcasts. Fox says documents and depositions show that it actually gained some business since the 2020 election.

Even a verdict in the hundreds of millions of dollars could be acceptable to Fox News if it can continue with a playbook that has generated far more money than that over the years. 

The network still dominates the cable news landscape, drawing more viewers than MSNBC and CNN. And some of Murdoch’s industry peers predict he will survive no matter the verdict. Speaking at an event hosted by Semafor on April 10, IAC Chairman Barry Diller described the risk facing Murdoch and Fox as “de minimis.”

“Look, I hope they lose,” Diller said at the event. “I think they should lose. And I think [Dominion] could get a very big award. So what? They’ll pay it. What is it going to do, worsen Rupert Murdoch’s reputation? Good luck to you.”