The Fox News settlement

Fox News has settled the defamation lawsuit brought against it by Dominion Voting Systems for the tidy sum (according to Dominion counsel) of $787.5 million. The AP covers the settlement here (in accessible form), Reuters here (in accessible form) and the Wall Street Journal here (behind its paywall). NBC News took up the question of Dominion’s damages claim in a pre-settlement story here.

Dominion had alleged damages of $1.6 billion. However, anyone can allege anything and I trust that was more or less the case with Dominion’s damages claim.

The sum of $787.5 million is about half of what Dominion sought. The outcome looks like a compromise, but I think that appearances are deceiving. In fact, the settlement is suggestive of capitulation by Fox News.

I haven’t seen any analysis of the settlement that takes up the basis of Dominion’s damages claim. The question is complicated by the fact that Dominion was taken private by Staple Street Investors in 2018. It is not a public company.

The Reuters story linked above reports:

Even before Tuesday’s settlement, Staple Street’s investment in Dominion had been successful. Fox said in a court filing that Dominion was valued at around $226 million in the run-up to the 2020 election, citing exhibits it did not make public. That was up from the $80 million valuation when the acquisition of Dominion was clinched in 2018.

The Reuters story notes that “Staple Street’s previous investments include theme park operator Six Flags Entertainment Corp (SIX.N)” (you can’t make this stuff up) and concludes with this illuminating observation:

In one of the court filings, Fox cited a December 2020 text from a former Staple Street employee to a current executive that proved prescient.

“Would be pretty unreal if you guys like 20x’ed your Dominion investment with these lawsuits,” the text read.

I think “unreal” is the operative word. Those numbers reflect the value of the entire company. The settlement paid by Fox appears to represent the value of Dominion several times over (“like 20x”).

The amount of the settlement must be well beyond any reasonable assessment of Dominion’s actual damages, if any. It either includes a component of punitive damages exposure — an exposure that I have seen mentioned nowhere and may or may not have been in the case — or reflects Fox’s desire to avoid the embarrassment of trial. Absent any authoritative analysis of the settlement — the terms of which remain private as I write — my best guess is that $787.5 million was the price of avoiding embarrassment.

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